University of Minnesota program will kick-start tech companies

Stefanie Botelho's picture
Wednesday, August 27, 2014

The program, launched by the university’s Office for Technology Commercialization (OTC), will invest up to $350,000 in equity financing in new startups that are currently developing their product or service. To be eligible for the funding, the startup company must produce a viable business plan and demonstrate qualified management that will oversee operations; secure a matching investment of an equal or greater amount from an outside investor and not have received any other equity capital from other, outside investors; and be approved by the university’s Discovery Capital board of advisors.

“The startup and investment landscape has changed in the course of the past few years,” said Brian Herman, vice president for research at the University of Minnesota, “and the university is responding to the needs of the market, as well as the need to get life-changing university research into the field. The Discovery Capital Investment Program is a university-first offering, demonstrating our commitment to advancing science and supporting entrepreneurs in our research community. The more we can do to foster start-up activities, the more our university, state and economy will benefit.”

The university expects to receive applications for funding in six industry-specific sectors: medical devices; pharmaceuticals; software and related services; engineering and the physical sciences; energy and the environment; and food and agriculture. Eligible companies will be selected for funding based on the university’s potential return on investment, its interest in commercializing technology developed through federally funded research and its desire to facilitate faculty’s involvement with early-stage companies.

“Our goal at the OTC is to find every avenue possible to accelerate the transfer of technology to market, and this type of investment program will better position our innovative faculty and researchers to translate their ideas into real-life solutions sooner,” said Jay Schrankler, OTC’s executive director. “We have world-class researchers at the U of M, and our office is excited that we are expanding the ways industry can take advantage of this knowledge and better interact with this new technology and our researchers. This year the university launched a record number of new startups—15—and we expect that this program will help contribute to this growth and innovation.”

The Discovery Capital Investment Program grew out of initial plans to form a university-focused venture capital fund. Recent economic downturns and the sizeable costs associated with managing a venture capital fund at the university have required university technology officials to rethink and restructure the initial plans. This new seed-funding program allows the university to better raise matching equity from outside sources, more quickly move university discoveries into the start-up phase and significantly reduce administrative and management expenses.

Along with the Discovery Capital Investment Program, the OTC also offers a number of ways to help university research find its way to market, including through a recently expanded MN-IP program that facilitates licensing terms of university technologies with industry, as well as through MIN-Corps, a U of M program geared toward taking the mystery out of commercializing technology by guiding students and researchers through the process.

For more information on the Office for Technology Commercialization, the Discovery Capital Investment Program and other OTC offerings, please visit www.research.umn.edu/techcomm.