Read the full article by Jeff Buchanan at Xconomy Wisconsin here.
The University of Wisconsin-Madison’s tech transfer office plans to invest $60 million in startups affiliated with the school over the next eight years and has launched a separate $50 million initiative aimed at commercializing UW-Madison research and discoveries in human therapeutics.
Erik Iverson, managing director of the Wisconsin Alumni Research Foundation—an independent organization that manages patents and licensing of intellectual property for UW-Madison—discussed those plans and more on Tuesday as he laid out a roadmap for WARF’s future during a presentation to university faculty members, Wisconsin business leaders, and others.
Iverson joined the organization in July 2016. He previously served as president of business and operations for the Infectious Disease Research Institute in Seattle. Iverson said that during his first year in the top job at WARF, he sought to “reset the strategy for the organization.” That involved encouraging those around him to “focus our energies on startups and entrepreneurship,” in addition to the intellectual property work WARF is most widely recognized for, he said.
WARF is known in academic and business circles as a tech transfer powerhouse. The organization has an endowment of $2.6 billion, and since its founding in 1925 it has provided more than $2.3 billion in grant funding to UW-Madison and the university-affiliated Morgridge Institute for Research. WARF has also been involved in some recent high-profile court cases, including one in which a federal judge ordered Apple (NASDAQ: AAPL) to pay more than $506 million to WARF in connection with a 2015 jury ruling that Apple infringed on a WARF patent related to computer processor technology.
WARF was granted 168 patents in 2016, sixth-best among the world’s universities, according to a ranking by the National Academy of Inventors and the Intellectual Property Owners Association. But WARF only nets a return on the money and time it puts into working with researchers to obtain patents when the organization licenses the technologies and discoveries to businesses—many of them new companies launched by UW-Madison students and faculty.
According to a 2016 report from PitchBook, a Seattle-based organization that monitors investment trends, UW-Madison came in 14th in a ranking of schools with the most students who start companies and later raise funding from investors. Being a top-15 school for entrepreneurship is likely a point of pride for the state’s flagship university, but Iverson noted that Wisconsin has finished last in the Ewing Marion Kauffman Foundation’s ranking of startup activity by state the past three years.
Like some other entrepreneurship advocates in Wisconsin, Iverson said he believes there are faults with the methodology Kauffman uses to compile its rankings. But he also describes what he perceives as an “aversion to risk” among entrepreneurs and would-be company founders.
“Some people [in Wisconsin] were even saying that if you failed at a company, you’re essentially blackballed,” he said. “I think that’s entirely the wrong approach. You can rest assured that WARF—although we’re not going to make stupid decisions—I am very welcoming to risk. I am not a risk-averse person.”
Iverson recalled that it wasn’t uncommon for entrepreneurs he met with while living in Seattle to have stumbled one or more times before having success with a startup.
“If somebody takes a shot at it and doesn’t do so hot—whether from a technical perspective or market perspective—and has the guts to pick it back up and try again … that’s fabulous,” he said. (Interestingly, the Seattle startup community has had its own disagreements over failure and risk aversion.)
In any case, WARF will soon begin providing more entrepreneurs with financial support to pursue their goals. Iverson said the organization’s board of trustees recently approved a proposal to create two new venture capital funds that will invest in “UW-Madison associated spinouts.”
WARF plans to draw on its own funds when making investments out of the new VC funds, Jeanan Yasiri Moe, WARF’s director of strategic communications, said in an e-mail.
The first is a $10 million fund that will provide seed-stage capital to startups, with investments likely falling in the range of $25,000 to $150,000 each. Iverson said WARF plans to make 10 to 15 such investments each year over the next four to eight years. When possible, WARF would like to partner with outside angel investors on deals, he added. (He said he also wants to engage banks in Wisconsin, most of which he said could do more to support entrepreneurs.)
The second fund is a $50 million pool of capital that will allow WARF to participate in startups’ subsequent rounds of financing, Iverson said.
“If we can fund 15 companies in the seed round, [maybe] three or four of those the next year make it to a [Series] A round,” he said. “We want to be able to participate in that A round, and on we go.”