Recent Research: Adapting tech transfer for the 21st Century

In the last twenty years, there has been a critical shift in the technology transfer landscape that calls for a fundamental overhaul of university Technology Transfer Offices (TTOs) from focusing on passive IP management to active startup development, according to a recent SSRN article.

In "Transforming TTOs: Filling the Existing Technology Commercialization Void," Timothy L. Faley argues that the traditional "patent and license" model, wherein TTOs facilitated the licensing of university-developed intellectual property (IP) to established corporations, has become increasingly obsolete. He identifies a "product-development void," a consequence of corporations pivoting towards acquiring market-validated startups rather than licensing raw IP. Faley argues for TTOs to adopt a "business building" model, actively nurturing startups from their inception, providing mentorship, and facilitating access to early-stage funding. He emphasizes that this transition requires a departure from traditional TTO metrics, such as licensing revenue and patent numbers, which he deems inadequate for assessing the success of a startup-driven ecosystem.

Faley highlights the evolution of technology commercialization, tracing the shift from in-house corporate R&D to the current paradigm of externalized innovation. He cites research indicating a dramatic change in how established companies source technology. In the late 1980s, less than 10% of U.S. companies relied on outside technology sources. By 2001, this number had risen to over 80%. This rise underscores the impact of the Bayh-Dole Act in enabling universities to become significant suppliers of technology to corporations and demonstrates that there has been a massive change in how corporations obtain new technologies. The article includes data showing the increasing availability of venture capital throughout the 1990s and into the 2000s, which fueled the growth of startup companies, and which Faley deems the financial foundation that supported the shift to larger established companies choosing to acquire startup companies for their innovations.

The core of the TTO "business building" model is a shift from passive IP management to active startup development. Instead of focusing on securing licensing agreements, TTOs proactively identify research with strong commercial potential and facilitate the formation of startups around these technologies. This new role involves providing access to essential incubation services, including mentorship, workspace, administrative assistance, foundational resources, and networking. The results are companies with initial business plans, conducted market analyses, and assemblage of the necessary teams to move the startup closer to acquisition or market production.

Access to early-stage funding is another key component. TTOs adopting this model are vital in connecting startups with potential investors, including angel investors and venture capital firms. Some TTOs even establish university-affiliated venture funds to provide seed capital. They assist startups in developing compelling investment pitches and navigating the complexities of due diligence. In some cases, TTOs take equity stakes in startups, aligning their interests with the venture's long-term success. Faley states that this transition necessitates a change in TTO structure, often moving from research administration to outward-facing units. He believes the transition will require added funding and a strategic plan to help TTOs make this change.

While not discussed in the paper, an alternate, more cost-effective approach is for TTOs to work in partnership with existing, proven venture development organizations and innovation studios within their local innovation system, allowing the TTO to remain focused on disclosure and IP concerns for the university and faculty or student researcher. 

Whether the full suite of needs is addressed in-house or in partnership with others, in Faley’s assessment of how technology now moves fastest and most effectively out of universities, TTOs  must become engaged participants in the startup ecosystem. University technology transfer success today requires TTOs to become facilitators, connectors, and strategic partners.