Business services company LGE Execs will help the Texas Tech University system commercialize its technologies primarily in the agriculture, health, and life sciences arenas, company and university officials said this week.
As part of the arrangement, which is the first broad-based, long-term university commercialization agreement for LGE Execs, the company will provide due diligence and managerial resources to Texas Tech’s Office of Technology Commercialization to turn commercially viable technologies into more attractive licensing opportunities, or to create startup companies around them.
In addition, LGE Execs is in the process of raising approximately $20 million to invest only in technologies emanating from Texas Tech or universities with which it has partnered.
In exchange, LGE Execs will receive an equity stake along with the university in any technology successfully brought to market, Newt Hamlin, a managing partner at LGE Execs, told BTW this week.
“We would be an equity partner in companies that spin out, and would participate side by side with Texas Tech in any success stories we have, and we all can be fully diluted in subsequent capital raises,” Hamlin said.
Such an arrangement wouldn’t necessarily change the type of deal that Texas Tech would normally negotiate with licensing partners, David Miller, vice chancellor of Texas Tech’s Office of Technology Commercialization, told BTW.
“It will vary by technology,” Miller said. “There is an equity interest, and also royalty provisions. We try to take both approaches to keep that balanced so we don’t handicap the company in terms of a percentage of revenue,” he said. “But then we also have the upside of the multiples that might be achieved through the equity play.”
LGE Execs, based in Austin, provides industrial and academic clients with a variety of business services such as supply chain management, product development, engineering, product management and marketing, communications, finance, IP commercialization, board governance, and human resources.
Up until now, LGE Execs has provided only case-by-case commercialization assistance to various academic clients through its technology-transfer program. These clients have included six undisclosed universities in Ireland and the University of Oklahoma, and Hamlin said the company is currently in discussions with a half-dozen other undisclosed universities to provide commercialization assistance.
“While we’ve talked with a number of universities, helped evaluate some technologies, and even been asked to come in and write some business plans, with [Texas] Tech it’s much different,” Hamlin said.
“We’ve been talking with David and his team for close to a year, and we tried not to establish a relationship that would be a one-off deal,” Hamlin added. “Instead, we’ve laid the groundwork for a long-term relationship where we work with them to evaluate the inventions that come out of the different TT universities, and when it makes sense to either help them license those or build companies around them.”
“We’ve laid the groundwork for a long-term relationship where we work with them to evaluate the inventions that come out of the different TT universities, and when it makes sense to either help them license those or build companies around them.”
If it decides to work with Texas Tech to form a startup company, LGE Execs has an internal team of some 90 C-level executives to call upon to help temporarily or permanently manage the startup, and, according to Hamlin, is “a phone call or e-mail away from 10,000 to 20,000 executives around the world” through its personal networks.
“For the most part we are people who have had successful careers and are retired, and got active in mentoring, sitting on boards, or doing angel investments in smaller companies, and found we were too energetic to retire,” Hamlin said. “So LGE brought them out of retirement. And we have a core group of people who are actively involved full time with LGE, like me.”
For its $20 million Texas Tech commercialization fund, LGE Execs expects to raise contributions from primarily local and regional individuals, corporations, and private equity firms. According to Hamlin, contributors are likely to be people who have three objectives:
“They want a good return on their investment like any other investor; they have an interest in seeing Texas Tech technologies succeed; and they are interested in developing jobs and a good reputation for the region of western Texas,” where Texas Tech’s main Lubbock campus is headquartered.
For Texas Tech, the partnership provides the school with access to a potential ready-to-go executive team and potential funding in a region of the state and country that traditionally has lacked such resources, at least compared with universities located in major metropolitan areas, Miller said.
“LGE Execs brings to the table 90-plus executives that can come in and create a company and get it operating fairly quickly,” Miller said.
And although the school has its own internal and external resources for vetting its researchers’ IP disclosures, “there is no better due diligence that we can find — even that we can pay for — than having existing management partners vet an idea through their contacts. Then it is more specific to whether there is a niche in the marketplace,” Miller added.
Although they only formally announced the partnership last week, Texas Tech and LGE have already reviewed many of the technologies the university has to offer, and is in the process of forming its first venture around a trio of inventions that could improve reproductive methods in livestock.
“One invention greatly increases the time in which semen for artificial insemination can be used after it is collected,” Hamlin said. “The second [invention] gives them the best possibility of anything on the market of determining the sex of the cattle. And the third invention is a series of media for storage that allows all these things to happen.”
Miller said the university and LGE Execs plan to provide additional details surrounding this venture in the coming weeks.
Miller and Hamlin did not provide examples of other possible areas of collaboration, but according to a statement, Texas Tech and LGE Execs are eyeing the commercial viability of a treatment for Alzheimer’s disease, as well as licensing opportunities in the areas of alternative energy from wind, solar, and biofuels; cancer treatments; nanotechnology; computer sciences; and industrial materials.
Miller said that the university doesn’t expect LGE Execs to run with every technology coming out of its laboratories.
“When we see something that we prioritize as promising, we get [LGE Execs] involved at an early stage to see what their interest is,” Miller said. “Sometimes they look at it pretty quickly and say, ‘No, it doesn’t match our time frame to cash, or risk tolerance, or what not,’ although it may be a viable idea. Some of the ones that they’re not interested in may be right for another partner.”
But in some cases, the relationship with LGE Execs may help uncover gold nuggets that the university didn’t even know it had.
“Sometimes we will have an idea that is so new to our office that it hasn’t been vetted,” Miller said. “One just came up this week, and we don’t even know what the IP protection portfolio looks like, so we’re doing prior art searches now simultaneous to some due diligence.” Miller declined to elaborate on the nature of that invention.
That adds a lot of value, Miller added, because many times technologies “through no ill-will or fault of the university, can sit for a couple of years before they are effectively moved toward the marketplace. Through partnerships like this, we hope we can effectively speed up that process.”