Good Things DO Come in Small Packages
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Often the easiest
and fastest way to commercialization is the old fashioned way
- licensing to a company. When department researchers developed
a stub loaded double helix antenna, they knew it had commercial
value. The new antenna offered the signal strength of traditional
helical antennas at one-third the diameter and half the length.
"Its small size made it ideal for wireless applications,"
said Warren Stutzman, director of the Virginia Tech Antenna Group
It had taken four years to develop, using both internal and external
funding. "Then, the company that had initially wanted the
antenna chose not to license the technology, in spite of considerable
pressure from me, CIT, and the university," he said.
"We submitted the patent anyway, and received the patent
last year. It was licensed by Turbowave a couple weeks after
notification of patent acceptance. Turbowave is a company that
produces and markets wireless computer interconnects. They found
the antenna on the VTAG web site."
At the same time Turbowave was licensing the technology from
VTIP, Stutzman was teaching a short course at a conference. "A
fellow who was taking the course came up to me to talk,"
Stutzman said. "He opened his attaché case, and there
was a collection of items he had built, including an antenna.
He had developed a unique manufacturing process. So, we teamed
up with him," he said.
"I was able to put together the ultimate product company
with the manufacturer." The Antenna Group did the design
and test evaluation.
"It has worked very well," Stutzman commented. "VTIP
negotiated excellent royalties and terms. They paid the license
fees. The graduate student, Mike Barts, and I get royalties at
no risk, and the department gets money from it also," he
"I consider this to be the primary entrepreneurial model.
Students do research. Once in a while it turns out to be very
valuable to industry, and everybody is happy."
Most license agreements do not have large percentage royalties
and are measured in the thousands, of dollars - not millions,
like successful start-ups, Stutzman acknowledged. "However,
when comparing university royalty potential versus university
equity positions in faculty-owned companies, it always boils
down to success stories," he said. "So far Virginia
Tech has not hit the really big patent. It will some day, and
not too far off."
When comparing the lower income stream of licensing royalties
to equity in a successful IPO, universities need to consider
that licensing is lower risk, he said. "The large income
potential of equity in a company is accompanied by large investment
and large risk. In this case, the investment includes faculty
and graduate student time. We must ask 'what is the probability
that the small company will really make it big, and what will
it cost the university?'"
Stutzman said that in some cases, there might be reasons to start
a company to commercialize a technology. "However, there
are so many problems in that," he said. "People get
confused as to whom they are working for. When they start a company
and have financial risk, they will do whatever it takes to protect
that risk - even if it means putting in more time at the company
than originally promised. Working part time at the company invariably
ends up taking much more time. In a university, nobody keeps
a time clock and accountability is difficult."
There is definitely a place for university involvement in companies
if these issues are addressed properly through formulation of
general policy and by examining each company carefully.
The university holding an equity share in a company is a more
open and acceptable approach, he said. "However, it still
has accountability problems. I also worry about students getting
into the companies, getting detached from the university, and
getting off track from their educational goal. Their progress
toward a degree can suffer."
In spite of these concerns and issues, Stutzman said universities
should continue to be involved in research, development, consulting,
and sometimes commercial activities. "The faculty is the
university," he said. "The more that faculty members
are involved in diverse activities, the more enriched their classrooms
are...Why are the better teachers the better researchers? They
are more exciting. They are bringing all that into the classroom."
When commercially valuable technology is developed in university
laboratories, however, he believes that the faculty should first
turn toward the traditional licensing model.