The entreprenuerial bug spreads

News Business Reporter

Erdogan Gulari only took one biology class in his life and that was back in high school. He doesn't have a background in business.

But it was the chemical engineering professor's discovery of a cheaper way to make medical diagnostic chips while working on computer displays that helped create one of the University of Michigan's recent startups.

It's one of seven companies to spin out from the university this year, with the help of U-M Office of Technology Transfer, which helps researchers commercialize their work.

According to the office's annual report for fiscal year 2007 to be released this week, there were 91 licensing or similar agreements for U-M intellectual property, down slightly from last year, and $12.8 million returned to the university in royalties, significantly less than last year's $20.4 million in revenue because this year no equity, or brief ownership in a company, was sold.

Despite fewer licensing agreements and less revenue, Ken Nisbet, director of the tech transfer office, said the higher number of disclosures - a 14 percent increase over last year - shows increasing interest from university researchers to participate in the statewide push to replace the disappearing jobs in the manufacturing sector with those in technology and life sciences.

When university intellectual property, ranging from disaster simulation software to more energy-efficient window design, is commercialized, it can end up bringing millions of dollars to the university and new jobs to the region.

"We get these zones of entrepreneurs," said Stephen Forrest, U-M vice president for research, describing how professors successful at commercializing an idea often spread the entrepreneurial bug to colleagues.

"It doesn't mean professors are being more inventive than before," Forrest said. "It means the interest in turning ideas into commercial enterprise is growing."

The potential commercial enterprise is one of the reasons U-M created the University Research Corridor with Michigan State University and Wayne State University. In a bid to separate their state funding from the state's 12 smaller universities, administrators from the three argue more funding could help the region compete with places like Silicon Valley. A recent report commissioned by the corridor found the three universities contributed nearly 69,000 jobs and $12.8 billion to the state.

In January, U-M moved to allow inventors to be compensated directly by the university, even if they also are compensated by the companies that license their technology. Previously, investors waived their rights to be paid by the university if they were compensated by the licensing company.

A 2006 report from the Milken Institute, an economic think-tank based in Santa Monica, Calif., that reviewed universities' data from 2000 through 2004, ranked U-M ninth most effective in technology transfer.

Commercialization of intellectual property doesn't always bring in a lot of money, but is pursued for the public good, Nisbet said. While the total revenue dollars are down, Nisbet said the change is merely cyclical and pointed out that U-M earned $2 million more in royalties this year, which will be poured back into research. The university is raising significantly higher revenue than a decade ago, he said, when tech transfer brought in only $1.8 million.

"The money coming from tech transfer is being reinvested into resources that might not be available through grants," Nisbet said. The money is split between the schools, the departments, the inventors and U-M's central administration, which helps fund research, he said.

In July, the business trade publication Fast Company rated Ann Arbor on the verge of being one of the 20 most innovative urban centers in the world, in particular as a top startup hub.

Bank of Ann Arbor's technology industry group vice president Michael Cole said the rating shows the potential Ann Arbor has, because of its partnerships, to grow its talent base.

"(The rating is) a pretty good third-party evaluation that we're not Austin or Silicon Valley yet," Cole said. "But we're moving from where we were in the 1980s, when we were a research center, to becoming a life science-techology center."

Tina Reed can be reached at 734-994-6843 or treed@annarbornews.com