Written by Tasso von Windheim
Associate, Buff Gold Ventures
Building a startup is expensive and resource intensive. Even more so in deep tech, where commercialization can take 10+ years to get from ideation to first revenue.
This wide gap between first funding and revenue can discourage investment and limit success of some of the most important and impactful technologies. But it doesn't have to be this way. As a university-focused investment fund, Buff Gold Ventures is dedicated to funding deep-tech companies that are built to face the challenges of today. And by working close with The University of Colorado Boulder (CU Boulder), I've seen first-hand the benefits that a supportive university can have on its startups. Making them more investible, and ultimately more successful.
Funding alone is not enough to grow early-stage deeptech startups. The crucial piece of the puzzle is a supportive environment to grow technologies, startups, and entrepreneurs until they are ready to raise venture capital funding and embrace the high-growth mentality that comes along with it. It is this gap, between when the technology is conceived and when it is ready for venture capital funding, that startups are most vulnerable, and where universities can step in to provide support.
CU Boulder and their commercialization arm Venture Partners are a great example of this. Venture Partners provides money and educational support for early-stage entrepreneurs at the university, and most crucially, a streamlined process to patent and license technology at startup-favorable terms. Way too often, university tech transfer departments front-load patent and licensing expenses onto the startup at the time of licensing, at the point where cash is hardest to come by. This short-sighted strategy can recoup patent expenses for the university at the expense of limiting long-term success of the startup. Instead, I believe universities should be focused on nurturing early-startups and founders, and reaping the benefits of their future success.
A few weeks ago at an event, I heard the phrase "tech transfer offices are where technology goes to die." And for many who have dealt with tech transfer offices at their respective university, this sentiment rings true. Beyond up front cost, the licensing process can be arduous and time-consuming, leaving founders frustrated and confused. This is especially true for external startups looking to license technology out of the university to commercialize it. University tech transfer offices should be focused on understanding fair market terms for VC funded startups at the seed/pre-seed stage, and building a licensing program that reflects that.
CU Boulder has implemented their "Licensing with EASE" program that streamlines the process by offering three standard licenses for new startups using technology developed at CU. These licenses have been vetted by Osage University Partners and other VCs to ensure that they are geared towards helping the startup succeed, rather than quickly recouping costs for the university. The terms are structured to help the startup in the early stages, and recoup costs when the startup is less cash-constrained. As an investor in CU startups, the standardized licenses make it much easier to invest, because we are deeply familiar with each startup's licensing terms.
Another common issue for early-stage startups is timing. They need funding to begin hiring and development, but they might not yet be ready as a company to pursue venture capital funding. Unlike many software startups, a deep-tech startup may take years and millions of dollars to get to a working prototype or product demonstration. This can limit startups to founders who are already independently wealthy, and therefore able to self-fund their company through the pre-seed stage. However, the university environment offers a remedy to this problem. With translational research grant opportunities, such as the SBIR/STTR program, founders can maintain their job or student status at the university while continuing to de-risk and develop their technology. This crucial incubation time, between conception and validating product-market-fit, is what I believe is the biggest role universities can play in helping grow early-stage startups. Allowing them to learn from mistakes and grow before they are under pressure from their investors to get to market.
Finally, the last component that I believe makes a entrepreneurial-focused university such a great ecosystem for startups, is the support for new entrepreneurs. There is a big difference in the skillset needed to be a successful academic, and a successful startup founder, and it takes time to make that transition. As an I-CORPS hub, Venture Partners at CU Boulder offers many key programs for academic entrepreneurial development. For researchers looking to bring their technologies out of the lab, these programs offer help and mentorship across many of the early stages of startup formation. From customer discovery to company formation and hiring, these programs give academics the skill set needed to grow their idea from a technology into a product. It also gives our fund the opportunity to interact with founders, mentor them, and get to know them as they grow. Even researchers who are not interested in forming a startup themselves can learn valuable skills that make it easier to bring their technology out of the lab and into the world.
