Why Others Don’t Commercialize Much of America’s Best Academic Research

The first image depicts the National Institutes of Health and National Science Foundation grants awarded to academic researchers throughout the U.S., while the second image depicts the concentration of venture capitalists with a history of investing in biomedical startups. (Sources: National Institutes of Health; Pitchbook; Research Bridge Partners model and analysis.)

Not only do America’s research universities have an unequaled track record of innovation, their best technology is dispersed throughout the country. Lifesaving breakthroughs ranging from the polio vaccine and the pacemaker to, more recently, chemotherapy treatments like Cisplatin and the world’s most widely prescribed blood thinner, Coumadin, have originated at mid-continent research universities.

However, mid-continent innovators and their labs are geographically removed from the commercialization resources – the venture capital, professional service firms and scaling business talent, as well as the velocity of the deal making – concentrated in the San Francisco and Boston areas.

This geographic misalignment results in far higher search and transaction costs for venture capital firms, which is a disincentive for traditional firms. Even if venture capital identifies a highly promising opportunity, the spinout will likely be slower in realizing its full potential than its rivals in the Bay Area or Boston.

Even the large venture capital firms that have created lab-to-market systems to progress ideas towards financial liquidity are challenged to commercialize innovations birthed at midcontinent institutions. Their “walled gardens” tend to put a premium on institutional brand and geographical proximity. If a landlocked innovator accesses one of these vertically integrated systems, she will have to relinquish management of her early-stage science to strangers whose approach to innovation and lab culture can be quite different, along with an outsized equity stake in the spinout.

That such a large percentage of America’s best academic research lies fallow is an extraordinary opportunity to create economic value and societal impact.