Our Unique Approach

What matters most in our approach isn’t money; it’s people.  So people are our core bet – they are what we “bridge,” at Research Bridge Partners.

Researchers at universities across the country generate innovations that have the potential to benefit society in significant ways. Research leaders at mid-continent universities are generally as productive as their counterparts on the coasts. But when it comes to commercialization, Massachusetts and California produce spin-outs at a much higher rate than the rest of the country.  For example, the University of California System creates spin-outs at about twice the rate per dollar of research as the University of Texas System.

This delta gets talked about using dollars, because dollars are easy to measure and obviously important.  We often point out that the Bay Area has $15 of investible venture capital for every $1 of research done by Bay Area universities, but Minneapolis only has $0.09 of investible VC for every dollar of research done by Twin Cities universities. We talk about this investment capital gap because it illustrates the larger capability and performance gap between the tech hubs and the rest of the country.

The problem is that such data points lead people to conclude that dollars are the problem.  “If only we could get more VC in our local community, that would close the gap between us and Palo Alto.”  This gets it backwards.  The dollar gap is a symptom; the people gap is the problem.

Commercializing technology is much, much more than matching promising patents with venture capital. Successful startups require tight collaboration between world-leading innovators and savvy, well-connected business leaders. In turn, startups need the additional support of a talented and knowledgeable ecosystem of business talent, professional service providers, investors, and others.  Oh, and they also probably need a deep enough reservoir of these resources so that a lot of people can say “no” to the deal before the right people say “yes.”  Still, many people nevertheless assume that the problem can be solved with a building or a marketing campaign.  Or a $100 million fund that covers a geographic area larger than the state of Texas and most of the industry sectors in the SIC index.

These resources are hard to build and require scale. And once the necessary scale is reached, it’s reinforcing.  The scientists who are doing science that can change the world are working at universities all over the country. The minimum efficient scale for innovation is low, and so our innovation infrastructure is diffuse.  But the rare business people capable of turning that innovation into a billion dollars’ worth of impact, the odds are overwhelming that you’re operating in the Bay Area or Boston.  Given the velocity and depth of both markets, good opportunities and good payoffs are far more plentiful there.

It’s those men and women – the people who can turn scientific innovation into scaling startups – who are what most heartland university communities are missing. The cost to move dollars is zero – it’s all electrons now. What’s expensive to move, and non-fungible across geographies, is people with options who could be doing something else with their time.

The most powerful economic force on the planet is the search for yield.  Money follows opportunities.  If money isn’t flowing to local deals, it’s because the local deals often aren’t shaped to attract that capital.  And if the local deals aren’t good enough, the reason is either that the science isn’t good enough – which the data doesn’t support – or that the way the mid-continent innovation has been formed into an investible opportunity isn’t good enough.  We bet on the latter, and we built RBP to bridge those great innovations and that great talent.

Using data models to grade assets for investment isn’t new. Both private investors and government funding agencies use analytics to make investment decisions. Research Bridge Partners’ (RBP) data analytics program has taken these best practices and applied them to principal investigators (PIs) and their labs throughout the mid-continent. We hired people out of Google and the National Science Foundation to do this. The result is a data model and set of algorithms that gives us unique insight on not only the research but the personality, productivity, and commercial potential of PIs and their labs.

Academic research is a $72 billion per year industry. We bring data analytics to it, and we are sharing this analysis with researchers and their institutions. This work requires committed philanthropic support and delivers exceptional impact.

Our unit of analysis is the PI, not the university, but we grow the model by “island hopping” from university to university. We started with 14 universities in 2017 and will have nearly 200 by the end of 2019. As of Fall 2018, we had about 45,000 PIs in our model, had used the model to develop ~200 targets, and had interviewed about half of those to determine our first set of fellows.

RBP receives two questions about our data analytics program often enough that it makes sense to address them here.

