From Academics to Entrepreneurs

Risk-Taking Faculty, Students Are Coming Out of the Lab to Create Startup Companies

by Robert Sanders

A record number of Berkeley graduate students and faculty have jumped into the corporate world in the last year or so, seduced by the dream of turning a fledgling technology they nurtured in the lab into a marketable product.

In the past fiscal year alone, three professors and a half dozen former graduate students licensed or optioned patents to Berkeley inventions to start new companies.

"In the previous four years we had none," said an obviously elated Bill Hoskins, director of Berkeley's Office of Technology Licensing, which is celebrating its fifth anniversary this year. "Throughout those years we worked hard to facilitate technology transfer by working closely with inventors, and all of a sudden in the fifth year things began to come together.

"As we start our sixth year, four more investor groups are negotiating option agreements."

The Board of Regents has first dibs on patenting all developments from UC labs, and in 1993 took in $45.3 million through licensing fees paid by companies that use the patented technology. That was more than any other U.S. college or university, according to a recent national survey.

Yet UC faculty and students invent far more than is ever developed for commercial use, and with decreased funding from the state and federal government, some campuses have increased their efforts to market them. The Office of Technology Licensing was formed in 1990 specifically to market Berkeley patents, taking over a function that until then was handled by the Office of the President.

Even with increased marketing efforts, however, the reaction from industry has many times been "show me a product." The expense of turning a lab success into a viable product is too much for them to gamble, but they're more than willing to snap up small companies that have demonstrated "proof of concept"--that is, that the technology really works when scaled up to a prototype.

In fact most of Berkeley's new entrepreneurs attribute their bold ventures to the realization that industry is not going to make the effort to develop their technology, no matter how spectacular. If you want your work to get to market, they say, you have to develop it yourself.

"Even when their own scientists and engineers come up with an idea they would rather they leave and start their own company to develop it," says Alan Bearden, a professor emeritus of molecular and cell biology who spent two years trying to interest established companies in his laser feedback microscope. Many were interested, but when it came to a commitment it was always "maybe next year."

Retirement gave him the incentive he needed to break out of the research lab and "conquer new worlds." He teamed up with another entrepreneur this spring to form Quadrant Imaging, Inc. in Walnut Creek, to develop a prototype general-use microscope with 3-D imaging at one-tenth the cost of competing microscopes.

"It's a hell of a lot different from the academic laboratory, but it's rather fun after 25 years in Donner Lab," he says.

The entrepreneurial bug bit two of his graduate students also, Mike O'Neill and Terrence Wong. They too formed a start-up, Calimetrics, Inc. of Emeryville, and this year licensed the basic principle behind the microscope, called laser feedback interferometry, to develop a way to boost the storage capacity of CD-ROMs. They already have eight employees and a grant from the National Institutes of Standards and Technology.

They are one group that has taken advantage of a new strategy to help small startup companies that are long on ideas but short on money. Hoskins has tried to accommodate them by offering more flexible licensing arrangements, including cheaper, short-term options on a license. (A license on a patent allows a company to develop the patented technology for a particular use, while a more expensive "exclusive" license guarantees no one else can use the technology for the same purpose. An option holds a company's place in line to obtain a license.)

The advantage of a short-term option--six months, for example--is that it provides a company with short-term rights they can use to develop a business plan and attract venture capital, possibly culminating in an exclusive license, Hoskins said.

"The cheaper option was critical for our start-up," agreed Steve Smith, an assistant professor of electrical engineering who took a two-year "industry leave" to start his Berkeley company, Beckman Display, Inc.

"Small start-ups can't exclusive option. The university was flexible enough to allow us to purchase short-term options, in the hope it will pay off in the long run through patent royalties."

Smith hopes to develop applications for something he first tried in his Berkeley lab. Called fluidic self assembly, it proved to be a cheap and effective way to assemble a silicon wafer full of laser emitting diodes. He has hired one of his graduate students, Mark Hadley, to help develop it.

For Stuart Wenzel and Ben Costello, the technology they worked on as graduate students in the Berkeley Sensor and Actuator Center (BSAC) seemed too good to abandon, so after getting their PhDs they started a company to develop actual products.

"There were plenty of jobs available in our field, but the technology seemed like it had a lot of promise, so we decided to break out on our own," Wenzel said.

They dubbed their company Berkeley MicroInstruments, Inc., rented space at the Richmond Field Station in 1993 and succeeded in getting government funding to develop prototypes. Just this year they took out their first license for a UC patent--they have optioned nearly half a dozen BSAC patents in all--and have at least one prototype product.

All their products are microscopic machines or sensors. The field of micromachines was pioneered a decade ago at Berkeley, and one of those pioneers, BSAC co-director and EECS Professor Richard White, is an adviser.

Potential products include microscopic devices to measure air pollutants and fluid density sensors that might find use in airline fuel gauges.

Whatever the reason behind their decisions to leap even briefly into industry, the fact that these students and faculty did so demonstrates a faith in their research that isn't lost on potential investors.

In terms of marketing a research development, "I'm more effective if I step out of my university role and try to do the development work personally to get the ball rolling," said Smith, who, despite his title as chairman of the board, admits to doing everything from hooking up the company's computers to changing the fax paper.

"Industry will take your technology much more seriously if you put your own time into applying it. I think more faculty should do this to create closer ties with industry."


Copyright 1995, The Regents of the University of California.
Produced and maintained by the Office of Public Affairs at UC Berkeley.
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