Fiona Murray Role Of Universityin Entrepreneurial Ecosystem

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ent The Role Of The University In Creating An

Entrepreneurial Ecosystem

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Lessons From MIT

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Professor Fiona Murray

Sarofim Family Career Development Professor

MIT

Sl Sarofim Family Career Development Professor

Associate Director MIT Entrepreneurship CenterCo-Head Technological Entrepreneurship, Innovation & Strategic Management Group

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Enlightenment Recognized “Useful” Science & was Key to Foundation Of Industrial RevolutionKey to Foundation Of Industrial Revolution

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ent "The business …of the Royal Society is to improve

the knowledge of natural things, and all useful Art, Manufactures, Mechanick practices, Engynes and inventions by Experiments "

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a Engynes, and inventions by Experiments...

wrote Robert Hooke in 1663 (Lyons 1944 pp. 41-42)

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By Nineteenth Century – Tight But Informal R l ti hi B t U i iti & I d tRelationship Between Universities & Industry

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Establishing industry-relevant disciplines

University of Delaware & DuPontUniversity of North Carolina & tobacco processing

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Education- future scientists for industrial research labs & for entrepreneurship

p gMIT establishing chemical engineering educationGermany (& UK) universities role

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o for entrepreneurship

Ideas - Individual faculty i i d i h f

in the founding of the chemical industryMerck’s consulting relationships to professors at University of

MIT

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views & consultingto professors at University of Pennsylvania

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Gradual decoupling of universities (especially in Europe) from industry – emergence of “Ivory Towers”Europe) from industry emergence of Ivory Towers

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WHAT GREAT SCIENTIFIC MYSTERY CRIES FOR MY ATTENTION TODAY?

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a CRIES FOR MY ATTENTION TODAY?.....

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Connection Between Scientific Knowledge & Economy Reaffirmed By Vannevar Bush In Post-WWII US y

…….But On New Terms

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ent “Advances in science when put to practical use mean

more jobs, higher wages, shorter hours, more abundant crops, more leisure for recreation, for study, for learning how to live without the deadening drudgery which has

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a g g ybeen the burden of the common man for ages past…But to achieve these objectives … the flow of new scientific knowledge must be both continuous and substantial”

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wrote Bush in “Science: The Endless Frontier” 1945

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Articulated as a commitment to “basic” scientific knowledgeSeparation of knowledge production from economic growth

Organized with a Clear Separation Of KnowledgeOrganized with a Clear Separation Of Knowledge Production

“B i ” R h W k f f

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ent “Basic” Research Work for fun,

freedom & love of knowledgeUniversities

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Unclear boundary – firms typically “waiting” to pick-up

people & ideas from

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Work for $$ &Firms

universities

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“Applied” Research &

Work for $$ & desire to do

something useful

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Commercialization

But in 1970s/1980s (US) impatience with perceived weak impact of universitiesp

US C i l d b t ff ti f

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ent US Congressional debates on effective use of

Federal funds – studies suggested small % ideas used by firms

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Pressure on US university fundingInstitutional confusion over ownership of patents

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o patents

Re-conceptualized role of university as source f id l d t d l

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engine for economy.

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Implemented via the 1980 Bayh-Dole Act

Ownership of patents generated in a university using Federal

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ent Ownership of patents generated in a university using Federal

funding => universities

Burden on universities to ensure the commercialization of these

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patents (of all ideas) – structured via licensing arrangements

Requirement to favor small, entrepreneurial firms

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What policy makers really wanted was a shift towards “Pasteur’s Quadrant”…towards Pasteur s Quadrant …

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Bohredom

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Pasteur

Science with useful focus

Pure science -universities

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a Bohr

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& fr

een

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w Pasteur

A li i i d

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EdisonWor

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on Application-oriented research - firmsRandom research

neither basic nor applied?

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Work for $ & focus on useful knowledge

99Adapted from Donald Stokes, “Pasteur’s Quadrant” (1997)

on useful knowledge

What they got instead was a narrow focus on t tipatenting

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U.S. University Response to the Bayh-Dole Actag

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About 10,000 patents granted per year to US universities on about US$30billion per year research funding ~ $3M/patent!

