What does it take to be a faculty entrepreneur?
In the popular Star Wars film “The Empire Strikes Back,” the wizened green Jedi master Yoda’s words of wisdom to his protégé Luke Skywalker could be the mantra for successful entrepreneurs: “Try not. Do or do not. There is no try.”
Several on the University of Missouri College of Engineering faculty are “doing,” having launched businesses based on their research breakthroughs. What follows is an examination of how faculty launch start-up ventures and a look at a handful of some of engineering’s adventurous risk-takers’ efforts, in various stages of development.
How does it work?
When an MU researcher comes to a point when he or she believes an innovation arising from their research is patentable, they file an intellectual property disclosure. Such a disclosure kicks off a review by MU’s Office of Technology Management and Industry Relations (OTMIR), which includes an assessment of the patentability and the marketability before a decision is made to file a provisional patent application. According to Wayne McDaniel, OTMIR associate director, 75 to 100 inventions are disclosed each year at MU, and about 60 percent lead to provisional patents. These temporary patent applications serve as placeholders for one year.
By policy, inventions by faculty at the university are assigned to and become the property of the university. Before the university invests between $10,000 and $30,000 or more for a utility patent application, a business case must be made to justify this investment. Is the invention novel, non-obvious and useful? Can it be differentiated from something that already exists? Does it take current technology to the next step? Is there a market? Can it be commercialized?
McDaniel and colleague Brett Maland, senior licensing and business development associate with OTMIR, serve as the intellectual property-licensing unit (IPLU) in the College of Engineering. They are responsible for making a recommendation to Chris Fender, director of OTMIR, who makes the final file or don’t-file decision.
Once a patent application is filed, commercialization can take one of two paths. Either the IPLU works with the researcher to identify established companies that want to license the technology from the university, or the researcher can license it from MU to develop his or her own company. McDaniel and Maland are responsible for most of engineering’s “tech transfer” negotiations and contracts.
What does it take? Where do you get it?
“We start working with researchers when they are just thinking about ideas,” said Paul Bateson, technology commercialization counselor with the University Center for Innovation and Entrepreneurship (UCIE), a Missouri Small Business and Technology Development Center that is part of MU Extension, located in Lafferre Hall. “They find us after they make a disclosure, often with a referral from OTMIR.”
Bateson and Jim Gann, the center’s director of technology business development, work directly with entrepreneurial clients through concept, development and commercialization phases. Bateson explained that clients must juggle the technological, marketing and business development stages of their venture, giving each equal weight as they proceed.
The inherent risks in entrepreneurial endeavors are not for the faint of heart. No matter how fabulous the technology, unless there is funding capital — and usually lots of it — there is a definite possibility that the venture will go nowhere fast. A time investment at least equal to an additional full-time job also comes with the territory.
Funding can come from a variety of sources. Independently wealthy entrepreneurs — or those with generous families — are ahead of the game.
The UM System offers a variety of support and funding programs — through competitive application processes — including Faculty Innovation Awards, a Fastrack program, an Interdisciplinary Intercampus Program and the Enterprise Investment Program (EIP), among others (umsystem.edu/fundingopps).
A couple of federal grant programs are available for small innovative technology businesses like those launched by MU Engineering faculty. Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are administered under the umbrella of the federal Small Business Administration. UCIE provides application assistance. Projects under both grant programs proceed through three stages with federal grant support available for the first two – proof of concept and commercialization R&D. The grantee company must fund the final stage in taking products to market. The SBIR program is aimed at “qualified small business concerns,” and STTR is for “small businesses in partnership with nonprofit research institutions.”
The primary source of available investment capital to seed early stage start-up companies is angel investors. Angel investing is a term used to describe private financial support from wealthy individuals or organized angel groups who are investing their own money.
Centennial Investors is an angel investor network in Columbia, Mo., located at the MU Life Science Business Incubator at Monsanto Place. The group was formed to “meet the early capital needs of university and private sector entrepreneurs.” Such a group is able to take advantage of the opportunity to join with others of the same ilk to invest in early-stage companies. In addition to infusing start-ups with needed funding, angels offer fledgling companies mentoring support and validation of business concepts.
Missouri Innovation Center (MIC) manages the Life Science Business Incubator and the business incubation program, a non-profit organization that has been helping start-up companies in mid-Missouri since 1984. Although a legally separate entity, MIC has had an affiliation agreement with the university for almost 30 years. This public-private partnership brings private sector perspectives and expertise to the business of starting and nurturing companies. More than 13 engineering-related companies call the business incubator home.
