A weekday morning in late November. A brownstone residence on Beacon Hill in the shadow of the State House. A dozen of the foremost experts in technology transfer and intellectual property in the Boston innovation cluster. And a representative from the Department of Energy. We at BSG Team Ventures had the recent opportunity to host a salon-style meeting in a home of a friend of the firm during Clean Energy Week here in the Commonwealth.
The purpose? Bringing the best minds in the Boston venture, entrepreneurship and innovation community together for a brainstorming session with the Department of Energy around best practices in technology transfer out of our national laboratories. Attending the meeting were Alan Gordon from Harvard University Technology Licensing Office, Chris Noble from MIT's TLO, head of the Mintz Levin cleantech practice Tom Burton, Peter Rothstein from the New England Clean Energy Council, Director of the Massachusetts Technology Transfer Center Abi Barrow, Director of Partners CIMIT John Collins, General Partner at Flagship Ventures Jim Matheson, and CEOs Chris Hobson and Peter Vandermeulen each running cleantech start ups with technology licensed out of several of the national labs themselves.
The challenge the current Obama Administration is taking on under Secretary of Energy Chu is how to better mine the metaphorical gold created inside the U.S. Department of Energy-funded national laboratory network of some 15 that are spread across the country. Some of these labs are household names--Los Alamos and Sandia (New Mexico), and Lawrence Livermore (California). Others are less well known-Argonne (Illinois), Brookhaven (NY), and Ames (Iowa). Even the National Renewable energy Lab (Colorado, known more often as NREL), are not as well known as one would hope. The history of these national labs springs from energy research spurred by World War II. What the layperson may remember is that many of these labs were where secretive nuclear energy research was conducted. However, much of the mandate for these labs some 60 years later is focused on discoveries that will broadly contribute to advancing the United States' understanding of energy, renewable energy, energy conservation, and all the various scientific disciplines that can contribute-physics, materials engineering, chemistry, and more. These labs are panning for a 21st century gold-energy discoveries and breakthroughs that will create new batteries using renewable resources, wean the U.S. dependence on oil and coal as primary energy sources, and break new barriers in energy efficiency.
However, the problem has been that these labs have explored a lot, and engaged in extensive primary research, but have punched below their weight class in bringing innovation from discovery through to successful commercialization. The DOE budget in FY 2009 topped $25 billion. The national labs budget made up approximately $10 billion of that. And with the Obama administration's stimulus package, these numbers only look to be increasing. One example brought up in the conversation to punctuate the problem from one of the Boston-based attendees was that fact that Argonne National Laboratory in the last decade has created less than a dozen successful out licensing/royalty events that generated meaningful returns. Logic holds that in terms of return-on-investment, there remains much room for added improvement.
So, two hours later, what were the issues that were brought up by the braintrust, and potential solutions that were tendered to improve the return on investment the DOE makes in the national laboratory's innovation mission?
Some of the key issues with the current structure that came out of the dialogue:
• Risk aversion of national labs researchers to leave the security of the lab to spearhead a risk-laden venture
• Innate interest of lab researchers is more geared toward research and "discovery" versus market-matching and commercialization
• Low/no financial incentive to take a discovery beyond research phase
• No business ecosystem or business-savvy catalysts to help focus lab research talent on "known problems," or the sifting through lab breakthroughs to match-make with existing business problems
Suggestions for improvement focused around the three ingredients that are key to metaphorical "combustion" of the innovation commercialization engine:
- "SPARK" = the novel ideas, innovations & discoveries that come out of the labs
- + Create a centralized online portal for intellectual property created by the national labs. The Commonwealth of Massachusetts has done this via their Massachusetts Technology Portal.
- "FUEL" Funding resources for
- + Create a www.grants.gov website, that clearly allows entrepreneurs the ability in a single location to see what grants are available for which to apply (SBIR, DARPA, ARPA-e, etc.).
- + Create small "mini-grant" offering within the labs, that awards small amounts (between $50,000-250,000) to discoveries to help fund the next stage in proof-of-concept creation
- + Create meaningful business competitions that galvanize scientists and business entrepreneurs to come together for a cause (great examples can be found with both The Ignite Clean Energy Competition and Clean Tech Open.
- "OXYGEN" = the talent, teams, and professional ecosystem that is required to wrap around the "spark + fuel" to make the engine run.
- + In addition to the current national laboratory scientists, technologists, and inventors there needs to be an institutionalized talent flow that includes:
§ The national labs equivalent of PhDs who currently work in universities under tenured professors. These PhDs are the "free radicals" who are capable of taking some primary research breakthroughs through their subsequent next phases, focusing on improving the breakthrough beyond peer-reviewed publications in which professors announce them. Also, these PhD-equivalents at times are capable of spinning out of the university setting with a newco that's created around that innovation, as they are not already career-tracked as tenured professors in universities, or national lab scientists who have a relatively safe and secure position and more often than not don't want risk leaving to pursue some much higher-risk venture.
§ Business-side talent. These are the CEOs, marketing VPs, sales VPs, corporate development specialists, and VPs of Strategy, Operations, manufacturing, and engineering. The subset of all of these business types who love the zero-stage venture, love entrepreneuring, discussing blue-sky opportunities, talking to the marketplace and potential customer segments to determine if a breakthrough could be harnessed into a product for various customer segments, and if it were, would the customer pay for it, how much, and how often.
§ Entrepreneurial Business Ecosystem. This is one of the last key elements. Wherever you find a rich geographic region of serial entrepreneurs and innovation, they are always planted in soil that offers the nourishment and fertilizing properties essential to standing up new ideas in the form of new start-up companies. These include the consultants and professional service providers who help the company-IP & corporate lawyers, accountants and CPAs, staffing agencies and executive search firms, commercial real estate advisors and investment bankers who are all critical catalysts to maturing the start-up idea. The ecosystem also includes follow-on funding sources including well-organized angel investing groups, institutional venture capital investors, and industry associations that provide the virtual water cooler for much of the dialogue, introductions, and business ideation that is brought to bear at various stages of company growth.
The business element could be assembled in the form of an advisory board. A good example of this can be seen in the structure of the MIT Deshpande Center, and the catalysts who are deputized by the Deshpande Center to work with the MIT lab professors.
§ Replanting/grafting: Ability to move an idea outside the labs in which they were discovered. The ability to graft a discovery onto a team elsewhere. Or house it in some sort of entrepreneurial "launch pad" or innovation Petri dish. Could this look like an incubator, perhaps. Although few if any incubators have succeeded. One such here in Massachusetts, run as a for-profit private entity is the Cambridge Innovation Center (www.cictr.com ) which may prove a potential model.
§ More "conferences as mixers": the NREL (National Renewable Energy Lab) just recently held it's 22nd annual conference out in Denver. Holding more of these events with the right invitation list that would push together the sparks, oxygen, and fuel providers. Perhaps hold them more than once a year, or in several different locations (West, Central, East) as a traveling road show of sorts. The more frequently the "right" people meet together wrapped around a galvanizing theme, the more trust, openness and sharing/brainstorming becomes the norm rather than the exception.
At the minimum, the session demonstrated the interest and passion of both the private and public sectors to meet, share, explore, and innovate around federally funded cleantech commercialization.