The first question: “Why are we using a proprietary search method instead of the conventional university channels?” In addition to their education and research programs, American universities have built licensing offices, startup incubators and accelerators, and corporate partnering offices. The staff who support these programs work hard to find and adequately resource academic inventors.

We use these channels, both algorithmically and on the ground. RBP’s algorithms weight participation in these programs, and we make sure to talk with the translation professionals and academic leadership wherever we go. In addition, we independently search for faculty entrepreneurs. RBP’s principals used to run “access point” programs, and none of us were immune from blind spots caused by institutional politics, personal interest, personality fit, limited time, or whatever.

The second question: “What are the underlying features collected on each lab, and how do you assemble your algorithms?”

What we can share are some insights, including the following:

  • Collaboration really, really matters. We looked at this from several angles and have developed an analytic perspective on collaboration that generates high correlations with other objective and subjective measures of entrepreneurial potential.
  • Gender-related access to commercialization probably still needs to be addressed at many universities. Academia is now hiring and promoting many more women PIs than in the past. But even after we adjusted for field, career stage, and research quality, women PIs are still patenting at a much lower rate, overall, than their male peers.
  • Research quality is king. The most important thing that an academic co-founder can do, is to invent something amazing. One of the reasons that Stanford is “good at” commercialization is that it has 156 members of the National Academy of Sciences on its faculty. Great research innovation is the prerequisite for great commercialization.

There is a lot of innovation at universities that the TLO and incubation manager don’t see, or don’t see at the right time. Our model turns out to be pretty good at identifying labs with lots of “dark innovation,” research projects that a lab has not yet shared with the university but which may have a high potential for commercial realization and societal impact.

Like us, you probably want your kids to seek out the best opportunities. Whether that means staying close to home or traveling far from it, America offers a continent’s worth of labor markets. People can pursue the opportunities that best match their capabilities and aspirations.

It’s the same with startups and spinouts. There are compelling reasons that university spinouts stay close to home – to be near the scientific co-founder’s lab, to leverage local customers, local suppliers and local labor, to take advantage of cost differences or more attractive regulatory or tax environments.

Sometimes, however, startups need to relocate to achieve their potential. Competition is irreversibly global. A technology-based business in Iowa must be competitive in Chicago, as well as Berlin and Taipei. Investors and talent – who have options – don’t ask whether a startup is attractive in a particular region, but whether it can be competitive on a global scale.

This is why Research Bridge Partners is agnostic as to where the startups that we support end up locating. Some will find what they need near their birth universities. Some will need to move to position themselves for optimal success. Regardless, today’s global marketplace means that commercialization networks must span the middle of the country to identify and elevate innovative ideas whenever and wherever they arise.

High search and transactions costs make it hard for the skilled for-profit sector to realize an appropriate risk-adjusted return from mid-continent commercialization. By organizing as a not-for-profit, dependent on philanthropic support for our work, Research Bridge Partners mobilizes mission-focused resources to reduce these costs and help drive innovation into American society and the world.

Heartland universities create lots of great innovation, but they don’t generate lots of the great deals that attract talent and capital with specialized skills. Turning great mid-continent innovation into a great deal requires a lot of work – work that has to be done before the payoff is clear – and that work has to be done in the context of customer markets and regulatory regimes and labor markets that have become highly specific to geographies.

If the cost around that speculative effort is perceived as too high, then the work often doesn’t get done, or doesn’t get done at the necessary level of quality. We see this reflected in the lower commercialization numbers coming out of heartland universities and in the massively lower Series A valuations and raise amounts for middle-of-the-country, science-based deals.

Deal velocity and talent concentrations in Silicon Valley and Boston are such that the cost associated with doing this work there is often lower and the payoff can be higher. As a result, a lot of “pre-deal” work gets done there on the come, priced into the next round of financing. That doesn’t happen at the same level, or at all, mid-continent. As a result, mid-continent university spinouts are often at a real disadvantage compared to startups based on similar quality science in close proximity to Silicon Valley and Boston.

