UA follows the money it takes to go from laboratory to market
Posted: Friday, Mar 30, 2007 – 02:18:50 pm MDT
Inside Tucson Business
It’s one thing to innovate. The next trick is to find the money to take it to the next level.
As part of its Innovation Day, the University of Arizona’s Office of Economic Development brought together entrepreneurs with the investors who make technology transfer possible.
Discussing their experiences, Leon Barstow, founder of three Vega Biotechnologies, Protein Technologies and Protein Therapeutics, along with Jim Butler, co-founder and managing member of HJ3 Composite Technologies, and Elaine Jacobson, chief operating officer of Niadyne, described them as “the good, the bad and the ugly.”
The same was true for Butler. He said, “I expected we’d build a business plan and the venture capitalists would want to snap us up.” Instead, he said “we bootstrapped” with credit cards and loans from family and friends.
On his third start-up, Barstow said he’s had the support of the venture capitalists, but his experience has been that the greater their involvement, the smaller the share of decision-making left for the founder.
That’s not unusual, said Robert Morrison, executive director of Desert Angels, an early-stage venture capital group in Tucson. He said most companies start with the “four Fs,” of family, friends and fools.
That’s the way it should be. “It’s only when you need a major piece of machinery that you need an angel.”
Even then, the best angel should become a partner, investing talent and time, as well as money. Morrison said he looks for “real business. I look at the quality of the solution. Does it solve a real problem? Then I look to see if it’s economically sustainable and scalable. If there are only a handful of potential customers, how are we going to grow?”
Whatever the available funding options, including federal Small Business Innovative Research (SBIR) and Small Business Technology Transfer Research (STTR) grants, Stephen ONeil, manager of special projects and outreach services for the Office of Technology Transfer, said the university is willing to work with them to establish patent licensing rules designed to encourage success. “We’re willing to work with anyone, because we want to see the technology reach the market.”
Offering her insights as keynote speaker at the Technology Innovation Awards luncheon, Daphne Zohar, founder and managing partner of PureTech Ventures, said with the decline in initial public offerings, early stage funding is down. That’s the good news.
Good science isn’t necessarily good technology, and a good business can’t be based on anything else. Instead, she encouraged potential entrepreneurs at the university to watch for two critical factors before starting. “First, it should meet a significant unmet need. Second, you should be able to identify milestones and reach them.”
If these factors are in place, along with a substantial and patentable foundation, she said the angel capital will be there. “More funding is going to be going to more companies based on authentic innovation.” For those without it, the venture capital market isn’t there, but for the ones who can meet the test, “I believe this will be an important and exciting time to be in business.”
E-mail comments for publication to email@example.com. Contact Philip S. Moore at firstname.lastname@example.org or at (520) 295-4238.