“The incubator is about much more than rental space,” said Jake Halliday, president and CEO of MIC, who referred to it as “a complete ecosystem of resources that young companies need for full-cycle technology commercialization.”
“We offer a variety of services for our resident companies,” said Halliday. “Centennial Investors is right here as a source of investment capital and a small army of MBA candidates from the [MU] Trulaske College of Business supports market research and analysis of the competitive landscape for resident clients. Legal externs are provided by the MU School of Law and two law firms from Kansas City provide pro bono office hours on-site.”
Halliday said that affiliate mentors in diagnostics and medical devices travel from Kansas City and St. Louis to coach incubator companies and an FDA regulatory specialist and a grant writer are also available for consultation. Plus, MIC’s counselors provide ongoing coaching for the startups, and OTMIR, which is headquartered at the incubator, hosts workshops and events of interest to faculty entrepreneurs.
Another eventual infusion of development and operations funding are venture capital investments, generally made by a group of wealthy investors or financial institutions once it is clear the technology is advancing toward commercialization. These cold cash investments often come with “warm body” investments — people with technical and managerial expertise. Venture capitalists take a more active role in company decisions and also receive a portion of the company’s equity.
A sampling of those who are “doing”
More than 20 engineering faculty members have taken the entrepreneurial plunge in an attempt to commercialize what is essentially their life’s work. The fact that their success may result in tidy financial gains is sometimes less an incentive for such risk-taking behavior than their desire for their invention to have the benefit to society they have envisioned.
The following five start-up profiles are intended to give a flavor of the truly impressive research that originates from the diverse and talented scientists who work and teach at the University of Missouri’s College of Engineering that may eventually benefit you or someone you know.
Entrepreneurs: Marge Skubic, professor with joint appointments in electrical and computer engineering and computer science, and collaborator, MU Curators’ Professor Marilyn Rantz, Helen E. Nahm Chair at the MU Sinclair School of Nursing Innovations/products: Aging-in-place sensor technologies, an electronic health record (EHR) for longterm care and care coordination Company structure: Principals are George Chronis, Skubic’s first graduate student, and Katy Musterman, Sinclair School of Nursing’s manager of nursing services. Skubic and Rantz have small equity partnerships in the business. The newest of any profiled here, ProactiveSense just “came together” in late May.
Background: Since 2002, the pair of researchers has pursued their vision of developing technologies and care management strategies to allow people to extend their independence into old age. They have done so with a vibrant and extensive interdisciplinary research program at TigerPlace, an active retirement community developed by Americare in affiliation with Sinclair School of Nursing.
The sensors the team has innovated are aimed at noninvasive monitoring of human behaviors that may signal declining health and even emergency situations.
Doing: “We were looking for a path where we could introduce this work into a commercial marketplace to people who can use it,” said Skubic. “It became obvious we wouldn’t be able to proceed with scaled-up research without a commercial partner.”
But, Skubic added, they could not find the right fit, so they approached Chronis to help launch a business to do so and he agreed.
“Marilyn and I had been very firm about not starting a company ourselves,” Skubic said, explaining the model they have chosen. “We wanted to avoid a conflict of interest that would taint our research. But we talked with the MU compliance officers and they assured us that a potential conflict of interest could be addressed.”
Skubic said Musterman, who also has her MBA, is the expert on the venture’s clinical data support system for early intervention, and Chronis, responsible for developing the EHR/care management software, are the perfect fit.
And, she added, Chronis has had some experience with entrepreneurship as he is running two companies of his own: his family’s Greek olive oil business, Olea Estates, a five-generation venture that he brought back into commercial success, and CyberSense.US, which specializes in information technology solutions with a target audience of academia.
Starting your own company takes perseverance,” Chronis said on the day he readied ProactiveSense’s pitch to Centennial Investors.
Chronis said he planned to tell investors about the opportunity in the marketplace, the company’s abilities and advantages and their plan to commercialize their products.
“Everything else being equal, our competitors do not have what we have,” Chronis said.
Entrepreneurs: Hao Li and Qingsong Yu, associate professors of mechanical and aerospace engineering
Innovations/products: Medical devices for orthopedics, dentistry and cardiovascular applications Company structure: Li is company president, and holds a doctorate in chemical engineering. Co-founders Yu, who also holds a doctorate in chemical engineering, Meng Chen, with a doctorate in electrical engineering, and Kenneth Lambert, an orthopedic physician, are the company’s VPs.
