New tools make it easier for researchers to commercialize their innovations.
For researchers Mike Paulus and Shaun Gleason, ImTek began as a moonlighting job building miniature animal scanners for a handful of research customers. The business grew into a $3.75 million company that is now part of Siemens, one of the most noted R&D-driven companies in the world.
Gleason and Paulus attribute part of that success to new efforts at Oak Ridge National Laboratory aimed at encouraging start-up businesses born of technologies developed at the Laboratory or founded by ORNL researchers. "We initially had no expectations that our business would grow as quickly as it did," Gleason says. "It just kind of took on a life of its own."
Since April 2000, when UT-Battelle become ORNL's managing contractor, the Laboratory has launched several new programs to aid young companies connected to ORNL. Programs include part- and full-time entrepreneurial leave, business assistance and, potentially, venture capital through Battelle Ventures and Innovation Valley Partners, which together represent $185 million in financing for technologies that emerge from the laboratories Battelle helps to manage. (See A Capital Idea.) ORNL also provides technology maturation funds to help ready inventions for license. (See Another Tool in the Toolbox.)
In the past six years, the Laboratory has helped generate 61 start-ups, of which 56 qualified for admission to the Center for Entrepreneurial Growth, a UT-Battelle–funded program operated by Technology 2020 in Oak Ridge. The CEG provides business counsel, financial planning, marketing assistance and other aid to companies in the formative stages. Of the 56 companies that have participated in the CEG program since its inception, 36 remain in business.
Technology 2020 was started in 1995, but president and CEO Tom Rogers says UT-Battelle's arrival marked ORNL's first active involvement with the organization, which focuses services toward high-tech companies. "I come to ORNL all the time now," Rogers says, adding that CEG director Shawn Carson has a permanent office there. "That's huge. These guys are so entrepreneurial. We really are the full partners with the Laboratory."
Companies that use the CEG must license technologies from ORNL, be founded by a current or former Laboratory employee or be working with the Laboratory through cooperative research and development or work-for-others agreements. The CEG helps researchers transition from a world where technology is the primary focus to a market-oriented environment, says Shawn Carson, CEG director of training and incubator operations. "What brings scientists out of the lab is a vision for this technology that they have," Carson says. "But in the private marketplace, the central issue is not your technology. The issue is whether there is a problem that needs to be solved and whether your technology can solve it."
In ImTek's case, the venture began as a project funded internally by ORNL's Laboratory Directed Research and Development program to create new technology for the Life Sciences Division's mouse genetics research facility. Gleason and Paulus, two electrical engineers working in the then Instrumentation and Controls Division, developed a computerized tomography, or CT, scanner that could image mice without sacrificing them for preclinical research. One day in 1998, officials from pharmaceutical company Parke-Davis, now owned by Pfizer, toured ORNL, and requested a machine.
"We obtained permission to form a company to deal with this initial customer," Paulus says. The new company licensed from UT-Battelle a copyrighted software package for processing images and the MicroCAT trademark. Other orders came in and Paulus and Gleason built machines around their work schedules at the Laboratory. Customers, consisting primarily of universities with some private labs in the mix, paid 50 percent up front, which funded early manufacture of the scanners.
ImTek's founders say joining the Center for Entrepreneurial Growth resulted in a major turning point in the company's growth. "For our first few sales, we operated in a reactive mode as customers came to us. With the CEG's help, we transitioned to a more proactive strategic planning approach to grow our company and position it for eventual sale," Gleason says. As the company grew and consumed more of its founders' time, Paulus and Gleason turned to another new commercialization tool offered by the Laboratory—part-time entrepreneurial leave. Through the program, ORNL employees can split their time between work at the Laboratory and efforts to build a new company, keeping partial pay along with medical, vacation and other benefits. Both say without that umbilical cord, they probably would not have taken a chance on ImTek.
Even with the $3.75 million sale of their company, Gleason and Paulus have not fully cut their ties to ORNL. Both are now on full-time entrepreneurial leave, allowing them the option to return to the Laboratory and keep their time-of-service—within a period of three years.
As Gleason and Paulus positioned ImTek for sale, with the help of the CEG, the founders approached CTI Molecular Imaging, a Knoxville-based developer of positron emission tomography (PET) technology. ImTek simultaneously was negotiating with Philips, then a sales partner.
The timing was perfect. CTI had already begun negotiations with Concorde Microsystems, a Knoxville-based leading manufacturer of laboratory animal PET scanners. The ImTek product line fit well with Concorde's products. In November 2004, ImTek sold to CTI. Four months later, CTI announced its own sale to Siemens for $1 billion.
Through the merger process, the CEG assisted ImTek, remaining involved through the final negotiations and signing of the deal with CTI. When ImTek sold, the company's founders were not the only ones smiling. Through earlier license negotiations, UT-Battelle had taken a 4 percent equity stake in the company. ORNL employs equity positions in addition to the typical up-front fees and royalty agreements as a way to bring additional revenues back into the laboratory.
"Any licensing organization has more flexibility in doing deals, especially with start-up companies, when equity can be accepted in lieu of cash," says Casey Porto, director of technology transfer for ORNL's Technology Transfer and Economic Development office. "The deal is often one of mutual benefit, since most start-up companies would also like to be able to point to an organization such as ORNL and claim them as a shareholder."
These tools, along with success stories like ImTek's, help create the "entrepreneurial spirit" UT-Battelle is hoping to foster at the Laboratory, says ORNL Director Jeff Wadsworth. "We have certainly encouraged that at the Laboratory," he says. Citing ImTek, he added, "People have taken entrepreneurial leave. We provide high visibility for technology transfer awards. We are trying to convince our staff that we value that piece of the Lab as much as we value any others."
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