The Way I
See It… by Michael C. Volker
Innovative BC: University Spin-Offs Lead the Way
British
Columbia’s universities are a hot bed of innovation. They produce the creative
talent and the intellectual property which comprise the raw ingredients for a
successful technology venture.
In the mid
1980’s universities across Canada and the U.S. set up technology transfer
offices in order to commercialize their intellectual property and take new
discoveries to the marketplace. At first this was done by finding suitable
business partners who would acquire a license to a technology by paying a
royalty to the university and its inventors.
However,
royalties flowing back to universities were minimal. On average, a return of
less than one percent of R&D expenditures was realized. By creating a
corporation to commercialize intellectual property, the likelihood of success
and the potential return to an institution are greatly increased. This is
because a raw technology requires a great deal of development beyond the
research stages in order to make it commercially viable. A corporation,
properly financed with good management, will also be able to seize new market
opportunities and acquire and develop its own know-how.
An excellent
example of this is QLT Inc. This company got started in 1981 by
licensing technology from the University of B.C. (UBC) in exchange for a
royalty interest. Today, QLT is a world leader and pioneer in developing and
commercializing pharmaceutical products for use in photodynamic therapy, a
field of medicine that uses light-activated drugs to treat disease. Had UBC
taken equity instead of royalties, it would have realized a better payback as a
result of the company’s overall performance.
An executive from
a large pharmaceutical company once commented, “We big companies are very bad
at commercializing early-stage technology. But if your spin-off company is a
success, and the technology is relevant to our business, we will buy out your
spin-off company at almost any price."
UBC and Simon Fraser University (SFU) have created over 150
spin-off companies some of which are now "anchor tenants" in the
Province which in turn spawn new ventures. Last year alone, these institutions
formed some 20 new companies.
Based on new companies created per million dollars of research expended, these
institutions have ranked in the top 10 in North America for several years
running.
Together with
the University of Victoria, the University of Northern BC, and
the Technical University of B.C., these institutions are actively
drumming up new initiatives on the innovation front. The University of
Victoria’s Innovation Development Corp is working with more than a dozen
spin-offs to commercialize their technologies and the Technical University has
created TechBC Corp as its business “front end”.
By
collaborating with each other and in partnering with organizations such as the B.C.
Advanced Systems Institute, the Science Council of B.C., and the Vancouver
Enterprise Forum’s Angel Network, these institutions fuel the growth and
development of their spin-off companies by attracting both the human and
financial capital to these ventures.
Last year,
these collaborations resulted in the establishment of new research and
development centres such as the New Media Innovation Centre which will
provide a pipeline of technologies for new business opportunities.
So, what do
some of the actual spin-offs look like? Here are a few examples.
Cogent
Chipware Inc., one of
SFU’s most recent spin-offs, based on 15 years of research at the Very Large
Scale Integration Computer Design Laboratory, was formed by researchers and
students to specialize in voice-coding technologies for the telecommunications
industry.
Another SFU
company, NeuroStream Technologies Inc., recently received venture
backing from the Working Opportunity Fund and the Business
Development Bank of Canada to develop and produce “nerve cuffs” – a
patented surgically implanted electrode which monitors messages from a
patient’s nerves in order to control prosthetic devices or to bypass
neurologically damaged pathways to facilitate bodily functions.
BandGap
Photonics Inc. is one of
UBC’s latest spin-offs. Founded in 2000 and backed with $5 million in venture
capital from Ventures West, the Working Opportunity Fund and
angel investors, BandGap intends to use photonic crystals for the fabrication
of next generation optical telecom devices.
UBC has also
spawned many life sciences companies such as NeuroMed Technologies Inc.,
Inphogene Biocom Inc., and Kinexus Bioinformatics Corp.
The way I see
it, although the present rate of new venture creation by B.C.’s universities
may be impressive, it’s only the beginning.
Michael Volker is a high technology entrepreneur and director of Simon Fraser U's University/Industry Liaison Office. He is a director of the BC Advanced Systems Institute and the Vancouver Enterprise Forum and runs Vancouver’s Angel Network. He may be reached at mike@risktaker.com.