The Way I See It… by Michael C. Volker
Innovative BC: University Spin-Offs Lead the Way
British Columbia’s universities are a hot bed of innovation. They produce the creative talent and the intellectual property which comprise the raw ingredients for a successful technology venture.
In the mid 1980’s universities across Canada and the U.S. set up technology transfer offices in order to commercialize their intellectual property and take new discoveries to the marketplace. At first this was done by finding suitable business partners who would acquire a license to a technology by paying a royalty to the university and its inventors.
However, royalties flowing back to universities were minimal. On average, a return of less than one percent of R&D expenditures was realized. By creating a corporation to commercialize intellectual property, the likelihood of success and the potential return to an institution are greatly increased. This is because a raw technology requires a great deal of development beyond the research stages in order to make it commercially viable. A corporation, properly financed with good management, will also be able to seize new market opportunities and acquire and develop its own know-how.
An excellent example of this is QLT Inc. This company got started in 1981 by licensing technology from the University of B.C. (UBC) in exchange for a royalty interest. Today, QLT is a world leader and pioneer in developing and commercializing pharmaceutical products for use in photodynamic therapy, a field of medicine that uses light-activated drugs to treat disease. Had UBC taken equity instead of royalties, it would have realized a better payback as a result of the company’s overall performance.
An executive from a large pharmaceutical company once commented, “We big companies are very bad at commercializing early-stage technology. But if your spin-off company is a success, and the technology is relevant to our business, we will buy out your spin-off company at almost any price."
UBC and Simon Fraser University (SFU) have created over 150 spin-off companies some of which are now "anchor tenants" in the Province which in turn spawn new ventures. Last year alone, these institutions formed some 20 new companies. Based on new companies created per million dollars of research expended, these institutions have ranked in the top 10 in North America for several years running.
Together with the University of Victoria, the University of Northern BC, and the Technical University of B.C., these institutions are actively drumming up new initiatives on the innovation front. The University of Victoria’s Innovation Development Corp is working with more than a dozen spin-offs to commercialize their technologies and the Technical University has created TechBC Corp as its business “front end”.
By collaborating with each other and in partnering with organizations such as the B.C. Advanced Systems Institute, the Science Council of B.C., and the Vancouver Enterprise Forum’s Angel Network, these institutions fuel the growth and development of their spin-off companies by attracting both the human and financial capital to these ventures.
Last year, these collaborations resulted in the establishment of new research and development centres such as the New Media Innovation Centre which will provide a pipeline of technologies for new business opportunities.
So, what do some of the actual spin-offs look like? Here are a few examples.
Cogent Chipware Inc., one of SFU’s most recent spin-offs, based on 15 years of research at the Very Large Scale Integration Computer Design Laboratory, was formed by researchers and students to specialize in voice-coding technologies for the telecommunications industry.
Another SFU company, NeuroStream Technologies Inc., recently received venture backing from the Working Opportunity Fund and the Business Development Bank of Canada to develop and produce “nerve cuffs” – a patented surgically implanted electrode which monitors messages from a patient’s nerves in order to control prosthetic devices or to bypass neurologically damaged pathways to facilitate bodily functions.
BandGap Photonics Inc. is one of UBC’s latest spin-offs. Founded in 2000 and backed with $5 million in venture capital from Ventures West, the Working Opportunity Fund and angel investors, BandGap intends to use photonic crystals for the fabrication of next generation optical telecom devices.
UBC has also spawned many life sciences companies such as NeuroMed Technologies Inc., Inphogene Biocom Inc., and Kinexus Bioinformatics Corp.
The way I see it, although the present rate of new venture creation by B.C.’s universities may be impressive, it’s only the beginning.
Michael Volker is a high technology entrepreneur and director of Simon Fraser U's University/Industry Liaison Office. He is a director of the BC Advanced Systems Institute and the Vancouver Enterprise Forum and runs Vancouver’s Angel Network. He may be reached at firstname.lastname@example.org.