Concerned that too many great technology ideas founder for lack of investment, the University of Illinois is creating its own venture-capital fund, spending public dollars to offer seed money, management expertise, and office space to professors' start-up companies.
Illinois' plan, dubbed iVentures, has parallels at universities across the United States, as schools scramble to cash in on valuable new technologies born in their labs - and to hang on to their ambitious faculty inventors.
"There are rumblings and discussions and proposals all over," says Jim Severson, head of the Cornell Research Foundation and president of the Association of University Technology Managers.
In New York, start-ups born at Cornell and other universities are vying for shares of a new $250 million venture-capital fund financed by the state retirement system. Rose-Hulman Institute of Technology in Terre Haute, Ind., and North Carolina State University each have created $10 million funds. Colleges in several states have worked to change laws so they can profit from research.
Experts say the optimism is not unfounded. Campus research spawned 364 new companies and $34 billion worth of economic development in fiscal year 1998, and universities collected more than $725 million in royalties, according to a survey by Mr. Severson's group.
The University of Illinois made about $5 million in such fees last year, but school officials say money is not their primary concern. "The main motivator for the university to do this was faculty attraction and retention," says Harry Arader, an investment consultant hired to write a business plan for iVentures.
The Massachusetts Institute of Technology recently lured away chemical engineering professor Dane Wittrup, who admits being attracted by MIT's track record of getting faculty ideas to market. "It's clear that world-class science is being done in Illinois, but everyone says, 'Why is it we are not getting more of this transferred into the private sector?' " Professor Wittrup says. "If you don't let faculty play in this game, they will go somewhere where they can play."
With a $2 million annual budget, iVentures would infuse about $150,000 into each of six companies a year. Its staff would recruit private investors and CEOs, write business plans, and handle other tasks that often trouble university-born start-ups.
"We would like our faculty entrepreneurs to stay in the classroom, to stay in our laboratories, but still be able to get those resources without being saddled by every tiny detail," says Chet Gardner, who is overseeing the iVentures project.
The university would own a stake in the company, and its share of the profits would go back to iVentures to cover its costs and reinvest in more start-ups.
(c) Copyright 2000. The Christian Science Publishing Society