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Universities and Startup Junkies Come to Washington

Jonathan Ortmans

While politicians are out of town campaigning, the nation’s capital has been welcoming leaders in entrepreneurship education from America’s colleges and universities. Following a warm up from the younger “Empact” entrepreneurship education advocates, I joined a packed summit of university and community college presidents at the White House put together by the Commerce Department’s Nish Acharya, and then spoke this past Friday at Jeff Reid’s Global Consortium of Entrepreneurship Centers conference at Georgetown University. It is increasingly clear that America’s colleges and universities have been retooling as engines of entrepreneurship and innovation.

Educators around the country seem determined to improve this engine’s efficiency, not just in terms of technology transfer, but also in entrepreneurship education, culture and support. Two years ago, I would merely have commented on the fact that entrepreneurship classes and career advice, once the exception to the rule, now appear on almost all campuses in more disciplines with entrepreneurship centers, incubators and accelerators—partly as a result of the Kauffman Campus challenges and investment. What is happening today is a much more exciting story.

First, as has been evident in data released last week by the Kauffman Foundation, new high-growth firms are emerging in less expected parts of the country. In the Ascent of America’s High-Growth Companies showing where the country’s fastest growing firms are located, who would have thought Salt Lake City (second after Washington, DC) would be followed by the likes of Indianapolis, Buffalo, Nashville and Louisville. This is important if you are not Stanford or MIT as it gives smaller educational institutions across the nation confidence to invest in startups and the communities they need to flourish.

The second major trend evident this week is how local community entrepreneurship ecosystems are blurring the line between the traditional bricks-and-mortar 20th century formal curriculum models and the recent emergence of experiential entrepreneurship education. This past week, university presidents and entrepreneurship center directors alike seem to have a much deeper appreciation for the reality of today’s new firm formation dynamics, showing more respect than in the past to informal networks, collaboration and most importantly the ideas behind teams “building airplanes in the air” with peers, being lean and validating as you go. They seem to be giving way to an era less focused on venture capital and business plan drafting and more on bottom-up communities driving innovation—where students pull what they need from professors and campus programs rather than depending on them to teach and lead them to entrepreneurial success.

Central to this is the new willingness of those running institutions and programs I talked with to collaborate with grassroots open innovation startup initiatives off campus. Global Entrepreneurship Week / USA, using its annual mass celebration of the entrepreneurial spirit as a vehicle, has encouraged this in unlikely cities such as Tulsa, Oklahoma. By getting diverse players in communities to come together under the auspices of celebrating and encouraging new generations of nascent entrepreneurs, a foundation is created for the development of more complex startup ecosystems that include both the formal as well as newer informal communities that are experimenting with new firm formation. Universities and community colleges are capitalizing on their strength as local institutions to integrate the traditional players (e.g. area colleges, economic development groups and chambers of commerce) with the new startup communities that include informal experiential educational leaders such as Startup Weekend. One university entrepreneurship center director noted to me that in the past they had been dismissed as out of touch by some “cool startup types” in the state. Now, for example, Startup Weekend concepts are being adopted in curricula at various universities. These two cultures seem to be listening more to each other.

We are definitively in a new era for universities in terms of their role in entrepreneurship ecosystems. Discussions about how to tap the full potential of these powerhouses for entrepreneurial minds, innovations and new ventures have expanded from patent management to the broader vision of their role in the local or city entrepreneurship ecosystem. After all, so many productivity-enhancing, life-saving, quality-of-life-improving and job-creating innovations got started in the dorms, classrooms and labs of colleges and universities. Moreover, they are the lifeblood of many communities, even in difficult times. The AUTM Licensing Activity Survey Summary: FY2011 revealed that despite continuing adverse economic conditions, university and research institute licensing and startup activity remained strong. The number of startups formed increased 3% over the previous year, and the number of startups remaining operational increased 7%.

The U.S. Department of Commerce event this week (aptly entitled “The Innovative and Entrepreneurial University: Higher Education, Innovation and Entrepreneurship in Focus”), organized by the White House Business Council and the U.S. Department of Commerce Office of Innovation and Entrepreneurship, gathered the original 145 signatories of a letter submitted to the U.S. Secretary of Commerce in 2011 by university presidents, as well as the 170 presidents who have also committed their community colleges to similar efforts to promote innovation and entrepreneurship, to discuss the growth of university-based innovation, entrepreneurship and commercialization efforts.

This commitment from the top of these institutions is important, showing they not only seek to excel in adding to the workforce top graduates, but they also want to mint the entrepreneurs coming out of their campuses. We not only hear about their top publications but also stats about how many startup companies a year their students and researchers have created. One even showed up with product samples from some of their best student entrepreneurs.

Obviously, as a major source of research funding, the government is interested in maximizing the impact of its investment. According to the National Council of Entrepreneurial Tech Transfer, U.S. universities create around 600 new companies each year based on the almost $35 billion dollars of federally funded research conducted at universities. The bipartisan Startup Act 2.0 which was featured at last week’s GCEC event at Georgetown, proposes to use existing federal R&D funding to support innovative initiatives at American universities to accelerate and improve the commercialization of taxpayer-funded research. Grants would be awarded to universities pursuing specific initiatives to improve commercialization capacity and to assist universities that want to pursue initiatives that allow faculty to directly commercialize the research. Another bill introduced in Congress last spring, the America Innovates Act (H.B. 4720 and S.B. 2369) would create a new independent agency called the American Innovation Bank to give grants and loans to universities, investigators and companies to aid in the commercialization of science and engineering discoveries.

In addition to all this, of course, are the graduate and post-doctoral students in university commercialization efforts, as noted in another recent Kauffman Foundation study released in August, “University Technology Transfer through Entrepreneurship: Faculty and Students in Spinoffs.” The authors, Wai Fong Boh (Nanyang Technological University), Uzi De-Haan (Technion – Israel Institute of Technology), and Robert Strom (Ewing Marion Kauffman Foundation) examined students' roles in university startups and compared the functions and responsibilities of faculty, entrepreneurs and students in successfully moving university innovations to market. They found that a partnership between faculty and Ph.D./post-doctoral students represented 41% of the commercialization cases in the study; collaborations between faculty, Ph.D./post-doctoral students and business school students (13%); and student-only ventures (23%).

Much like in the larger entrepreneurial ecosystem, maximizing the entrepreneurial contributions of academic institutions relies on an overall university ecosystem that encompasses everything from career centers, to business plan competitions, to accelerator programs and to links to industry. However, this week it was clear there is an even more important component—full integration with the local startup ecosystem and the programs that are born within it. As one student entrepreneur noted to university presidents at the recent White House event, “If we have to, in tech, we can walk across the street to Starbucks and do it without you”—that is, that code writers and the like are driving innovation-based entrepreneurship.

Universities seem to have awakened to the realities of local entrepreneurial ecosystems namely that students, faculty, researchers, on- and off-campus service providers, formal courses and informal startup community programs, local industry, investors, mentors and customers all need each other to co-create new products and services. I hope that as they catch up with the messiness and velocity of informal disruptive entrepreneurship, more of the informal experiential programs off campuses will tip their hat in return. The recent books by Marc Nager, Brad Feld, Eric Ries and Steve Bank are just the beginning of scholarship around the science of startups. As the literature makes these innovative methods more mainstream, America’s educational institutions will have a vital role to play in enabling a sustainable startup ecosystem.

The gatherings continue this week. PDE Editor Mark Marich is attending the National Association of Community College Entrepreneurship 2012 in Chicago today and tomorrow and I will speak at George Washington University this week at their major entrepreneurship data conference on new firm formation. Stay tuned.

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