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U of Arizona OTT, Pacific Northwest VC Shop Aim to Develop Startups Based on UA Inventions

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The University of Arizona Office of Technology Transfer said yesterday that it has signed a memorandum of understanding with Pacific Northwest-based venture-development firm the University Funds to create startup companies based on research at the university.

UA is the seventh academic institution to partner with the University Funds, or UFunds, which is currently in the process of reviewing research and intellectual property from its partner institutions with the goal of forming 10 companies.

Each of these shops will receive backing from UFund's $50 million investment fund, Jim Torina, UFunds co-founder and CEO, told BTW yesterday.

And though UFunds is targeting investments in several industry segments, a significant portion of its ventures will fall into the life-sciences bucket, with a focus on vaccines, plant and animal science, medical devices, and applied materials, Torina said.

UFunds, based in Bellevue, Wash., is "not interested in building billion-dollar molecules," Torina said.

Instead, it will focus its investments on four major areas: human life sciences, including healthcare and medical devices; food sciences, including animal sciences related to the food chain; alternative energy and related green technologies; and software, in particular enterprise and web-service applications related to the above sectors.

"We have several interests in vaccines, plant and animal studies, and diseases that can be transferred from animals to humans," Torina said.

He added that he also personally has a strong interest and background in medical devices, and that UFunds is "also looking at applied materials and new inventions that are devices that may not be medical but change the way people use items." He did not elaborate.

Patrick Jones, director of the University of Arizona OTT, told BTW that he expects UFunds to take a close look at UA's portfolio of life-science research and intellectual property, particularly at the crossroads of biomedical and engineering research at the school.

"I expect them to be interested in medical devices, diagnostics — something that's a little quicker to market and perhaps will intersect with some of their other focus areas a little more," Jones said. "One of the reasons they want to interact with us is that our College of Optical Sciences intersects very strongly with medical and imaging technologies."

He also said that "some of the stuff we're doing in our College of Pharmacy in the area of pharmacy services and support; and in health sciences, information systems, diagnostics, and medical devices, are probably the areas" in which UFunds will be most interested.

Jones added that he doesn't expect therapeutics to be considered for venture startups through UFunds because "the requirements to put together a killer therapeutic company [are] hard, and the road is long, and it's really not where venture is going as strongly these days."

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Torina, a serial entrepreneur with experience founding companies in a wide range of industries, co-founded UFunds late last year with Patrick Murphy, another entrepreneur with an IT-rich background.

The company's model combines a venture fund with a business accelerator that provides "interim executives, shared services, and other contract resources to support the formation and growth of" its portfolio companies.

"We work closely with the institution and its professors in helping them guide research, and making modifications to the basic research to create a better market opportunity," Torina said. "We might say, 'Turn this research 5 degrees in this direction, and you may have a million-dollar market opportunity.'"

Torina said that UFunds will initially make investments using $50 million in funds compiled from other undisclosed "investors, certain partners, foundations, and other high net-worth individuals." It is currently contemplating forming 10 companies from its seven partner institutions: UA, Washington State University, the University of Washington, Pacific Northwest National Laboratory, the University of Idaho, Oregon State University, and the University of Utah.

UFunds offers what it calls a "progressive model" that combines early-stage financing with ready-to-go management teams and access to professional services such as IP lawyers.

"The resources that this partnership brings to the problem help tremendously, and the connectivity is also a big part," Jones said. "It really is about putting the right teams and discipline around the companies very early in a very structured manner. It won't solve every tech-transfer opportunity — and certainly we produce a broad range of opportunities — but these types of partnerships can really aid tech-transfer offices."

The main difference between UFunds and a typical VC firm is that the latter will typically "build around the opportunity, and they'll informally have their network of people and CEOs and others available," Jones said. By comparison, he added, UFunds "pre-packages a lot of that. The venture accelerator will have the C-level personnel basically committed and in-house, and they'll be looking at more than one opportunity."

Jones said that another possible benefit of working with UFunds is exploring the idea of pooling intellectual property with its other academic partners to create startups with a stronger, broader, IP portfolio.

"There may be an opportunity to bundle technology because in certain areas we already collaborate with some of the other partners," Jones said. "A lot of people talk about bundling, and it's difficult to do at times, but this is something we're excited about exploring."

And though all of UFunds' university partners are located in the Western US, within a short flight of the firm's Washington state digs, Jones said UFunds will strive to keep the companies it forms near the institutions from which they are spun out. This could be a particularly salient point for areas such as Tucson, where UA is located, which has been making a concerted effort in recent years to spur regional economic development through university innovation and company formation.

"In the early stages, where technology needs to be close to home, there will be a strong tendency for those companies to form locally," Jones said. "The accelerator doesn't need to be a physical place. A startup needs access to something akin to, for instance, a chief financial officer, but doesn't need one at the beginning in-house, full time. There are a lot of resources in the early stage that can be shared in a coordinated fashion and allocated appropriately, and that includes certain aspects of management personnel."

Torina added that "in the beginning that's how we'll do it, but what makes the most sense for the company will drive what we do. This is definitely a for-profit venture."

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