Angel Funders Boost Academic Tech Startups

Angel funding – that's funds from friends and family, as well as, officially, Securities and Exchange Commission-accredited high-net-worth individuals – is boosting early stage enterprises spinning out out of academia and non-profit research organizations, according to an annual survey by the Association of University Technology Managers.

The group announced last week that 21 percent of the funding for startup business enterprises in 2004, based on innovations coming from its members, was provided by angel investors, while venture capital accounted for some 19 percent.

These numbers are important indicators for the new biology economy as academia and non-profit research institutions are becoming the engines of innovation in the life sciences and high technology, fueled by Federal funds, and as a consequence of the large publicly held players in the molecular biology sector focusing on the quarterly demands of Wall Street and stepping into the marketplace when a technology has moved to a high state of commercial promise, or offers a high degree of potential as a disruptive factor.

Venture capital investors apparently are recalcitrant to support companies at the earliest stages of emergence, a situation that compels a demand for support from organizations that have not only funding, but also managerial and marketing expertise. It is often is the case that academics are more interested in commercial gain if it helps them fund their particular research interest. Although that is not to overlook the academic researcher with a yen for a dollar.

According to AUTM, startup companies flowing out of the member institutions in 2004 grew 24 percent compared to 2003, with 232 institutions responding to a survey conducted by the Illinois-based group that counts as its members some 381 US and Canadian universities, hospitals, and nonprofit research institutions.

Some 462 startups were reported in the year, reversing a three-year downward trend among AUTM members responding to the survey. Additionally, the group reported that 92 existing early-stage academic spin outs folded in 2004 compared to the 131 closing in the previous year.

The survey also reported 4,783 licenses or options granted on US members' technology, up 6.1 percent over 2003; some 10,517 patent applications, and $1.03 billion in licensing fees.

New York University and Columbia University are regarded as the leaders in the area, each with over $100 million in licensing income in 2004, according to an article in the State News, a publication covering Michigan State University, which was seventh on the AUTM list with licensing income of $36 million in 2004.

With $47 million in licensing income, the Wisconsin Alumni Research Foundation of the University of Wisconsin is third, followed by Stanford with $47 million, and then the University of Minnesota ($45 million). MIT is 12th on the list with $25 million while Harvard is 15th with $16 million, the article said, in numbers attributed to the Chronicle of Higher Education

The top 10 universities in terms of patents granted, according to the US Patent and Technology Office, are: the University of California (424 patents); California Institute of Technology (135); Massachusetts Institute of Technology (132); University of Texas (101); John Hopkins (94); Stanford (75); University of Michigan (67); University of Wisconsin (64); University of Illinois (58); and Columbia (52.)

For those with an interest in more academic patent number crunching, see the blog, see Patent Chronicles

For a lawyer's take on patents, see Patent Baristas though, be prepared, there is no brevity in these briefs, but lots of information.