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What would all you hooligans, punk rockers, castaways, hardcore Utes like to hear?*

January 24, 2012

There has been quite a bit of media coverage in the past several months about the University of Utah being the top school in the U.S. for creating start-up companies for the second year in a row.

So, I thought it would interesting to take a closer look at those numbers and see what we might learn as it relates to commercialization efforts in Louisville.

According to AUTM, the average number of startup companies created per U.S. university, hospital and research institution was 3.29 in 2009 and 3.56 in 2010.  The University of Utah [UofU] created 22 companies in 2009.  In 2010, the UofU launched an additional 19 companies.

The UofU created The Technology Venture Development Office in 2005.  Since that time, the UofU has created approximately 100 companies.

So how many of those companies formed between 2005 and 2010 have raised venture capital?  To answer that question, we (me and Kevyn Merten) searched VentureSource working—primarily—from this list of UofU startup companies.  We only looked at “life science” companies.  Here’s what we found:

  1. Wasatch Microfluidics, LLC was founded in 2005.  It is based in Salt Lake City [SLC], UT.  It has raised approx. $300,000 from Salt Lake Life Science Angels and Utah Angels.
  2. Allegro Diagnostics Corp., located in Maynard, MA, was founded 2006.  It has raised approx. $12 million.  Investors include Boston University, Catalyst Health Ventures, Kodiak Venture Partners and National Cancer Institute.
  3. Exeven Therapeutics Corp., founded in the 2006 timeframe, is located in SLC.  It has done a seed round of $500,000 with vSpring Capital.
  4. Larada Sciences Inc., based in SLC, founded 2006.  Larada has raised approx. $2.6 million, from Salt Lake Life Science Angels and others.
  5. Lineagen Inc. was founded in 2006.  It is located in SLC.  The company has raised approx. $14 million from investors including vSpring, Mesa Verde Venture Partners LP, PrairieGold Venture Partners and Sanderling Ventures.
  6. Catheter Connections, Inc. is located in SLC.  Founded in 2008, it has raised approx. $8.5 million.  Investors include three UT-based funds, including vSpring.
  7. JSK Therapeutics Inc., located in SLC, founded 2008.  It has done a seed round of $400,000 by vSpring.
  8. Sera Prognostics, Inc. is located in SLC.  Founded in 2008, Sera has raised approx. $22 million from investors including Catalyst Health Ventures, Domain Associates LLC, InterWest Partners, Osage Ventures, Upstart Ventures (SLC) and individual investors.
  9. Scintalla Inc., located in Miami, FL, was founded in 2009.  It has raised $2 million from vSpring.
  10. Veritract Inc. is located in SLC.  Founded in 2010, it has raised approx. $800,000 from KickStart Seed Fund (SLC), Knox Opportunity Fund, Salt Lake Life Science Angels and individual investors.

UofU affiliated startups raised a total of approx. $63 million between 2005 and 2010.  Two of those startups—accounting for approx. $14 million—are not located in UT.  A good chunk of the remaining $49 million is concentrated in three companies.

I don’t know much about the other 90 companies.  And, this is focused on life science startups.  We searched and found nine UofU companies with either SBIR or STTR grants.

Tip of the hat to the University of Utah.  Keep in mind, this probably isn’t exhaustive and was only based on what shows up on VentureSource.

The point of this is to use the UofU “buzz” as a way to examine what we are doing here in Louisville.

So, now time to compare the UofU and the University of Louisville over the same timeframe.  Here are some additional data points to put this in context:

  • According to AUTM, the UofU started its technology transfer program in 1968.  The University of Louisville started its office in 1996.
  • 2008-2010 Cumulative Research Expenditures for the UofU were $1,078,148,629.  The University of Louisville checked in at about half that—$520,391,000.
  • Of note, however, in August 2011 The Chronicle of Higher Education ran an article on the top 100 universities in biggest gains in federal funding for R&D in sciences and engineering for the period 1999-2009.  The University of Louisville ranked fourth on that list with an increase of 263.1% over the decade.
  • The Louisville/Jefferson County, KY-IN MSA ranked 42nd by population according to the United States Census 2010, with 1,307,647 people.  The Salt Lake City, UT MSA was 50th with 1,124,197 people.

