In the wake of a dramatic pullback by venture capital funds in early-stage financing, the arrival of The University Funds, LLC (UFunds) is a welcomed new approach to commercializing intellectual property. Launched in May by serial entrepreneurs Jim Torina, who serves as president and CEO, and Pat Murphy, MBA, chief operating officer, the Bellevue, WA-based firm aims to combine the entrepreneurial expertise and management capabilities of a start-up business accelerator with an in-house VC fund to commercialize innovations with high-dollar market potential. The company is targeting health care and life sciences, plant and animal sciences related to the food chain, alternative energy and green technology, and software applications related to these sectors. The goal is to create a business infrastructure that supports the commercialization process from lab to market while generating acceptable returns for stakeholders. “The notion of having a new class of venture capital is very interesting,” says Janis Machala, MBA, director of LaunchPad Services at University of Washington (UW) Tech Transfer. “As specialists, they understand early-stage [technology] and they know the kind of work and resources that it takes.” The fact that UFunds has an accelerator associated with its model is “appealing,” she adds, “because it brings resources — not just capital — to the partnership.”

UFunds considers its business accelerator to be the most valuable part of the venture because it “aggregates” investors who are serial entrepreneurs, Murphy explains. These individuals “understand the challenges, know where the minefields are located, and understand how to organize projects,” he says. On the capital formation side, UFunds targets investors — they’re called “partners” — who have extensive networks rather than deep pockets. “We spend a lot of time doing due diligence on our investors to make sure they can have an impact,” Torina says. Some partners have their own networks of 300 or more investors, “and each of those investors knows another 20 people,” he points out. “When you start doing the math, by degrees of separation there are tens of thousands of people involved in what we’re doing.” The UFunds founders were motivated to create a new technology development model, they report, after their experience as mentors and judges for business plan competitions at their alma mater, Washington State University (WSU). After seeing several exciting IP opportunities perform well in competition but fail to garner sufficient capital to launch, the two devised a strategy to build “a company that builds companies” — the motto they coined for UFunds. Their goal is to launch three to four companies per year for the next five years, Torina reports, targeting technology with a market valuation of at least $100 million and a time to market of 36 months. Torina expects IP associated with these technologies to have demonstrated proof of concept, with a prototype either in hand or expected in 12 months or less. “We’re not looking for something that needs 10 more years in the lab before it’s ready to go to market,” he says. A detailed article on the University Funds model appears in the July issue of Technology Transfer Tactics. For subscription information, CLICK HERE.

Posted July 22nd, 2009 under Tech Transfer

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