U seeks a better way to market its ideas

Nov. 1--Unhappy with the slow pace of commercializing its intellectual property, the University of Minnesota has signed an agreement with a private firm, aiming to more quickly convert the school's technology and patents into viable businesses.

Under the September deal, V2R Group Inc. will evaluate the school's inventions, including software and medical devices, license the technology and then provide initial capital and managerial talent to build a company over 18 to 24 months.

"Universities are the greatest source of knowledge," said Bahram Yusefzadeh, founder and chairman of V2R. "The challenge they have is how to convert this into revenues for the university. It takes a real professional business to identify business opportunities and leverage it."

Faced with budget constraints at the federal and state levels, universities are turning to their own inventions to generate revenue. Besides bolstering their internal technology transfer programs, schools in recent years have been increasingly relying on outside help, such as professional "matchmakers."

Such firms help get universities together with patent lawyers, executives and venture capitalists.

But the V2R deal is unique in that the company offers a "one-stop" service to the university that could greatly speed up the time it takes a technology to hit the market, said Leslie Norins, publisher of Technology Transfer Tactics, an international newsletter in Naples, Fla.

"I don't recall any company that will take over the entire process," Norins said.

Doug Johnson, director of the U's Venture Center, stressed that the agreement does not give V2R exclusive rights to develop U of M technology. But the company will have the ability to scour the university's intellectual property in search of potentially viable projects.

Johnson said V2R is just one of several initiatives the university has undertaken during the past 18 months to help speed up what has been a slow and frustrating process.

"We weren't pleased," Johnson said. "That's why we made all of the changes. Clearly, we are on the right path."

In addition to the V2R deal, the U established the Venture Center in 2005 to oversee the creation of start-ups, and six months ago it recruited a senior Honeywell executive to run its office for technology commercialization.

According to the Milken Institute, the university in 2006 ranked sixth in North America in turning biotechnology into viable products and companies.

But previous years have been less impressive.

In 2005, the U reached 79 licensing deals and launched just one start-up. The school won 48 patents, filed 94 patent applications and generated $47.3 million in licensing revenue.

By contrast, the University of Wisconsin in Madison wrote 216 licensing agreements and launched four start-ups, according to a survey by the Association of University Technology Managers. It won 89 patents, filed 203 applications and generated $49 million in revenue.

Modeling on Google

But sometimes it takes just one blockbuster start-up to establish a university's reputation. Google Incorporated's search technology originated from California's Stanford University, which has reaped millions of dollars in royalties from the company.

"We want the next Medtronic, not the next dress shop," Johnson said.

Part of the challenge facing schools such as the U is that analyzing the market potential of university technology is difficult and inherently risky, he said.

That's where V2R comes in. Founded last year, the company has reached nondisclosure agreements with seven schools, including the University of Alabama and the University of Florida, to broadly review technology across the schools' portfolios. Normally, a school would have to sign confidentiality agreements with individual parties interested in a particular technology.

Once V2R determines that a technology has market potential, the company licenses the product from the university, typically in exchange for a 5 percent royalty fee and a 5 to 10 percent ownership stake in the new company. The creators of the technology also receive some equity in the start-up.

V2R, which maintains majority control of the companies, normally invests as much as $2.5 million. It also recruits senior managers and provides legal, banking and accounting services.

V2R owns three start-ups, including ICU Data Systems, an electronic patient information firm it created based on technology from the University of Florida. V2R licensed the technology in February 2006, gained FDA approval in November and launched ICU in February of this year.

Yusefzadeh, who will meet with U officials this month, is especially eager to commercialize the school's prized medical device technology.

"You can't deny the fact that med-tech is the heart and soul of the U," said Yusefzadeh, who lives in Wayzata.

The company, which hopes to go public soon, said it wants to launch 10 to 15 start-ups a year from U technology -- about five times more than the school did on its own last year.

But V2R still faces big obstacles, Norins said. The firm must win over the professors and doctors who create the technology. While the university legally owns their inventions, professors and doctors -- some of whom are shy or just suspicious of business -- might not disclose their work. Some might not even know they have a technology that can be commercialized, Norins said.

"I don't know how V2R will get over the hurdle," he said.

Thomas Lee --612-673-7744

Thomas Lee --tlee@startribune.com

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