It’s People, Not Money, When Commercializing Academic Research

What matters most in our approach isn’t money; it’s people. 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 or industry dollars. 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. They also 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 institutions and states nevertheless assume that the problem can be solved with a new building or a far-reaching marketing campaign. Or by launching a $100 million fund that covers a million square miles and most of the industry sectors in the SIC index.

The right resources are hard to build and require scale. But once the necessary scale is reached, it’s reinforcing. The scientists whose innovations can change the world are working at universities all over the country. The minimum efficient scale for their innovation is low, and so the U.S. innovation infrastructure is diffuse. But their commercialization counterparts, the rare business people capable of turning that innovation into a billion dollars’ worth of impact, overwhelmingly operate 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 Research Bridge Partners to bridge those great innovations and that great talent.