Corporations have traditionally been seen as the best avenue for building new startups. But it's not just Fortune 500 companies focused on building entrepreneurial ecosystems and launching new businesses.
Many universities nationwide are now using funding from their boards of trustees and local and state governments to turn business ideas from students, alumni, and local industry experts into brand new companies.
And they're doing so through the venture studio model.
Venture studios are in place at many universities today to help them tackle some of the world's biggest problems by helping them validate and commercialize concepts that address societal problems at scale.
The University of Notre Dame, the University of North Carolina, and Purdue University are prime examples of schools that not only have thriving venture studios but also a dedicated venture-building partner — High Alpha Innovation — to help them develop and launch new startups tied to their mission and vision.
High Alpha Innovation General Manager Matt Brady spoke with venture studio leaders at these universities at Alloy, our annual Venture-Building Summit that brings together today's top innovators and entrepreneurs.
The entrepreneurial ecosystems built by university venture studio leaders at Purdue, UNC, and Notre Dame
Allan Gray, the Executive Director of Digital Innovation in Agri-food Systems Laboratory (DIAL) Ventures at Purdue University, explained the school's approach to developing startups in the agriculture and food space.
"The way DIAL Ventures and our venture studio works is really more outside-in," said Allan.
"We asked ourselves [at the start], 'Why wouldn't we be a leader in AgTech and FoodTech?'" Allan added. "We should be working directly with the industry to solve problems in this space.' So, we said we're going to create DIAL Ventures, which will be industry-focused."
Allan noted the DIAL team regularly speaks with industry partners (e.g., agriculture retailers, farmers) to discover their challenges.
DIAL then brainstorms business ideas based on those chats to see what kinds of startups could solve those problems.
"If that technology [that could help industry partners] exists at Purdue, great," said Allan. "If it doesn't exist yet, great. It's not a requirement of us to try to [create] it." Rather, Allen added it simply informs DIAL that a sizable opportunity exists in the market.
Kelley Rich, the Interim Vice President and Associate Provost for Innovation for the IDEA Center at the University of Notre Dame, has executed a similar model. Using $23 million from the school's Pit Road Fund, Kelley and the IDEA Center have lofty ambitions: Spin out 250 startups over the coming decade.
"All the initial capital from the Pit Road Fund is fully deployed with follow-on investment that we're making now," said Kelley. "But, as part of that initiative, we knew there was an opportunity to do more than just commercialize the IP coming out of faculty research and the great ideas that students have."
Kelley noted how many university-run venture studios come up with solutions first. The IDEA Center has flipped this approach.
Instead, it embraces problem-led ideation, with the goal of tackling major issues facing many industries today.
"We wanted to do what we called 'Stage-Zero' approach," said Kelley. "Start with a problem in the market, and get some alumni engaged that are experts in that industry, and really start to create solutions with the problem being the first and foremost things in mind."
John Bamforth, PhD, Director of Eshelman Innovation at the University of North Carolina at Chapel Hill, offered a third take on the university venture studio model: unlocking digital healthcare ideas that can make a big impact.
"The first goal was finding ways to take the technology on campus and translate that into the startup frame," said John. "But, more recently, because of some of the work we've done, the general assembly has started to send money our way for the infrastructure."
Specifically, funds from the recent opioid settlement have been directed to Eshelman. John noted he is intent on using this money to build new startups with High Alpha Innovation that provide aid to areas across North Carolina hit hard by the opioid crisis.
"None of us really knew anything about the opioid crisis," said John. "So, we talked to people on the frontline there to develop a couple NewCos we're working on now [with High Alpha Innovation]."
Ensuring the output and outcomes of entrepreneurial ecosystems leads to strong ROI: Insights from HAI venture studios
The three universities certainly have their own unique venture studio models and startup creation methods. That said, the collective goals are the same:
- Give innovators — students, alumni, and/or industry experts — a voice and platform to share their business ideas and denote the specific societal issues they want to tackle.
- Provide a strong return on investment for their schools and other entities backing their ventures in the form of revenue generated and ideas brought to market.
Consider DIAL. The studio is focused on getting commercialized projects off the ground that will address tech opportunities in food and agriculture.
"There's increasing pressure to think about, 'What is the university doing with respect to producing outcomes for society?'" said Allan. "We've mostly done that through IP and licensing agreements and offices of technology and commercialization approaches."
However, Allan said there are a few issues with those options.
Notably, they are slow, rely on the faculty to explain the IP they want to commercialize, and require the university to learn about pricing models — something Allan said they don't specialize in.
"We had this change in mentality that became a sort of ROI mentality," said Allan. "That's when we started to say, 'We need to do more [ag innovation] through a different mode of commercialization. Can we build startups to do this?'"
This culture shift is one the university and DIAL are still managing, according to Allan. But it's not just about providing ROI for those backing the venture studio. It's also about getting ROI from the people involved:
Ensuring positive outcomes from advantaged startups created that help solve big societal problems
At ND, Kelley has also delved into commercializing existing IP and licensing patents to businesses. But new venture development, with a heavy focus on de-risking ideas, has become top priority for the IDEA Center in recent years.
"We set up a really robust commercialization engine within the IDEA Center where, instead of licensing managers and industry experts, we have process experts from innovation: from disclosure, to market assessment and putting the business plan together, to technical de-risking and problem validation and market de-risking," said Kelley.
Kelley added they also have a group in charge of venture acceleration. These are venture-building experts who making sure the right management is in place for each spun-out startup and aid with early- and late-stage funding efforts.
"We're trying to maximize our impact in return through making sure we have the most robust de-risk assets that have the best chance of successful commercialization in the market," said Kelley.
At Eshelman, John aims to "take full advantage of the research enterprise" at UNC to make headway with health-centric initiatives, including the development of new, novel technologies to address the opioid crisis.
"If I were back at my days at Eli Lilly and Company and we had a $1.2 billion research engine within the corporation, we'd be expecting some things to come out of the other end," said John. "I think that's the expectation with a lot of legislators who are sending money from Raleigh to Chapel Hill."
Increasingly, John said the pressure is going to be about the translational capability:
Turning investment dollars into ongoing initiatives that deliver ROI and provide substantial relief in terms of therapeutics, the venture studio's primary focus, as it pertains to startup creation
"Coming in as a commercial guy into the oldest public university in the country to try to shift the needle on translation is really what Fred [Eshelman] has been all about," said John. "The whole idea behind the Eshelman Institute was to poke the bear and move a little bit quicker [toward innovation and commercialization]."
John added there's a wealth of potential that is "all wrapped up here within the institution."
Now, it's just a matter of unleashing that potential through the creation of transformative startups at the venture studio that make a considerable difference in the healthcare services space.
