28 Feb Will tech transfer save Wisconsin's economy?
With the thousands of manufacturing jobs that have vanished all through the industrial areas of the Midwest, chasing more smokestack industries is a fool’s errand. Instead, efforts are underway to develop a new breed of companies based on the technological inventions coming out of Wisconsin’s institutes of higher education and private industries.
Several economic development entities have sprung up with the intent of assisting these technol with high growth potential. Corporate Report Wisconsin magazine looked at four of them to evaluate how they are doing. Are we getting enough new-economy bangs for our old-economy tax bucks?
Wisconsin Governor Jim Doyle has made economic development a top priority, as did the two governors before him. He told Corporate Report Wisconsin magazine in an interview last March, “We know that in Wisconsin we are a tremendously creative state and ranked in the top 10 in the number of patents that are created. The real gap that everybody has identified is helping the scientist or the researcher who’s got the great idea to get it out of the laboratory and into the marketplace, and we are very much focused on that.”
Most of Doyle’s “Grow Wisconsin” plan has been passed by the Legislature, including speeding up permitting and encouraging more venture capital.
On the policy level, the most visible and vocal of the new development entities statewide is the Wisconsin Technology Council. The council came from the new-economy-boosting ideas of former Governor Tommy Thompson before he joined the cabinet of President George W. Bush as health and human services secretary in 2001, and was funded that year by the Legislature to formulate long-range plans for developing new businesses in Wisconsin based on science and technology. WTC President Tom Still has a broad overview of where the new economy is headed.
“The smokestack-chasing model may have actually worked for a while,” Still said. “Wisconsin continues to have such a great manufacturing workforce that this was a natural place to look.
“What you are seeing now is more innovation-based strategies — not looking for next branch plant, but looking for the right idea, the right science and the right technology.”
Still sees promise both in building on UW-Madison’s powerhouse status in the biomedical and genetic research, and bolstering industrial sectors that have historically supported the state.
“I don’t think Wisconsin can afford to put all of its eggs in one technology basket,” he said. “We have opportunities in so many different sectors.”
Still agrees that Wisconsin has a head start in the life sciences such as biotech, medical devices and equipment, agriculture life sciences, and bioinformatics, but he also sees other industries that could benefit from high-tech and biotech innovations.
“I think some exciting technology will come out of forest products,” he said. “The paper industry may become a fiber and energy industry instead of just a fiber industry. There are huge opportunities in advanced manufacturing. And IT is a strength in Wisconsin with companies like Metavante, Fiserv, Berbee and Sonic Foundry.”
With WTC sponsoring many outreach efforts, Still has ample opportunities to spread the new economy gospel. WTC’s 43 volunteer board members have come up with a strategic plan for increasing the number of high-tech jobs in the state an average of 5% a year through 2020. WTC operates four Wisconsin Innovation Network branches around the state where local entrepreneurs can get together for networking and to hear speakers. WTC also puts on the annual Life Sciences and Venture Conference in Madison, and the Entrepreneurs’ Conference in Milwaukee.
|Mission||Created by the Legislature to form a master plan for developing science- and technology-based businesses in Wisconsin, because growing tech-based economy means more high-wage career opportunities for Wisconsin citizens.|
|Funding||Base funding of $250,000 per year in 2000/2001 state budget and in the 2002/2003 budget. Matching funds generated from donations of private companies.|
|Results||Holds annual Life Science and Venture Fair in Madison, and Entrepreneurs’ Conference in Milwaukee. Expanded Wisconsin Innovation Network meetings from Madison to Milwaukee, Fox Valley, and Eau Claire. Developed strategic plan for state.|
The Center for Advanced Technology and Innovation in Racine commercializes technologies developed by Wisconsin and out-of-state businesses, giving new life to patents that these companies have sitting on the shelf.
“We work in two primary areas,” CATI Director Matt Wagner said. “We acquire technologies from private industries, and we have a new initiative partnering with corporations that have core technologies that have other applications within non-competing industries.”
This can provide revenue for the owner of the invention while helping to build new companies based on that technology.
According to Wagner, CATI is already the second-largest entity of its type in the country. Number one is the Mid America Commercialization Center affiliated with Kansas State University.
CATI is not affiliated with an academic entity, but rather is an offshoot of the several economic development organizations in the Racine area. CATI is closing in on $50 million in intellectual property assets thanks in part to donated intellectual property from companies like Kraft, S.C. Johnson, and ISP, a specialty chemical company.
|Mission||Focus is on commercializing orphaned and underutilized technologies. Works primarily in Racine County but may expand beyond county borders at some point.|
|Funding||Base funding of $600,000 in the 2000/2001 state budget and $200,000 in the 2002/2003 budget. Other funds: $125,000 from the U.S. Economic Development Administration; $125,000 from the U.S. Department of Commerce (9/04); Royalty fees from private industries in exchange for technical assistance, licensing of CATI-owned technology and technology commercialization fees.|
|Results||In the last 12 months, CATI launched three new companies and provided technical assistance to nearly 20 companies. In total CATI has attracted more than $40 million in intellectual property assets to the state from global companies such as Kraft, ISP and Boeing.|
Like CATI, the Center for Technology Transfer Inc. in Madison works extensively with existing industries and has a track record of winning government grants for companies, as well as advocating for state funding to keep enterprises going during grant application processes.