Background: Li has been investigating biological nanocomposites since 2005, and received a National Science Foundation CAREER Award in 2009 to study “Fabrication of surface-modified hydroxyapatite nanofibers and their composites.” One result, bioadsorbable bone screws, will be one of the company’s commercialized products. A plasma dental brush that cleans and disinfects cavities in teeth to increase the bond of fillings is also close to hitting the market, with many other innovations simmering on the back burner.
Doing: Li and Yu announced in late March that the China-based venture capital firm SummitView Capital and other investors will pump $7 million into Nanova, creating a joint venture with the engineering researchers on their orthopedic implants and dental consumables.
“We presented our work to a lot of venture capital companies; but venture capital appears to be a small world,” Li said. “Getting the money is difficult, but may not be the most important and difficult thing. Finding the right partner is. It’s similar to a marriage. We have declined funding from others because the resources they had to contribute were not the right fit. We know ourselves. I don’t have experience in areas like management and marketing, and have no manufacturing expertise,” he added, elucidating some of the areas in which SummitView will support Nanova.
Li said he has dreamed of developing and commercializing a novel device that can improve people’s lives since he was a student, not solely for financial gain, but for the impact he can make on the world.
“Although profit is important, that is not the driving force for our team. We would like to make our devices available in underdeveloped countries for low costs,” he said.
Of moving innovations forward to commercialization, Li said researchers should step back and treat the technology like it’s someone else’s and not get too personally involved.
“Companies have to take risks and take the full responsibility, right or wrong. How much can you sustain failure before you succeed? It takes persistence to get things done.”
Entrepreneurs: Sheila and David Grant, a bioengineering professor and a senior research design engineer, respectively
Innovations/products: A medical biotech company, EternoGen’s first product is a cosmetic dermal filler — or tissue scaffolding — that is a combination of collagen and gold nanoparticles.
Company structure: Sheila and Dave Grant are co-founders. Sheila serves as chief technology officer and David is director of analytical development. Global dermal filler expert and entrepreneur Anna Tenstam Lunvall is chairman of the board and chief commercialization officer.
Luis Jimenez is chief executive officer; Dale DeVore, a leading commercialization expert in dermal fillers, serves as chief scientific officer; Ron Bassuner a successful biotech researcher, is chief operations officer, and Rebecca Rone serves as director of preclinical development.
Background: Sheila Grant performed the original research. She then teamed with MU’s Biodesign Program in 2008, when Rone was a fellow with the program, to launch the dermal application. In addition to use in skin correction procedures, soft tissue fillers have implications for a variety of additional human connective tissue applications. EternoGen’s dermal filler represents a longer-lasting, better dermal solution than those currently available, offering superior regenerative, anti-inflammatory, antimicrobial and antioxidant properties.
“I’ve been working on EternoGen since 2009, my first baby steps into a start-up,” Sheila Grant said.
Doing: Grant said the extremely positive response she received after a presentation about her research at a dermal conference in Europe first clued her to the product’s commercial viability.
The dermal filler research originally was proffered as one of the six biomedical projects used in a MU business school graduate course taught by Halliday, who said the course teaches “how to launch a high-growth venture and get it financed.” Graduate students in the class form six simulated start-ups around faculty inventions, write full business plans and make a pitch to a panel of investors in competition for a cash award.
MBA student Luis Jimenez won the class competition with a plan for EternoGen and the plan — along with Jimenez — made the transition into the real world.
Missouri Technology Corporation, a state-supported technology investment program, MU’s EIP and Centennial Investors have financially embraced Grant’s start-up initiative, which is based at the business incubator.
Animal studies are currently being conducted and there are plans to first launch the product in Europe because, as Grant noted, the European Medicines Agency (EMA) — their regulatory agency — works faster than our Federal Drug Administration (FDA).
“We have at least 10 doctors lined up, each with patients who are willing to participate in trials,” Grant said of their European strategy.
“As a company, EternoGen has gone a long way because of the team we have put together — the right people to get this going.” Grant added. “You have to believe in it. We think it’s going to make a difference in people’s lives and you can’t get more satisfaction than developing something that makes a difference.”
Editor’s note: The Grants have launched another company, Nanocine, a biotechnology company that plans to license Grant’s research success with a nanomaterial and acellular tissue that can be used as a replacement anterior cruciate ligament (ACL) graft. The research, conducted in cooperation with Richard White, a physician in the MU department of Orthopaedic Surgery, has received a Coulter Transitional Partnership Program award.
Viator Technologies Inc.