Recent recognition that Patenting & Licensing lik l t id ll % f i h $ ( 4%)likely to provide small % of univ research $ (~4%)

MIT th t f l li i ti

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ent MIT among the most successful licensing operation

But in 2006 MIT received only $30M in licensing revenues on a research base of $1.1B (95% Federal $)

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Research base $1.1BN (2006)Invention Disclosures ~ 523

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o Invention Disclosures 523Patents filed ~ 321 (of which ~100 granted so far)Licenses executed ~ 121Start-ups created ~ 23 (eight with equity) ~one

$

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Office of 15 licensing professionals

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Recognition of a highly complex (& “inefficient” )process)

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Of 14 institutions in MA only 5 make more than US$1M

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per year in licensing after costs.

MA start-ups on an

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o MA start-ups on an ongoing and long-run research base of about $3.5BN from

$

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running revenue of about $150M/yr

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Reorientation toward university as locus of ideas & l (& ) b d l i t i lpeople (& money)….broader role in entrepreneurial

ecosystem not on maximizing licensing revenue

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ent Funding

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IdeasPeople

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Ideas – Commercialization and licensing guided by faculty interests & maximizing impact onby faculty interests & maximizing impact on

commercial world not revenues

F lt P t ti i li ti & li i

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ent Faculty: Patenting, commercialization & licensing as way

to have an “impact”, excite students, create jobs, (& occasionally get rich!!)

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University: Tech transfer is important for impact not as a dominant revenue stream (even at the large universities)

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TLO: Focused on efficient execution of licenses to allow for commercial outcomes and effective “bundling” of IP –seeking to avoid mistakes of 1990s e.g. Oncomouse

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Ideas – Licensing to start-ups structured to allow for effective commercialization strategyfor effective commercialization strategy

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A123 – most recent successful MIT spinout to IPOFounded from idea from lab of Prof Yet-Min Chiang (Materials Science & Engineering) - new Li ion battery material

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o Science & Engineering) new Li ion battery materialPatented by MIT

– Exclusive license from MIT to A123 in 2001 - minimum guaranteed payments of $50,000 per year

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– Single digit equity to university (sold on IPO) – with benefits shared 1/3:1/3:1/3 (worth $5.2M at IPO)

– Founding faculty gains additional “founders equity” depending on role in company

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p y– Co-founders (and investors) were alumni….

Analyzing entrepreneurial strength of MIT alumni & th i i t th l l t i ltheir impact on the local entrepreneurial economy

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JobsPercent of Companies

Median Employees

Median Sales

($Millions)

Estimated Total

Employees

Estimated Total Sales ($Millions)

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a More than 10,000 0.3% 15,000 1,523 1,339,361 1,389,075

1,000-

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o ,10,000 1.8% 1,927 308 1,043,932 235,532

Less than 1,000

97.9% 39 <1 900,001 226,671

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Total 100.0% 155 <1 3,283,294 1,851,278

Over 25,000 active MIT alumni companies (as of 2003) – scale & impact

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Over 25,000 active MIT alumni companies (as of 2003) scale & impact dramatically > direct tech transfer (which amount to <500 companies). Like tech transfer companies, impact focused on <5% of companies (which create over 90% jobs and sales)

Proportion of Founders from Three Selected A d i A f MITAcademic Areas of MIT

(% all MIT alumni companies founded during the decade)

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Decade of First Firm Founding 1950s 1960s 1970s 1980s 1990s

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EE & CS degrees 20.4 26.5 18.7 25.4 22.7

Life Sciences degrees 0 0 2 7 4 0 4 9 4 7

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Sl Life Sciences degrees 0.0 2.7 4.0 4.9 4.7

Management degrees 16.7 14.3 13.5 13.8 15.8

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University Factors Important to Venture Founding*% Rating University Factors as Important in Venture Founding* (%)% Rating University Factors as Important in Venture Founding* (%)

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Graduation Decade 1950s 1960s 1970s 1980s 1990sMIT’s Entrepreneurial Network 26 25 32 40 50

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o MIT Business Plan Competition 0 1 0 3 30MIT Entrepreneurship C t 3 1 2 1 12

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Technology licensing activities 1 0 2 4 11

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*Survey respondents could check all relevant categories.