This is the problem we address. We depend on philanthropic support for our work. We use our not-for-profit balance sheet and relationship networks to bridge the market gap and make sure that mid-continent science is advanced for the public interest.

Despite the advantages of creating new businesses in the middle of the country – the high quality of life and low cost of living, for example – there are significant costs as well. Interfacing with suppliers, partners, investors and service providers usually entails a flight, for example, often with a connection. Everything takes a little more planning and coordination. There are fewer serendipitous encounters.

For venture investors, velocity is key. They measure results by the economic value created each year. The timing of value creation and liquidity can be almost as important as the magnitude of value creation. Therefore, it is little wonder then that the opportunity cost for coastal investors prospecting mid-continent opportunities is high. It can be difficult and time consuming for investors to find even the most promising opportunities. And if they do, the company itself may be slower in creating economic value and societal impact than its rivals in the Bay Area or Boston.

These comparative inefficiencies mean that firms and funds in the middle of the country often look less attractive on an IRR basis. Therefore, commercializing mid-continent innovation at scale requires a new class of patient and risk-tolerant capital – neither charity nor conventional venture investment.

So, Research Bridge Partners (RBP) built a new model. Our VC fund is unique because it is organized to accept only program-related investment (PRI) from our limited partners. In other words, our VC fund is run by a charity in support of charitable purposes and accepts LP investments only from other charities.

The goal of this PRI fund is to launch companies that can advance science in the public interest. RBP’s fund invests to support RBP’s mission, and its focus is on creating opportunities that can compete globally for talent and capital. This approach solves the mid-continent innovation problem by mobilizing mission-focused resources to reduce the higher costs of commercializing innovations originating there.

To date, funding for startups has traditionally come in two forms: grants, which come with no expectation of return; and venture capital, which typically carries portfolio return expectations of three to five times invested capital. The problem is that science-based startups need investment in the business, not just the lab, before they can compete for high-return capital in global markets. Our PRI fund enables the advancement of mid-continent science through philanthropic program-related investments of patient capital, while maintaining the potential to recoup the investment when the startup is successful.

What matters most in our approach isn’t money; it’s people.  So people are our core bet – they are what we “bridge,” at Research Bridge Partners.

Researchers at universities across the country generate innovations that have the potential to benefit society in significant ways. Research leaders at mid-continent universities are generally as productive as their counterparts on the coasts. But when it comes to commercialization, Massachusetts and California produce spin-outs at a much higher rate than the rest of the country.  For example, the University of California System creates spin-outs at about twice the rate per dollar of research as the University of Texas System.

This delta gets talked about using dollars, because dollars are easy to measure and obviously important.  We often point out that the Bay Area has $15 of investible venture capital for every $1 of research done by Bay Area universities, but Minneapolis only has $0.09 of investible VC for every dollar of research done by Twin Cities universities. We talk about this investment capital gap because it illustrates the larger capability and performance gap between the tech hubs and the rest of the country.

The problem is that such data points lead people to conclude that dollars are the problem.  “If only we could get more VC in our local community, that would close the gap between us and Palo Alto.”  This gets it backwards.  The dollar gap is a symptom; the people gap is the problem.

Commercializing technology is much, much more than matching promising patents with venture capital. Successful startups require tight collaboration between world-leading innovators and savvy, well-connected business leaders. In turn, startups need the additional support of a talented and knowledgeable ecosystem of business talent, professional service providers, investors, and others.  Oh, and they also probably need a deep enough reservoir of these resources so that a lot of people can say “no” to the deal before the right people say “yes.”  Still, many people nevertheless assume that the problem can be solved with a building or a marketing campaign.  Or a $100 million fund that covers a geographic area larger than the state of Texas and most of the industry sectors in the SIC index.

These resources are hard to build and require scale. And once the necessary scale is reached, it’s reinforcing.  The scientists who are doing science that can change the world are working at universities all over the country. The minimum efficient scale for innovation is low, and so our innovation infrastructure is diffuse.  But the rare business people capable of turning that innovation into a billion dollars’ worth of impact, the odds are overwhelming that you’re operating in the Bay Area or Boston.  Given the velocity and depth of both markets, good opportunities and good payoffs are far more plentiful there.