While CATI concentrates on southeastern Wisconsin strengths including heat transfer, consumer products and industrial coatings, CTT works with energy-intensive industries statewide including forest products, food products, water and wastewater treatment, metal casting, and chemicals and plastics, among others.
“It is so interesting that regardless of which company we talk to, they are always interested in research and development and technologies that will save energy,” CTT President Masood Akhtar said. “The challenge is that it takes a lot of time to get permits from the Wisconsin Department of Natural Resources, and that is a barrier in commercializing these energy-saving technologies.”
An example of the kind of companies CTT has helped is Madison’s Virent Energy Systems LLC, which has developed a renewable method to make hydrogen from the sugars in corn and other plants. The hydrogen can then be used in fuel cells as a source of pollution-free electric energy for many uses.
Akhtar met with Virent’s founders and expressed concern that the company’s focus on hydrogen-powered cars was too long-term and they needed products that could be marketed sooner. CTT helped Virent secure $550,000 in state funding to match a $2 million federal advanced technology grant. Some of that was used to hire an experienced CEO to help assess the markets.
|Mission||Serves as a one-stop-shop for commercialization of new energy-saving technologies, helps established and early-stage companies move new technologies from discovery to successful implementation in the marketplace.|
|Funding||Initial funding of $300,000 in June of 2002 from Wisconsin Department of Administration’s Focus on Energy program. Ongoing funding from Focus on Energy and the U.S. Department of Energy.|
|Results||CTT’s $3.5 million investment fund provides equity, low-interest loans, or both for technologies that will decrease energy usage in Wisconsin. Has helped finance several new companies and helped secure state and federal funding for others.|
Techstar in Milwaukee works to commercialize technology developed by academic institutions in southeast Wisconsin, acting as a counterpart to the Wisconsin Alumni Research Foundation, which patents and promotes UW-Madison research developments. Techstar’s member institutions include Marquette University, the Medical College of Wisconsin, the Milwaukee School of Engineering, UW-Milwaukee, and UW-Parkside.
Techstar has successfully spun out several companies, most of them related to health care. The two managing directors, Lane Brostrom and Brian Thompson, both have MBAs. In addition, Brostrom holds a doctorate in physics while Thompson earned a master’s degree in mechanical engineering.
“Our background means we can get up to speed on the science behind a company or product in a hurry,” Brostrom said. “We can do the necessary due diligence on the feasibility and marketability of a new product.”
In September of 2004, Techstar announced the formation of the Biomedical Technology Alliance, a group that will facilitate joint research between its member institutions.
According to Brostrom, an organization like BTA is necessary to allow the collective universities and colleges in southeast Wisconsin to work together, as do the various departments and entities that make up UW-Madison.
“Madison is cool because they have a lot of different disciplines and strengths under one roof,” Brostrom said. “Southeast Wisconsin has some of the same resources, but not all under one roof. If we bring these resources together, we will have an easier time funding early-stage research and encouraging collaboration.”
While Techstar’s involvement will diminish once BTA is able to hire its own staff, Brostrom said his organization will benefit down the road as more research creates additional opportunities for commercialization of technologies.
Funding the BTA will also be a challenge. Brostrom said Techstar would seek $10 million from state and federal sources to fund the initiative.
Meanwhile, the challenge of bridging the gap between academia and business remains, according to the Tech Council’s Still, who likened the process to a dance where the boys and girls are still standing at opposite sides of the school gym.
“The music is playing and some dancing is starting to take place,” Still said. “WARF and Techstar are starting to waltz with the business community.”
|Mission||Goal is to stimulate entrepreneurship, facilitate technology transfer, fund new companies and invigorate the local economy. TechStar is a collaboration of the Medical College of Wisconsin, UW-Milwaukee, UW-Parkside, Marquette University, the Milwaukee School of Engineering, and the Metropolitan Milwaukee Association of Commerce.|
|Funding||Initial funding in September of 2003 from Milwaukee Metropolitan Association of Commerce until $1.5 million from the Wisconsin Department of Commerce appeared. Additional DOC funds of $300,000 granted in August of 2003. In January 2004, Techstar received $300,000 in federal funding, and in September received $1.2 million from DOC and Milwaukee Economic Development Corp.|
|Results||Helped launch 14 university spin-off companies employing more than 60 people. Has helped companies secure $7 million in grants and has amassed $11 million in equity in affiliate companies. Working to raise $20 million for its for-profit TS Early Ventures fund to invest in a number of start-ups.|
Leading in life sciences
CATI’s Wagner stressed that while UW-Madison is a leader in life sciences and stem cell research, the rest of the state may benefit more from efforts to build on Wisconsin’s historical strengths in manufacturing.
“I do believe that within the medical industry we have some strengths,” Wagner said. “But do those strengths extend to every part of the state? No. You just don’t have the infrastructure. In the meantime, other states have these huge biotech initiatives, and you have to wonder whether it makes sense to follow a fad and compete with that or build on what you already have.”
Brostrom disagreed, saying, “I don’t see any diminishing demand for health care.”
Still warned against underfunding tech transfer in the life sciences.
“We have at least 100 years of investment in life sciences,” Still said. “In 1900, the University of Wisconsin was one of the founding members of the first association of research universities in the country. Wisconsin focused on life sciences and in 1918 founded the first genetics department in the U.S. Other states are scrambling to catch up to what we have built and are trying to create life science sectors out of less than whole cloth.”