Kauffman Foundation Analyzes New Approach to Moving University Innovations to Market and Filling Seed-Stage Funding Gap

An emerging approach to identifying, funding and commercializing university-based innovation is proving quite effective at seeding new companies, according to research conducted by the Ewing Marion Kauffman Foundation and the Max Planck Institute of Economics.

According to the Kauffman Foundation, “proof of concept centers” are an effective vehicle to help launch the commercialization of university innovation and to fill the seed-stage funding gap for new technologies.

Proof of concept centers provide seed funding to university-based early stage research as well as a host of advisory services and educational initiatives to assist students and faculty with market research, mentoring, development and testing of innovations, preparation of business plans and connections to the commercial market.

The report examines two such centers, the Deshpande Center at MIT and the von Liebig Center at the University of California San Diego.

According to researchers, since the two centers’ creation in 2002, they have collectively awarded nearly $10 million in seed grants and launched 26 seed-stage companies that have accumulated more than $159 million in private capital. Both centers are funded from philanthropic donations.

The lessons learned from the proof of concept study have led the Kauffman Foundation to form a network that will bring centers together to study best practices, establish metrics and define points of future research. The Deshpande and von Liebig centers will be founding members of the new network.

“The centers’ successes and strategies provide a promising model for replication, and this network will help advance this new approach,” said Lesa Mitchell, vice president of Advancing Innovation, Kauffman Foundation. “The network will help them to share strategies such as how to help grantees leverage more capital for their technologies.”

“By legitimizing a researcher’s technology, these centers enable and accelerate the acquisition of private capital for university technology,” said Christine A. Gulbranson, director, Advancing Innovation, Kauffman Foundation, and one of the paper’s authors.

“Proof of concept centers assist with the exchange of ideas between the university innovations and industry,” said David B. Audretsch, director, Max Planck Institute of Economics. “Providing mentors with experience in innovation and industry connections help link faculty and students to external networks.”

The report also provides an outline for other universities to use in replicating proof of concept centers.

According to the report, a successful proof of concept center benefits from locating at universities that produce innovative and marketable technology, are located within a strong external network of investors and innovators and have an administrative team and advisors with a depth of commercialization expertise. A unified approach of providing seed funding, advisory services with industry connections and educational initiatives also is vital to ensure the commercialization of university technology.

A copy of the paper can be downloaded at www.kauffman.org/poc. In addition, an analysis of the Kauffman Foundation report will be published in the June 2008 issue of The Journal of Technology Transfer.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation of Kansas City is a private, nonpartisan foundation that works with partners to advance entrepreneurship in America and improve the education of children and youth. The Kauffman Foundation was established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman. Information about the Kauffman Foundation is available at www.kauffman.org.

About the Max Planck Institute of Economics

The Max Planck Institute of Economics conducts research on a broad set of problems relating to change in modern economies, including experimental economics and entrepreneurial studies. Located in Jena, Germany, the Institute is part of the Max Planck Society for the Advancement of Science, Germany's largest research organization. The Max Planck Society employs some 4,200 researchers in some 80 institutes in both the sciences and the humanities.