University of Michigan reports all-time high mark for technology deals
The University of Michigan struck 101 technology licensing deals with businesses and startup companies during its 2010-11 fiscal year, reflecting the most active year for deals in the Technology Transfer Office's history.
U-M Technology Transfer Office executive director Ken Nisbet (center), Michigan Venture Center director Jim O'Connell and Tech Transfer licensing director Robin Rasor stand outside the new Venture Accelerator at the former Pfizer site.
Lon Horwedel | AnnArbor.com
The Tech Transfer Office — which is responsible for commercializing intellectual property created by U-M faculty members — also spawned 11 startup companies in 2010-11. That was up from 10 in 2009-10 and eight in 2008-09. The office has created 104 startups over the last 11 years.
Ken Nisbet, executive director of the Tech Transfer Office, said the results were particularly encouraging because the sluggish economy has caused venture capitalists and corporations to conserve cash.
"Having the success we've had in this market is astonishing," he said. "We're trying to provide opportunities to people to break through this cycle."
The Tech Transfer Office received about $16 million in revenues from its licenses and equity stakes in 2010-11. That was down from $39.8 million in the previous year, when revenues were inflated due to a one-time royalty payment connected to the university’s decision several years ago to license the FluMist vaccine.
"We're still happy with that because it represents funds that come back because of successful products in the marketplace," he said. "That money is being reinvested back into these research and tech transfer activities."
Among the most high-profile startups the university founded last year was Life Magnetics, which is developing a diagnostic product that helps hospitals expeditiously determine a patient's bacterial response to antibiotics.
Life Magnetics recently recruited a high-profile entrepreneur to be its CEO: former HandyLab and Accuri Cytometers CEO Jeff Williams, who is also leading U-M startup Tangent Medical Technologies.
Life Magnetics also secured a venture capital investment from Ann Arbor-based Arboretum Ventures and moved into the Tech Transfer Office's new Venture Accelerator, a 16,000-square-foot business incubator for U-M startup companies.
The Venture Accelerator, which is located in a former Pfizer building at U-M's North Campus Research Complex, is already at 50 percent capacity.
Nisbet said 10 companies are based at the Venture Accelerator, and another four are close to moving in. He expects it to be full by early 2012 — more than a year ahead of schedule.
U-M faculty reported 322 technological discoveries in 2010-11 and filed 122 patent applications. They received 82 patents.
The Tech Transfer Office is celebrating its 2010-11 performance with its annual event, Celebrate Invention, which will take place 3-6 p.m. Oct. 19 at the Michigan League.
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Comments
Chase Ingersoll
Mon, Oct 3, 2011 : 7:07 p.m.
I really like Stephens analysis of the Washington DC laws that enable Wall Street to walk away with the businesses that are developed on Main St. Likewise the current business and estate tax laws written by the lobbyists for the large companies, inhibit the smaller companies growth. Warren Buffett / Bershire Hathaway is a prime example of a beneficiary of this not so level playing field, as he is given preference to cheaply borrow "created money" (Federal Reserve), that he then uses to purchase family businesses out of estates that can't afford to pay the estate taxes, which this year are at 35% with a $5M exemption, but which are back up to a 55% rate and only $1M exemption by 2013. Now $5M or even $1M may seem like all of the world to many of us, but take any operation with 100 employees and it is likely sitting on real estate assets of $1-5M. So let's say that with the land, inventory, equipment and contracts that the business is valued at $25M. Their heirs then exclude $5M due to the real estate and then have to come up with 55% of $20M from a local banker, to buy their business back from the Federal Government. So, even if a Warren Buffet doesn't come along, the Heirs are hard pressed not to sell out to a competitor who is going to liquidate the inventory, assets and employees while they have the inside track to capture the client base.
Stephen Lange Ranzini
Sun, Oct 2, 2011 : 1:50 p.m.
(My entire comment didn't fit in one post so here is the rest) Our political leaders of both parties in DC sold us out in exchange for Wall Street's campaign contribution money over the past 20 years while these laws and regulations that undermine the business model of small IPOs was implemented and if we don't fix this problem, Ann Arbor will not actually grow jobs but merely serve as a small company incubator from which other states and other countries derive all the long term job creation benefit from. Then, if any of our few remaining existing large firms or God forbid U-M run into financial trouble (all companies have a life cycle, witness Borders at one time was our largest local private company employer), the local economy will continue to stagnate.
Stephen Lange Ranzini
Sun, Oct 2, 2011 : 1:30 p.m.
This is all great! U-M's tech transfer and business incubator departments are doing great work! The only problem I see is what happens when these venture capital backed firms get to the 5th to 7th year after formation and the VCs have to exit? Well it used to be that the more successful firms worth at least $25 million would get to the next level and go IPO and list on a stock market. They would then stick around and grow continuously for decades locally. Now the securities rules and regulations are written in such a way as to discourage all but mega IPOs over $1 billion. In the past 5 years Michigan has had 3 IPOs in the entire state and two of those were GM and Delphi, not exactly a real IPO, but a return to the stock market after bankruptcy and radical downsizing. Ann Arbor over the last few years has had three of it's most promising U-M tech spin-out venture capital backed firms sold, in each case for more than $25 million, because the IPO route wasn't available to them to take out the venture capital funds needing to exit a 5+ year investment (ones older than that are known as "zombie investments" and hurt the VC firms ability to raise new funds). One of those three local firms (bought by a competitor with an inferior product) was then shut down to kill the technology, one had its manufacturing operations and 100 jobs relocated to New Jersey by the buyer and all but the sales and marketing people were fired, and the jury is out on the results of the third firm that was sold.
DonBee
Sun, Oct 2, 2011 : 12:34 p.m.
How many licenses were to Michigan companies? How many to US companies? How many to companies that have no presence in Michigan or the US?
xmo
Sun, Oct 2, 2011 : 12:14 p.m.
Hooray! New small companies which will eventually hire people. This is how the south-eastern Michigan area became great about 100 years ago.