University Spin Game
Success is rare and slow for spinoff companies, but the potential rewards -- visibility and income - keep schools playing.
A decade ago, University of Florida professor Jamie Grooms and partner Richard Allen formed Regeneration Technologies, licensing Grooms’ UF research on bone tissue grafts as a mechanism to help patients regenerate their own natural tissue. As typically occurs when a university spins off a company, the school receives ongoing royalties and, in UF’s case, got an equity stake in the firm in exchange for allowing the company to use the technology. Since the company went into business, the university has reaped $70 million from RTI, including $25 million of the $75 million the company raised in its initial public offering in 2000.
That level of success is rare, however. Profitability figures aren’t available for the 133 companies spun off by Florida universities between 2000 and 2006, but university officials estimate that at least 20% of the firms are no longer operating.
Currently, UF, Florida State University, the University of South Florida and the University of Central Florida are the most active in the spinoff game, collectively generating some 20-plus spinoffs each year for the past five. Tom O’Neal, associate vice president for research and commercialization at UCF, says more of his school’s faculty have become interested in commercializing their technological and scientific research. Spinoffs, he says, are “where more real wealth is created.”
Because of the scope of research needed, the cost of intellectual property protection and the time and money it takes to evaluate the commercialization potential, it’s unlikely that many more Florida schools will jump in. For the schools already on the playing field, however, the potential visibility and income from successful spinoffs create incentives to stay in the game.
Some colleges, including the University of Miami and Florida Atlantic University, are ramping up their efforts. At UM’s Miller School of Medicine, Vice Provost for Technology Advancement Bart Chernow has set up UM Innovation to help package and market the university’s technology. He hopes to begin work this year on the first of three stages of a 7.2-acre life science park near the med school with about 1.4 million square feet of lab and office space for UM spinoffs as well as non-UM companies. Says Chernow, “By having other life sciences companies here, we create synergies.”
To help universities commercialize their technologies, the 2007 Florida Legislature set up the Institute for the Commercialization of Public Research and provided $1 million in funding under the auspices of Enterprise Florida, Florida’s economic development partnership. The institute will augment the work of tech transfer offices and will help market the research to angel investors and venture capital companies.
Successful spinoffs, university and state officials say, will also serve as talent pools for future companies. Allen, the co-founder of RTI who guided the company through its IPO, is controlling the reins of a new UF spinoff, Xhale (page 77). Says UF’s Day, “It’s only going to get better.”