Something start-up companies require besides great ideas and plenty of hard work is money—often, lots of it. Because in East Tennessee local sources of venture capital have historically been hard to come by, UT-Battelle officials identified seed funding as a critical ingredient needed to generate more business in the region.
When former Tennessee Economic Development Commissioner Alex Fischer joined Oak Ridge National Laboratory four years ago, "he recognized there is a piece of the Battelle strategy that should include venture funding," says ORNL Director Jeff Wadsworth. "At that time, Carl Kohrt, the newly appointed CEO of Battelle, had a similar vision. He brought the notion to the board and he suggested that Battelle should create a venture fund, not only for the company's own technologies but for any technologies in the domains of Battelle's interest."
As a result, Columbus, Ohio–based Battelle created Battelle Ventures, a $150 million, independent venture capital fund aimed at providing promising technology companies, in markets related to Battelle's missions, the equity dollars needed to commercialize their products. Included in the fund's scope is technology developed at ORNL and the four other national labs Battelle helps to manage.
Battelle Ventures has invested in 10 companies thus far, focusing on the information technology, homeland security, energy and nanotechnology markets. One company, New Jersey–based Multispectral Imaging, replaced its original infrared camera detection technology with infrared-sensing microcantilever arrays licensed from ORNL. (See Calculating the Odds.)
Fischer says Battelle Ventures has modified the fund's approach to investing since its inception in 2003. While promising, many technologies at ORNL and other labs are simply too early in development to warrant traditional venture dollars, he says. "There has been a shift in approach from not just simply starting up companies out of the labs but going to what we call a technology injection model. This model takes established companies and injects lab technologies as a differentiator for those companies in which Battelle Ventures is investing."
Such an example is SmartSynch, one of Battelle Ventures' early investments. The company produces wireless smart meter systems for utility customers and has been working with ORNL researchers to develop technologies the company could then license. (See Technology Spotlight.)
Henry Jones, director of research and development at Jackson, Miss.–based Smart-Synch, followed the advice of the Laboratory's tech transfer office when it came to gleaning technologies from ORNL. "They said, yes, you can come in, you can see if we have an answer to a particular problem that you're having. If those are your expectations, you might be disappointed. But if you are really trying to develop a relationship with the Lab to work on future products then you can definitely get that at Oak Ridge," Jones says.
The debut of Battelle Ventures has served to expand the availability of local venture capital. In 2005, a group of Knoxville business leaders created a $35 million fund, Innovation Valley Venture Partners, to co-invest with Battelle Ventures, including investments prior to IVP's creation. Within the last three years, Technology 2020—which operates UT-Battelle's Center for Entrepreneurial Growth—has raised private money and secured federal matching dollars to create two funds, the Southern Appalachian Fund and Meritus Ventures, that bring more than $40 million in start-up capital to underserved areas of the Southeast.
"What we have done with Battelle Ventures and Innovation Valley Partners will have a lasting impact," Fischer says. With other funds coming on line, he adds, "you see all that effort beginning to take root in the region."
Web site provided by Oak Ridge National Laboratory's Communications and External Relations