Over the summer, VCU Innovation Gateway gained the responsibilities of forming and driving new university-created startup ventures. It’s a related but different field to tech transfer, and the job requires a professional trained in commercialization and startup formation.
That role has fallen to Gerard Eldering, a commercialization expert and entrepreneur. He serves as Director of New Ventures, an interim role at the moment but one that the Northern Virginia resident, who commutes to Richmond each week, will use to build a foundation for VCU’s inventors to turn research into revenue-generating companies.
“There are several tasks in front of Gerard, and one of the most important is creating a strategic plan to understand and implement the type of support we need for startup creation at the university,” says Innovation Gateway’s Senior Executive Director Ivelina Metcheva, Ph.D. Within that plan will be benchmarks against selected peer technology-transfer teams, along with more aspirational programs. Innovation Gateway will identify best practices and build a long-term program based on them, she says.
The startup team has also identified a cohort of four VCU startups to incubate and support as a sort-of test run. The goal: guide them through the process of forming a company, identify part-time CEOs and talent, and find funding. To get there, Innovation Gateway is working closely with partners such as Activation Capital. “For us, the new focus on VCU startups is about giving them the infrastructure and the connections they need to form viable businesses,” Metcheva says.
Eldering, founder of startup foundry InnovateTech Ventures, is a member of the VCU Innovation Gateway Commercialization Fund board and CEO of Perfusion Medical, a company in the university portfolio. Eldering has more than two decades of experience in technology transfer ventures, has created more than a dozen start-ups and achieved million-dollar-plus IP deals and company exits. His career has built a portfolio of successful companies, often based on university innovations.
How did you get connected to the university and Innovation Gateway?
I worked with a nonprofit, Mitre Corp., to set up their licensing office. We were in Tyson’s Corner and collaborated with universities that had licensing programs — all of the Virginia universities, including VCU. So, I’ve been working with VCU and Ivelina for more than a decade. This gives me more of an excuse to be at VCU and connected to the system.
When you look at the Richmond region, what is your analysis on where our own venture ecosystem stands?
The Central Virginia region is one where there's lots of resources and opportunities, but they’re largely overlooked.
If I go to Boston and spent a week up there and want to meet with people and talk about my startup, I can find people. But somebody in the same situation could visit Richmond for a week and walk away and go, “There's nobody down here. No investors, no researchers, no skilled workers.” But I would argue they are wrong. Relative to a lot of other cities, and even big cities, Richmond’s got VCU and other universities, and VCU’s research activity relative to most universities is actually enormous. It's pretty considerable.
And someone has to put those pieces together. That's a big challenge, and something I hope to have an impact on in the short term and lay a roadmap and bring to the surface the potential and capabilities we have in Richmond.
Explain the difference between the protection and licensing work that Innovation Gateway does, versus the venture and startup work.
Innovation Gateway is about really protecting intellectual property, and then facilitating a path to the market for it.
In most cases you can’t get a technology to market without the intellectual property being protected. Say you invent a new therapeutic drug. And you decide to skip the whole IP protection and patenting phase, and just create your company and go to investors. The investors are going to throw you out of their office as soon as you answer the question about whether you have a patent. If you are a VCU researcher, VCU owns the rights to your IP. Innovation Gateway is really sort of the first step on the roadmap to secure protection around an idea.
Startups are one pathway. But for probably the majority of inventions, Innovation Gateway is actually licensing the technology out to an existing company. There are pros and cons, tradeoffs between licensing and a startup. We walk inventors through it, and if a startup is the right direction, that’s where I’d come in.
Where does VCU stand when it comes to research and startup activity compared to national rankings?
The tech transfer industry focuses on research volume, and VCU is around $360 million. VCU is pretty high up there. And then they look at how many inventions are coming out of that, and VCU’s not too far off on the standard ratio. You could critique VCU and say our startup production relative to those other numbers is lower than some benchmarks. But universities are all over the map. And if somebody wanted to pick a fight with me over that, or criticize VCU, I'll pull up a list of 20 universities that have more assets and more capabilities that are doing far worse. VCU is actually doing much better than the tech transfer offices in its commercialization peer group by spinning off 6-7 faculty startups a year versus four on average for that group.
How far de-risked does a technology have to be to be ready for a startup?
In most cases, you've got to get investor capital to get the startup to grow. I really like to use that as a barometer. So, what are on the list of things that will get me a probability of over 50 percent that I can even get investor capital?
One of the answers is to de-risk the technology — to minimize as much risk as possible that the invention will succeed. Now, what one investor might see as de-risking, another investor has a different answer. If we were looking at a therapeutic or new drug, for example, I would like to see a large animal trial that was conducted and accepted for publication in a well-known, peer-reviewed journal. Some other investor would say, “Well, I want to see an IND (Investigational New Drug Application) approval from the FDA for you to start experimentation on humans.” Now, if an investor said that to me, I'd counter and go, “Wait a minute. That's not what universities do. Large animal study, renowned publication…that’s what universities do.”
In that brings a challenge that we have to deal with here: How do we de-risk at VCU? University faculty and researchers are not experts at de-risking. Where we see things go off track sometimes is that the researcher holds on to that technology, thinking they have to de-risk it more. But they're sometimes holding longer than they need to, and they're not actually really doing the right things to de-risk it. So, trying to control too much de-risking activity within the university is a challenge.
Some researchers may be hesitant to start something out of fear of being perceived as chasing the money. What’s your advice to those inventors?
The first thing that drove me to where I am today, to follow this career, was a desire to have an impact. I want to be 90 years old and think back and say, “OK, the stuff I did matters. There's some products in the market, there's medications, and the world’s a little bit better of a place today because of what I did.” While earning money is important to make a living, being “in it for the money” isn’t a message you ever want to send to others.
And for a faculty member involved in a startup, that can be a similar challenge for them among their peers. And there can be even a higher level of sensitivity in a university environment. Some folks are going to say that “Going out and trying to make a gazillion dollars off your technology is not what we as an educational institution are all about.”
But I don't agree with that. Inventing technology and getting it into the hands of the public is part of the university mission and contributes to the educational process.
If a faculty member was saying to me, “Some of my peers would criticize me for starting a for-profit company,” what I would say to them is to focus on talking to people about the impact you want to have. For the most part, if we can take a good technology, have a big impact on the world, and play a role where we take risks and work extra hours making that happen, and therefore have equity, were going to get rewarded financially, too.
Just in the short time on the job, I have talked about 20 or 30 technologies at VCU and every one of them has the potential have an impact on life. And the cool thing about the university, the cool thing about the VCU portfolio, is that VCU researchers can have a positive impact on the world and make it a better place. And if you can earn money and make the world a better place, I can think of no better combination.