Lexington, KY - When University of Kentucky President Lee Todd attended a recent forum in Washington sponsored by the U.S. Commerce Department, he was pleased with the government's apparent strong interest in creating new jobs. Commerce Secretary Gary Locke impressed Dr. Todd with one key message.
"There's a need for jobs. They need to be creative jobs - not jobs that manufacture things over and over again. In that case, the world is competing too hard against us," said Todd.
At the forum, UK's leader discussed the inherent problem of fertile minds with great ideas struggling to create new companies.
"How do you help entrepreneurs work through what is known as 'Death Valley'? That means you have an idea, reduce it to prototype, and you think you're ready to go to market, but then you fall into this gully because it takes a good amount of money to finish it, get it to market and to start selling things," he explained.
Todd said he believes it's as important for research universities like UK to create jobs for their graduates as it is to educate them. One way is to hire faculty that yearn to start companies. He said the United States doesn't have enough of the IBM Watson labs or the AT&T Bell labs because they are so expensive. So the alternative is innovation.
"One place that happens is at small businesses and at universities," Todd said.
According to Todd, commercializing intellectual properties is the key, but universities are not good at negotiating deals with business so things get done quickly.
Encouraging professors to go commercial is a 30-year mission of Todd, who held six patents of his own as a graduate student at M.I.T. When he taught at UK from 1974 to 1983, Todd was dismayed that 80 percent of electrical engineering students left Kentucky to find jobs.
"If we don't keep those type students in the state, we're going to lose the kind of talent that's going to make this country competitive again," he said.
UK is becoming the state's economic engine. It's Office of Commercialization and Economic Development (UKCED) has programs to encourage, nurture and generate new companies. UKCED manages the university's intellectual property portfolio and assesses commercial potential of promising technologies and clinicians, acting as agent for industry partnerships. Last year, there were 307 new patents, producing licensing revenue worth $1.7 million.
"The competitive advantage is being able to make a deal in a relatively short period of time," said Len Heller, vice president for UKCED. "We bring the different entities into one place - Commerce Lexington - so any business can meet with all of our parties at one time."
Among the dozens of fascinating UK-connected start-ups, Todd highlighted three in particular: Outrider Technologies, Allylix and AllTranz.
UK chemistry professor John Anthony founded Outrider, which makes soluble, organic semiconducting materials for a range of display applications, especially for printed and flexible electronics.
"John presented me with a half a million dollar royalty check he got from 3M," said Todd. "We got it because we own the intellectual property. He's brought in about $830,000 in royalties. He's like an idea factory. He generates ideas, gets the protection (patent), then licenses the ideas to someone else who can manufacture them."
Allylix, co-founded by Dr. Joseph Chappell at UK, is based in California but has labs at UK's Coldstream Research Park. It is commercializing products for the food and fragrance industry using yeast fermentation. It will produce fragrances, flavors, agricultural products and new medicines.
AllTranz, founded by UK research professor Audra Stinchcomb, is a start-up that produces skin patches delivering anti-nausea, marijuana-like chemicals to AIDS and cancer patients. There are also patches for pain management.
Dr. Todd wants more of these type of companies.
"$48 million was invested in 88 small, local start-up companies, and 800 jobs were created with those companies since 2003. Those jobs average $60,000 to $70,000 per year. That's a huge change from what it used to be," he said.
Providing heavenly help for projects like these is a group called the Bluegrass Angels, private investors willing to stick their necks out to make things happen, and of course, make a buck.
"There are 40 investors, accredited by the SEC (Securities and Exchange Commission)," said Heller. "We keep their identities quiet. A lot of people would love the list of addresses, but we don't do that. As far as skill sets, we have very sophisticated investors; some have been entrepreneurs and they get into some really good discussions."
Todd said the East and West coasts have plenty of entrepreneurs, venture capitalists and start-up companies, but middle America lags behind.
"We don't know how to take risks. If you haven't failed once in California, you haven't tried. Here, you fail once and you're dead," he remarked. "It's an attitude. People here don't want to lose money on something they don't understand. But a failure in the new technology doesn't equal failure in the old economy. You have to take risks to create new things."