To do an “apples to apples” comparison, searching VentureSource, between 2005 and 2010 the following University of Louisville affiliated startups received funding:

  1. Pradama Inc., located in Louisville and founded in 2005, has raised approx. $2.2 million from investors including Commonwealth Seed Capital LLC, The Kentucky Science And Technology Corporation, Kentucky Seed Capital Fund and Triathlon Medical Ventures.
  2. RhinoCyte, Inc., based in Louisville, was founded in 2005.  RhinoCyte has raised approx. $3.9 million.  Investors include Bluegrass Angels, The Kentucky Science And Technology Corporation, Kentucky Seed Capital Fund, Queen City Angels and individual investors.
  3. Advanced Cancer Therapeutics, LLC was organized in 2007.  It is located in Louisville.  The company has raised approx. $10 million from investors including B F Capital, Inc., Commonwealth Seed Capital LLC, undisclosed institutional investors and individual investors.

According to VentureSource, University of Louisville affiliated startups raised a total of approx. $16.1 million between 2005 and 2010.

I have the benefit of knowing one University of Louisville startup—Immunotheragnostics Incorporated, founded in 2005—was acquired in 2008 while in the process of putting together a Series A (it had received a $240,000 convertible promissory note financing).  Additionally, Intrepid Bioinformatics Solutions, Inc., incorporated in 2006, has raised approx. $1.1 million.  But including these would be “apples to oranges.”  And I’m sure the UofU could point to similar cases that don’t show up on VentureSource.

How are we doing in comparison to Utah?  In terms of gross dollars invested, they are eating our lunch.  But, with a few notable exceptions, the dollars that have gone into these UofU startups have been from Utah, or at least regional sources.  That’s similar to Louisville.

Does it even matter how we’re doing in comparison to Utah?  Probably not.

Something we may both deal with; the concept that technology licensing has a big role in economic development.  According to AUTM, more than ¾ of the startups formed in 2010 were located in each institution’s home state.

Ideally, sure, we’d create startups based on University of Louisville technology that get funded and stay in the community, creating jobs, wealth and, hopefully, more startups.  But is that always realistic?  I’ll circle back to this point as I veer off on a slight tangent.  Stay with me, I hope to bring this all back home.

Bruce Booth kindly posted this data in a blog post yesterday.  How timely!  “Total VC funding into First Rounds in Biotech hit a 3-year high in 2011 and was one of the 4 highest years since 1995 (red bars below).

That total VC funding isn’t flowing into first rounds in biotech companies in Louisville, KY.

This chart popped in today via BIO.  Basically, says there was “a drop in start-up, early-stage [biotech/life sciences] deals from 2010.”  Doesn’t look like huge swings to me, but OK.

Here’s what I’d like to see; is there a geographic concentration of life science startups spinning out of universities that get significant venture capital financing?  Intuitively I have to believe there is.  We can all point to the institutions and areas.

I’m not whining.  Well, maybe a little bit.  But I like this quote from Bruce’s above mentioned blog post; “Don’t get me wrong, it’s a tough environment for biotech startups.  But tough is the nature of any startup in the venture ecosystem.  Fundraising has never been easy.  It’s entrepreneurial capitalism.  Let’s get on with it.

Agree.

So if we’re in Louisville, what do we do?  Significant amounts of venture capital investment are not rolling in here.  Assuming we have good technology—and I realize that is an assumption, but one I think is true—what’s the issue?  Do we give up?  No. Do we look at alternative sources of funding as a starting point? Sure.

So back to the economic development component; maybe we shouldn’t be so focused on keeping things here.  Maybe we should be aligning ourselves with groups in Boston like Atlas Venture and PureTech Ventures.  Package up good technology that fits with their interest areas and let them grow the companies in Boston where there is capital and, equally as important, all the other infrastructure necessary to pull a biotech startup off—like a deep talent pool, for example.

Maybe ApoVax, Inc. should relocate to Seattle?  Luke Timmerman noted in an article yesterday how Novo Nordisk “plans to tap into Seattle’s immunology talent pool.”  We got a taste of Seattle’s immunology talent pool back in December.

I know.  Heretical, isn’t it?

* Fist bump if you get the title reference.

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