University research is a bargain for tech companies

Executive summary:  It’s a steal.  For you, I mean.

Many companies will crinkle up their noses, frown and then throw up on your shoes if you suggest they should work with a university research team to achieve their technology goals.  And, in many cases, your shoes would deserve to be soiled in this manner.  After all, there is a reason that good research faculty are teaching college classes instead of heading up research labs for private companies.  The academic life has its own pace, which is nowhere near fast enough for the typical technology based business.  I have personally managed a number of university collaborations over the years, and I have management-inflicted scars on my back to prove it.  But even though the interface to a university research team is difficult to control and synchronization of goals with business timelines is almost impossible, I still believe that university research is the best bargain your business will ever see, outside of bureaucratically distributed stimulus funds.

First, consider how much larger is the skill set of a well-endowed university research laboratory.  Generally there is a mix of seasoned senior research-managers and younger faculty, which really brings some R&D power to the problem.  In addition you get grad students feverishly working to earn their degrees, as well as apprentice post-docs trying to beef up their resumes using your project.

Most importantly, the cost of the research is a real bargain.  Not only do you get the benefit of years, sometimes decades of well-equipped labs, some containing one-of-a-kind tools developed specifically to study problems in your field, but you only have to pay a fraction of the actual cost of the work.

Think about it.  In a public university, the state budget underwrites a huge part of the research, not only by providing facilities, but by subsidizing the salaries of the folks working for you.

Let’s look at the Virginia budget (relevant tables for education spending are here).  The University of Virginia and its Medical School, Virginia Commonwealth University, and Virginia Tech together account for about $4 Billion of the State budget.  So, for example, if Virginia Tech, with about 1500 faculty, gets about $950M from the state, that equates to about $680k for each faculty member.  Of course, not all of that money goes directly to research faculty, but still, because the state underwrites the university operation to this degree, outside sponsors get a huge bargain compared to what it would have cost them to accomplish the same research results internally.

Even so, the perceived “relaxed pace” with which university research occurs is often at odds with product windows of opportunity in the commercial world.  Yes, that’s true, and it’s not going to change.  But it shouldn’t.  Businesses should view university based research as a long term strategy for obtaining leading edge technology for next generation products, not quick fixes for the failures of an internal R&D effort.  And while there are slackers within a university just like any other organization, the unbounded freedom to explore science and technology within the university environment can unleash extreme creativity, often leading to game-changing, transformational technology for the market.

One criticism often leveled at university technology transfer efforts is that the school “wants to own all the intellectual property developed with the sponsor’s money”.  Well, that’s sort of true, but there are some reasons.  Generally, the university requires faculty to assign all their rights as inventors to the school for management.  In exchange, the tech transfer office (TTO) returns a significant fraction of any license revenues back to the inventors.  So they could, for example, reap huge royalty payments from a pharmaceutical company for a drug they helped develop without having to work in a startup company.  The TTO protects and markets the inventions for the state and the inventor.  In the case of company sponsored research, the sponsor generally gets some sort of credit in the way of paid up options to negotiate exclusive license agreements, and possibly very favorable terms, in exchange for their portion of the funding.

It’s important for the company to understand that no matter how much funding they put into the project, the taxpayers of the state have also put in a significant amount, and expect a fair return.

But it’s still a bargain.  Partnering with a university results in the development of leading edge research at a fraction of the actual cost to the company.  Often, for the company, it can be the difference between being a market leader or an also-ran.


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