Entrepreneur: John Viator, professor of biological engineering
Innovations/products: Photoacoustic detection of circulating melanoma cells
Company structure: Viator serves as president and chief scientific officer. Co-founder Martin Sanders, a physician who has extensive biological research and business development experience, is executive chairman.
Cofounders Richard Maisto, an investment professional, is the company director, and Bash Derti, with background in financial consulting and investment, is chief financial officer and vice president of finance. Sharon Lew, whose background includes international start-up experience, is chief commercialization office and vice president of operations.
Background: MU’s positive climate of interdisciplinary research offered Viator the opportunity to work with MU physician and surgeon Paul Dale to identify the potential in the cancer detection technologies he began developing in 2006. The device Viator has innovated, which is about the size of a small photocopier — can detect the presence of metastatic melanoma cells in a patient’s blood sample. Its compact size, relatively low price, ease of use and the fact that it also offers earlier detection to available technologies make it a groundbreaking technology.
Doing: Viator said he put his biophotonic research program together after countless seminars, brainstorming
and lots of talk with doctors and clinicians.
“To truly master something and have high impact, it must be fairly well defined and you have to have collaborators,” Viator added.
Viator said regulatory hurdles place commercialization of the technology at least five years out.
“It will take at least two years of clinical lab testing to make sure it can report a number [of cancer cells in a sample] that is lower than that for diagnosis,” he said of the required testing. “But we may be at a point at the end of next year where we will be able to sell devices for use in research such as drug testing as the regulation hurdles are lower.”
Also finding a home at the business incubator, Viator Technologies has received funding from a variety of sources on campus and off, including funds from private investors.
Viator also is using biophotonics to develop technologies that will help physicians evaluate and treat burns, and plans to expand his photoacoustic cancer detection research to additional cancers.
“It’s my hope that I will be a small part in a grand effort to make cancer as irrelevant as polio. Kids may need to look it up on Wikipedia. Someday, on the list of 917 things to be afraid of, cancer will be 916,” Viator said.
NANOS Technologies, LLC
Entrepreneurs: Shubhra and Keshab Gangopadhyay, LaPierre Chair of electrical and computer engineering with joint appointments in bioengineering and physics, and professor and research professor of electrical and computer engineering, respectively
Innovations/products: Nanocoating for aircraft window repair, as well as a food safety and bioterrorism detection test
Company structure: Keshab serves as founder, president and chairman, and Shubhra is chief scientific officer. Gus Pappas is chief executive officer, Andrew Kennedy serves as chief medical adviser, and Angel Wu is director of international business development.
Background: The Gangopadhyay Research Group has made its home in the College of Engineering since 2003, engaging in a broad spectrum of nanomaterials research. The aircraft window-coating technology, which began as a collaborative project with The Boeing Company, will reduce the need to replace scratched windows on planes, saving thousands of dollars. The food pathogen project began as a military force protection grant from the Leonard Wood Institute. It uses nanomaterials to cause a change in fluorescence with a change in concentration of toxins, in this case, botulinum. The detection device being developed is portable and test results are available within an hour, much more quickly than current technologies.
Doing: “We first worked on transistors and in the mid-1990s, they shrank to nanometers,” Shubhra said of her research introduction to nanoscale projects. “Working with them bottom-up — nanoparticles and rods in solutions — changed my entire research program, which exploded after I came to MU because there is such a collaborative environment here.”
The nanocoatings research has benefited from both SBIR and STTR funding in addition to private support.
“We have worked with Wayne and Brett to set up a business plan,” said Keshab of the window nanocoating venture. “We have the exclusive license for this technology and may have a company [to produce the coating] here in Missouri within six months to a year.”
The Gangopadhyays continue to scale up the toxin detection research and are working with a couple of other companies that are interested in the technology.
“Our license for this technology is exclusive,” said Keshab. “What is more realistic or pragmatic is to make it a joint venture with one partner providing the IP and the other side, the capital.”
He said they have worked on a partnership proposal with Epic Medical Concepts & Innovations (EMCI), a Kansas City-based company that exists to help companies like NANOS Technologies commercialize their innovations.
“The Kansas Bioscience Authority may partner with us to produce necessary nanoparticles,” Keshab said. NANOS Technologies also is based in the business incubator.
Editor’s note: The Gangopadhyay’s have a second start-up, NEMS/MEMS Works, LLC, that has licensed the research group’s nanoenergetic materials project for defense industry applications. The well-funded venture has received financial support from a number of public and private sources. It too makes its home in the business incubator.
Find more about these and other engineering faculty member’s research here. Click the faculty/researcher’s name and a new screen will open with research foci and links to news features about their research and achievements.