By Allan Maurer
ATLANTA—Realizing the commercial potential of an idea developed in a university laboratory is a process fraught with obstacles. Atlanta’s VentureLab, a program of the Georgia Research Alliance, works with Georgia’s six research universities, provides support throughout what it calls “the continuum of innovation,” to spin companies out of those ideas.
Lee Herron, vice president of commercialization for VentureLab, tells TechJournal South the program, founded in 2002 at Georgia Tech, follows a process that helps realize the commercial potential of ideas generated in the state’s research universities, Georgia Tech, Georgia State, Emory, The Medical College of Georgia, the University of Georgia and Clark Atlanta.
Each university funds its own VentureLab program at varying levels. VentureLab in turn, provides funding for specific projects from those programs. “It’s a real partnership between the individual institutions and the Georgia Research Alliance,” says Herron.
Since 2003, VentureLab has provided 203 funding awards to 150 projects based on various milestone achievements. In Phase I, a project receives $50,000 to basically determine the project’s commercial feasibility. Phase II, awards up to $100,000, require outside matching funds. “We’re looking for outside validation of the opportunity,” says Herron.
Phase III consists of an unsecured loan of up to $250,000. “You couldn’t go to the bank and get that type of loan,” notes Herron.
Next in the series would be money from the GRA fund—which just closed on $18.75 million and plans to raise $30 million.
“What we try to do with VentureLab,” says Herron, “is cover the innovation continuum from inception to getting a company on its feet.”
VentureLab directors meet four or five times a year to review proposals and decide on which to support. Due diligence is not as extensive as for a venture or angel funding. “Many of the proposals are just ideas with an early indication of opportunity,” says Herron. “It’s usually associated with a faculty member who submitted it through the VentureLab program at their university.”
So far, the program has launched 80 startups, some of which have been acquired, some are inactive, and a few have moved out of the state.
VentureLab grads that have done well include medical device companies CardioMems and Medshape, and solar energy innovator Suniva, with, Herron adds, “More on the way.”
Many projects represent strengths of their representative schools, Herron notes, such as security and wireless ideas from Georgia Tech. “I’ve been told that 10 percent of the engineers in wireless are Georgia Tech grads,” says Herron. “So we see a fair amount of that.”
Projects from the University of Georgia include those focused on agricultural biotech, biotech, and healthcare. Those from Emory are across the board in the life sciences, drug development, and medical devices. The Medical College of Georgia is also strong in life sciences. “It really all starts with strong research programs,” says Herron.
Once a company is launched, a number of incubators are available to provide early stage space to the emerging companies, including Georgia Tech’s ATDC, the Bio Business Center at the University of Georgia, EmTechBio at Emory, CollabTech at Georgia State, and one at the Medical College of Georgia.
“We provide resources, and then when a company is mature enough and needs space, it’s available,” says Herron.
While Herron says there are always bottlenecks to nurturing new companies along that continuum of innovation, such as funding, one of the biggest problems is finding appropriate management for the young firms, says Herron.
“There are always issues with funding, a little worse now, but it’s always a challenge.”
But early-on, he says, VentureLab tries to pair up the young companies with appropriate management talent. “We don’t necessarily want faculty founders to quit their day jobs,” Herron points out. They are not necessarily cut out for management roles either.
So, VentureLab runs a fellows program that brings in executives and gives them carte blanche to look at opportunities. It finds people through alumni of the various universities, entrepreneurs in Atlanta looking for their next opportunity, or out of state people who want to return to the area.
Often, says Herron, they’re people who have done well in industry, cashed out and are not ready to retire.
“It’s really key, finding those folks,” says Herron. “It’s probably the single biggest differentiator we have.”
For an examply of Georgia Tech’s current VentureLab projects see: http://www.gtventurelab.com/tracking.html
Previously on TechJournal South: Georgia Research Alliance venture fund raises $18.75M
http://techjournalsouth.com/news/article.html?item_id=7703
Online: www.gra.org
Southeast Venture Conference, February 29 – March 1, 2012 at the Ritz Carlton in Tysons Corner, VA – Where Smart Money Meets Smart People.
www.seventure.org
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