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Michigan State University VC Arm Spartan Ventures Closes Shop After Brief Tenure

Spartan Ventures, a venture capital subsidiary of the Michigan State University Foundation created last year to help identify, evaluate, and invest in promising technologies developed by MSU researchers, has been shut down by the foundation, BTW learned this week.
According to officials, Spartan Ventures was dissolved because the foundation does not want to “overextend” its resources as it commits more money to basic research and Michigan State University’s recently revamped technology-transfer office.
“The MSU Foundation’s decision to wind down Spartan Ventures was difficult, but necessary,” George Benson, executive director of the MSU Foundation, said in a statement. 
“The foundation is making substantial grant commitments, both to technology commercialization at Michigan State University and positioning the university as a world leader in the new bioeconomy,” Benson added. “Knowing that these commitments are likely to grow over the next three years, and not wanting to overextend our resources, led [us] to [reexamine] the foundation’s role in enterprise creation and the decision to pull back in this area.”
MSUF was established in 1973 as an independent non-profit corporation to help advance MSU through activities like providing grants and funding to support university research and activities, underwriting MSU's intellectual property program, owning and operating the MSU Corporate Research Park, and managing planned gifts to the university.
Last year, as part of reassessing MSU’s technology-transfer strategy, MSUF established Spartan Ventures, though the exact date of its founding is unclear. The company was intended to operate in tandem with the Center for Entrepreneurial Strategy within MSU’s Eli Broad College of Business to help grow and launch enterprises from MSU and the surrounding community.

“The MSU Foundation’s decision to wind down Spartan Ventures was difficult, but necessary.”

According to the MSUF website, Spartan Ventures specifically was responsible for “seeking out and evaluating promising technologies; recommending investments to the MSU Foundation;” building companies and management around the technologies; and guiding the startups “to the next stage of development or financing.”
Furthermore, the startups received seed funding and help developing relationships with banks and other lending institutions, with the goal of securing an IPO, an acquisition, or other profitable exit, with any profits returning to MSUF for later reinvestment.
And, although formal investments were to be made by MSUF, Spartan Ventures had said it was open to what it called “attractive opportunities” coming from any entrepreneur or institution, regardless of affiliation with MSU.
It is unclear whether Spartan Ventures was successful during its brief existence in creating any university-based startup companies through this process. MSUF officials did not return calls seeking comment.
It appears, however, that the decision to shutter Spartan Ventures was more a matter of reallocating resources to where they are needed the most: supporting basic research and technology transfer at MSU. To that end, the foundation said it will still actively support MSU Technologies, the unit within MSU responsible for vetting and commercializing university-developed intellectual property.
“The foundation will support MSU in developing new enterprises through its support of MSU Technologies,” Benson said. “It also will be active in the strong network of regional economic development organizations to foster creation of startup businesses originating from the university.”
Spartan Ventures may have also been rendered superfluous by a much larger initiative in the state of Michigan designed to create and support university startup companies. In July, a consortium of 15 state universities including MSU created the Michigan Initiative for Innovation and Entrepreneurship to leverage philanthropic resources to strengthen university-industry ties, spin out technology companies, and promote an entrepreneurial culture within the state (see BTW, 7/23/2008).
One of MIIE’s first acts was to award 20 grants totaling $1.3 million to Michigan universities for various tech-commercialization and public-private research projects. The MIIE program said at the time that it believes it can yield as many as 200 startup companies in the state over the next decade, and plans to raise and distribute $75 million over the next seven years, primarily through donations from some of the more than 2,200 foundations located in the state.
Spartan Ventures’ dissolution also continues a recent turbulent ride for technology commercialization at MSU. In November, the university named a new director for MSUT and said that it was looking to more than double the size of the office in an effort to revitalize the commercialization of MSU research (see BTW, 11/5/07).
That announcement followed the school’s decision earlier in 2007 to establish MSUT as an official entity, and the subsequent hiring and departure after one month of its first director.
All of this came in the wake of expired MSU patents related to the chemotherapeutic compounds carboplatin and cisplatin, and resultant loss of related royalty streams, which constituted the bulk of MSU’s tech-commercialization revenues.

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