PhillyInc: Wanted: More start-ups from research institutions

Posted: December 19, 2011

Instead of wasting my holiday wish on something like world peace, I hope to see more start-up creation by the region's research institutions next year.

That yearning was prompted by a review of licensing and start-up activity in fiscal year 2010 by 182 U.S. universities, hospitals, and research institutions as tallied by the Association of University Technology Managers.

Forget yearning; it's envy I felt. For the second year in a row, Carnegie Mellon University in Pittsburgh was involved in the creation of 10 start-ups.

In case that doesn't sound like a lot, consider that it's equal to the number created by the Philadelphia quartet of the University of Pennsylvania (4), Drexel University (3), Thomas Jefferson University (2), and Temple University (1).

And don't get me started on the Massachusetts Institute of Technology's 17 start-ups and the University of Utah's U.S.-leading 18.

Even though the association didn't include Stanford University's number of start-ups for 2010, it's safe to say the California institution is in a class by itself.

On its website, the university lists more than 5,000 companies founded by 4,548 members of the Stanford technocracy. They include some that are household names, such as Cisco Systems, Google, and Yahoo.

Stanford generated a whopping $65.47 million in 2010 license income. Those same four Philadelphia institutions generated combined license income of $12.77 million in 2010, thanks largely to Penn's $11.26 million. (Carnegie Mellon's total was $6.08 million.)

Judging by this annual survey of technology-transfer managers, the king of licensing income locally is the Wistar Institute, a 119-year-old medical-research organization that generated 2010 license income of $13.22 million.

Though I like cash as much as anyone, I'm hungrier for start-ups right now. Here's why: The technology-managers group in Deerfield, Ill., said those surveyed reported a 9 percent increase in the number of start-ups, to 651 firms in 2010.

That's even more impressive when you realize these research institutions created 462 start-ups when the economy was far more robust five years ago.

Such growth is counter to the recent national trend in business formation. The federal Bureau of Labor Statistics said the number of business establishments that were "born" for the year ended March 2010 proved to be the lowest since it began tracking the stat.

Technology-based start-up activity is important because it's often the source of many fast-growing (read: job-creating) companies. Also, the association calculated that 77 percent of the start-ups that universities incubated in 2010 were in the research institutions' home states.

I'm worried that Philadelphia's research institutions, which have solid reputations as research centers, aren't keeping up with the pace of start-up creation of other regions.


Contact Mike Armstrong

at 215-854-2980, marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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