Amplifying MIT’s Internal Entrepreneurial EcosystemEntrepreneurial Ecosystem

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Mentoring: Example of Coordination Across Ecosystemy

Deshpande Center

Entrepreneurship Center

Venture Mentoring Service

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ent Center Center Service

Name Catalyst Entrepreneur-in-Residence/Focus

Area

Mentor

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Mentor-Team Ratio

1 to 1 1 to Many Many to 1

Time Frame Project Semester Indefinite

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Type of MentorTechnology

Commercialization Specialist

Founder Senior Exec

Expertise Domain Generalist & Generalist

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DomainGeneralist

Teams Mentored Grantees (Faculty & R h )

Students Entire MIT C it

2121

Researchers) Community# of Mentors 30 5 100

MIT Entrepreneurship Center : To “educate” MIT men & women to be the next generation of successful entrepreneurs

creating innovation-based new ventures worldwide.

C b ilt “M t M ” M t i

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ent Courses built upon “Mens et Manus”:

• New Enterprises• iTeams• Energy Ventures

Mentoring :• Entrepreneurs-in-Residence• External network

Networking :• CEO Receptions (Fall & Spring)

• Entrepreneurial Finance• Biomedical Strategy• Product Development

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a • E-Lab• G-Lab

CEO Receptions (Fall & Spring)• Brown Bag Luncheons (Weekly)• Web Site/Social Networks• Silicon Valley Study Tour

Conferences :

• Human Side of New Ventures• Tech Innovation Principles

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o • MIT Venture Capital Conference (December)• MIT Energy Conference (March)• MIT Private Equity Symposium (April)• MIT Sales Conference (April)

External Programs (Exec Ed) :

Clubs include:• $100K Entrepreneurship Competition• MIT Clean Energy Prize

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• MIT Entrepreneurship Development Program (1 wk)

Thought Leadership :• MIT Entrepreneurship Review• Faculty and Distinguished Guest Speaker Series

• MIT Energy Club• MIT Global Startup Workshop• MIT Innovation Club• MIT Sales Club• MIT Sloan Entrepreneurs &Execution Club• MIT VCPE Club

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Matching people & ideas - i-Teams (15.371) – a t l l b t Sl & E i isemester –long class between Sloan & Engineering

DIGITAL PROGRAMMABLE APERTURE

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“PROJECT” – real technology under development in MIT lab (typically with IP)

LCD screen in which select pixels are opened to capture varying 

perspectivesShot 1

Shot 2

Shot 3

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TEAM – mixed group of students (Sloan, Engineering, Science, Media Lab)

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ADVISORS – class faculty, a Catalyst (outside expert) & project PI & other members of the lab

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GOAL - Evaluate the commercial potential of your technology project. Define commercialization strategy - technology &

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market execution plan.

BUILD – lasting network & expertise.

Conclusions:E h i U i it ’ E t i l I tEnhancing a University’s Entrepreneurial Impact

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ent Remove barriers to entrepreneurship from university rules

IDEAS: Orient university licensing office away from licensing

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a y g y grevenue focus toward encouragement of new enterprises

PEOPLE: Build internal entrepreneurship education programs,

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o with integrated academic and practitioner faculty participantsPEOPLE: Engage alumni in university ties with faculty & students.

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MONEY: If neighboring infrastructure is weak, university may need to supplemental “incubation” & $

TIES C t ti t d t b i l titi j t

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TIES: Create active student business plan competitions, project mentoring & other chances to match money, ideas & people

Entrepreneurial Impact: p pThe Role of MIT

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ent http://entrepreneurship.mit.edu/impact.php

orhttp://www kauffman org:80/newsroom/mit-

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a http://www.kauffman.org:80/newsroom/mitentrepreneurs.aspx

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o With special thanks to Professor Edward Roberts for sharing his report results.

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