It’s those men and women – the people who can turn scientific innovation into scaling startups – who are what most heartland university communities are missing. The cost to move dollars is zero – it’s all electrons now. What’s expensive to move, and non-fungible across geographies, is people with options who could be doing something else with their time.

The most powerful economic force on the planet is the search for yield.  Money follows opportunities.  If money isn’t flowing to local deals, it’s because the local deals often aren’t shaped to attract that capital.  And if the local deals aren’t good enough, the reason is either that the science isn’t good enough – which the data doesn’t support – or that the way the mid-continent innovation has been formed into an investible opportunity isn’t good enough.  We bet on the latter, and we built RBP to bridge those great innovations and that great talent.

Using data models to grade assets for investment isn’t new. Both private investors and government funding agencies use analytics to make investment decisions. Research Bridge Partners’ (RBP) data analytics program has taken these best practices and applied them to principal investigators (PIs) and their labs throughout the mid-continent. We hired people out of Google and the National Science Foundation to do this. The result is a data model and set of algorithms that gives us unique insight on not only the research but the personality, productivity, and commercial potential of PIs and their labs.

Academic research is a $72 billion per year industry. We bring data analytics to it, and we are sharing this analysis with researchers and their institutions. This work requires committed philanthropic support and delivers exceptional impact.

Our unit of analysis is the PI, not the university, but we grow the model by “island hopping” from university to university. We started with 14 universities in 2017 and will have nearly 200 by the end of 2019. As of Fall 2018, we had about 45,000 PIs in our model, had used the model to develop ~200 targets, and had interviewed about half of those to determine our first set of fellows.

RBP receives two questions about our data analytics program often enough that it makes sense to address them here.

The first question: “Why are we using a proprietary search method instead of the conventional university channels?” In addition to their education and research programs, American universities have built licensing offices, startup incubators and accelerators, and corporate partnering offices. The staff who support these programs work hard to find and adequately resource academic inventors.

We use these channels, both algorithmically and on the ground. RBP’s algorithms weight participation in these programs, and we make sure to talk with the translation professionals and academic leadership wherever we go. In addition, we independently search for faculty entrepreneurs. RBP’s principals used to run “access point” programs, and none of us were immune from blind spots caused by institutional politics, personal interest, personality fit, limited time, or whatever.

The second question: “What are the underlying features collected on each lab, and how do you assemble your algorithms?”

What we can share are some insights, including the following:

  • Collaboration really, really matters. We looked at this from several angles and have developed an analytic perspective on collaboration that generates high correlations with other objective and subjective measures of entrepreneurial potential.
  • Gender-related access to commercialization probably still needs to be addressed at many universities. Academia is now hiring and promoting many more women PIs than in the past. But even after we adjusted for field, career stage, and research quality, women PIs are still patenting at a much lower rate, overall, than their male peers.
  • Research quality is king. The most important thing that an academic co-founder can do, is to invent something amazing. One of the reasons that Stanford is “good at” commercialization is that it has 156 members of the National Academy of Sciences on its faculty. Great research innovation is the prerequisite for great commercialization.

There is a lot of innovation at universities that the TLO and incubation manager don’t see, or don’t see at the right time. Our model turns out to be pretty good at identifying labs with lots of “dark innovation,” research projects that a lab has not yet shared with the university but which may have a high potential for commercial realization and societal impact.

Like us, you probably want your kids to seek out the best opportunities. Whether that means staying close to home or traveling far from it, America offers a continent’s worth of labor markets. People can pursue the opportunities that best match their capabilities and aspirations.

It’s the same with startups and spinouts. There are compelling reasons that university spinouts stay close to home – to be near the scientific co-founder’s lab, to leverage local customers, local suppliers and local labor, to take advantage of cost differences or more attractive regulatory or tax environments.

