The roles and abilities of universities to create and maintain start-ups is a challenge all overthe world.
New Zealand's no different, and Victoria University's Viclink looks like it is going to get amake over, with its back office infrastructure brought back into the main university (see sticKstory here ).
One main problem is that our universities don't have too much spare cash floating around toinvest in new ideas.
One challenge for universities is that while they may be good at inventing technologies, theyaren't necessarily that good at extracting the full measure of profit from those innovations. Thatstart-up investment is usually meant to come from venture capitalists - usually with the universitydiluting its stake in the new business as they decline to participate in the later financingrounds.
A report out of the New York Times briefly outlines a new V.C. fund,
Research universities like Penn, the California Institute of Technology, Duke, the University ofCalifornia, Berkeley and Columbia assign their investment rights to it, and hold sizeable ownershipstakes in the fund.
Singer and his partners are entirely motivated by profit they say, rather than altruism, and thefund will avoid consumer internet plays, if only because these are rarely what the universitiesproduce. Instead they will invest in areas like material science, battery technology, therapeuticsand energy.
Some of their projects may also require significant amounts of labour (again unlike internetplays), because their projects generally lead to manufacturing.
Based on a profit motive, Singer says "one of the questions we had to ask ourselves is whetherthis is the area we'd want to invest in," he says. "What would be the returns?"
They built up an index of start-ups from 50 top-flight universities that had licensed theirtechnology to those start-ups but not invested in them.
There was a very respectable 33% rate of return, with few strike outs. In fact, about 40% of theinvestments had a positive return.
Singer says, as a result, if universities have a bigger stake in companies, they will make moremoney and can finance other start-ups. And many can fulfill a mandate to create local jobs.
"The tech transfer community has become increasingly oriented toward job creation," LouisBerneman says. "In a lot of ways, we are part of a larger puzzle that universities are trying tosolve."
It is a conundrum that NZ Inc is also trying to solve.
The availability of a wider fund, in which universities are members and participants, and whichallows outside capital to be invested in commercialising their ideas, seems at first blush a goodidea.
It will be interesting to see whether a fund of this type could be considered a goer in NewZealand.
Is there the appetite?
Would the venture capitalists find enough deal flow?