Sometimes, however, startups need to relocate to achieve their potential. Competition is irreversibly global. A technology-based business in Iowa must be competitive in Chicago, as well as Berlin and Taipei. Investors and talent – who have options – don’t ask whether a startup is attractive in a particular region, but whether it can be competitive on a global scale.

This is why Research Bridge Partners is agnostic as to where the startups that we support end up locating. Some will find what they need near their birth universities. Some will need to move to position themselves for optimal success. Regardless, today’s global marketplace means that commercialization networks must span the middle of the country to identify and elevate innovative ideas whenever and wherever they arise.

High search and transactions costs make it hard for the skilled for-profit sector to realize an appropriate risk-adjusted return from mid-continent commercialization. By organizing as a not-for-profit, dependent on philanthropic support for our work, Research Bridge Partners mobilizes mission-focused resources to reduce these costs and help drive innovation into American society and the world.

Heartland universities create lots of great innovation, but they don’t generate lots of the great deals that attract talent and capital with specialized skills. Turning great mid-continent innovation into a great deal requires a lot of work – work that has to be done before the payoff is clear – and that work has to be done in the context of customer markets and regulatory regimes and labor markets that have become highly specific to geographies.

If the cost around that speculative effort is perceived as too high, then the work often doesn’t get done, or doesn’t get done at the necessary level of quality. We see this reflected in the lower commercialization numbers coming out of heartland universities and in the massively lower Series A valuations and raise amounts for middle-of-the-country, science-based deals.

Deal velocity and talent concentrations in Silicon Valley and Boston are such that the cost associated with doing this work there is often lower and the payoff can be higher. As a result, a lot of “pre-deal” work gets done there on the come, priced into the next round of financing. That doesn’t happen at the same level, or at all, mid-continent. As a result, mid-continent university spinouts are often at a real disadvantage compared to startups based on similar quality science in close proximity to Silicon Valley and Boston.

This is the problem we address. We depend on philanthropic support for our work. We use our not-for-profit balance sheet and relationship networks to bridge the market gap and make sure that mid-continent science is advanced for the public interest.

Despite the advantages of creating new businesses in the middle of the country – the high quality of life and low cost of living, for example – there are significant costs as well. Interfacing with suppliers, partners, investors and service providers usually entails a flight, for example, often with a connection. Everything takes a little more planning and coordination. There are fewer serendipitous encounters.

For venture investors, velocity is key. They measure results by the economic value created each year. The timing of value creation and liquidity can be almost as important as the magnitude of value creation. Therefore, it is little wonder then that the opportunity cost for coastal investors prospecting mid-continent opportunities is high. It can be difficult and time consuming for investors to find even the most promising opportunities. And if they do, the company itself may be slower in creating economic value and societal impact than its rivals in the Bay Area or Boston.

These comparative inefficiencies mean that firms and funds in the middle of the country often look less attractive on an IRR basis. Therefore, commercializing mid-continent innovation at scale requires a new class of patient and risk-tolerant capital – neither charity nor conventional venture investment.

So, Research Bridge Partners (RBP) built a new model. Our VC fund is unique because it is organized to accept only program-related investment (PRI) from our limited partners. In other words, our VC fund is run by a charity in support of charitable purposes and accepts LP investments only from other charities.

The goal of this PRI fund is to launch companies that can advance science in the public interest. RBP’s fund invests to support RBP’s mission, and its focus is on creating opportunities that can compete globally for talent and capital. This approach solves the mid-continent innovation problem by mobilizing mission-focused resources to reduce the higher costs of commercializing innovations originating there.

To date, funding for startups has traditionally come in two forms: grants, which come with no expectation of return; and venture capital, which typically carries portfolio return expectations of three to five times invested capital. The problem is that science-based startups need investment in the business, not just the lab, before they can compete for high-return capital in global markets. Our PRI fund enables the advancement of mid-continent science through philanthropic program-related investments of patient capital, while maintaining the potential to recoup the investment when the startup is successful.