Economic Development Series: A Game Changer For Start Ups

Innovation-Park-exampleBy Peter Bell

A game changing opportunity for Davis resides with the “crowd” of 60,000 Davis residents, 25,000 U.C. Davis staff and faculty, plus the 225,000 U.C. Davis alumni. This crowd could pool its capital by allocating as little as $1,000 of their retirement IRA’s, 401K’s or 403’s to backing start-ups coming out of Davis due to the new crowdfunding provisions of the JOBS Act.

The Davis Funding Club’s mission is to be at the vanguard of the big change coming to the start-up ecosystem where everyone, no matter their income or net worth can now invest as little as $100 in start-ups due to the JOBS Act of 2012 that comes into full effect on May 16th, 2016.

This crowdfunded pool of capital would represent more than $300 million dollars of investable capital and potentially could seed 1,000 start-ups with the funding they need to launch their ventures.  These 1,000 new start-up companies could generate over 4,000 local jobs in Davis and could very quickly fill up the proposed R&D space at the Nichi property for example.

Technology Transfer

This seed capital pool would transform the U.C. Davis’ technology transfer process as it could bring all the new technology currently residing in the university’s laboratories more rapidly to the market place and so greatly benefit all of society for the better.

The Davis Funding Club is the first pillar on what we hope will become “The Technology Transfer Framework”, which is an initiative that is designed to dramatically accelerate the pace of U.C Davis technology transfer and begin the process of reversing our societies’ declining rate of innovation.

The overall goal of the Technology Transfer Framework is to form start-up companies to commercialize U.C. Davis technology and incubate them in local Davis technology parks like the proposed Nishi property. If these companies grow and require manufacturing capability, they can transfer to local Davis manufacturing parks like the on-hold Mace Ranch. Once these companies grow into behemoths, they can transfer to west Sacramento and become globally successful organizations, with all the room they need to grow.

The 30,000 students attending U.C. Davis represent some of the brightest and most talented people in the country. After graduation, rather than staying in Davis and potentially starting their careers locally, most of these students leave Davis for all corners of the world. Instead of seeing student graduation as the end of their time at the university and relationship with the town of Davis, we should view this as just the beginning of their relationship with our magic little town of Davis by offering them the opportunity to work in our local start-ups.

Technology Transfer Framework Goals

The goal of the “Technology Transfer Framework” would be to develop a technology transfer model from gown to town that accelerates the pace of innovation. Adopting this R&D financing model will accelerate the rate of new discoveries, up from the current rate that is the equivalent to the rate of innovation last seen in the 1850’s.

Accelerating the rate of technology commercialization of university developed technologies could revert society’s introduction of new innovations back up to the levels achieved in the 1950’s and potentially beyond, which has the potential to transform and dramatically improve life in Davis for all of its citizens.

Why is this important?

Peter Thiel sums up our societies’ declining rate of innovation most succinctly by saying:

“what we wanted was flying cars, space travel and a long,  healthy old age…

…what we got was 144 characters to Twitter with”.

Adopting the ideas represented by the “Technology Transfer Framework”, has the potential to change the world in ways we are unable to imagine at this moment as most of the technologies our society wants and needs are yet to be discovered. However, if we adopt the proposed “Technology Transfer Framework” we might see a flying car in our very near future… even Peter Thiel would give a big Facebook thumbs up “like” to that.

4 Pillars of the Technology Transfer Framework

The Technology Transfer Framework consists of 4 pillars or founding principles:

  1. Form early stage capital to finance the launch of new Start-Up companies commercializing U.C. Davis technology through a crowd funding platform comprised of the university faculty, staff, students and alumni, complemented by local, Davis residents and business owners.
  2. Foster the local U.C. Davis technology commercialization ecosystem by building a large technology transfer incubator AND Start-Up accelerator facility, plus the associated R&D facilities for these technologies to be brought to life on R&D parks like the Nishi property.
  3. Assemble ad-hoc, multi-disciplined, commercialization teams drawn from the business school and other innovative student populations on campus to “mine” the faculty’s laboratories across the entire U.C. Davis campus to find the technology “nuggets” currently lying undiscovered, yet highly suitable for commercialization.
  4. Adjust the faculty compensation structure to reward technology commercialization and incentivize the acceleration of the rate of technology transfer at U.C. Davis.

Potential Impact

The “Technology Transfer Framework” could have two profound impacts:

  1. The Technology Transfer Framework has the potential to double the amount of total R&D funding available for U.C. Davis faculty to work with from $780 million to $1.5 billion annually by 2030, positively transforming the sheer volume of R&D taking place on the U.C. Davis campus.
  2. The Technology Transfer Framework has the potential to dramatically increase the amount of “unencumbered” funding available to U.C. Davis faculty. These funds will free up faculty so that they can pursue more “Blue Sky” kinds of research projects rather than the incremental types of research that are typically funded by outside grant sources or corporations.

These two impacts would transform the type of R&D taking place on the U.C. Davis campus, dramatically increasing the rate at which the U.C. Davis faculty can innovate and expand mankind’s knowledge base for all of society’s benefit.

Peter Bell is  Curator of Start-Ups for the Davis Funding Club – http://www.davisfundingclub.com


Editor’s note: following the decision by Mace Ranch Innovation Center to put its pending project on hold, the Vanguard decided to re-start a community discussion on the future of economic development in Davis.  As such, we are reaching out to a very diverse group of people and starting May 1 we are hoping to publish one op-ed a day on this subject.  We are pleased to announce that so far we have over 40 commitments and counting. Beginning today, we will publish one article per day for the month of May into June.  If you would like to add your voice – please submit your piece on the future of economic development in Davis (800 to 1000 words).

May 1: Robb Davis

May 2: Elaine Roberts Musser

May 3: Dan Carson

May 4: Matt Williams

About The Author

Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

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12 Comments

  1. Tia Will

    “The 30,000 students attending U.C. Davis represent some of the brightest and most talented people in the country. After graduation, rather than staying in Davis and potentially starting their careers locally, most of these students leave Davis for all corners of the world. Instead of seeing student graduation as the end of their time at the university and relationship with the town of Davis, we should view this as just the beginning of their relationship with our magic little town of Davis by offering them the opportunity to work in our local start-ups.”

    I very much admire the adventurous spirit and enthusiasm represented here. As a member of the medical field I am sometimes frustrated by the slow pace of change as Mr. Bell seems to be with the assertion of innovative decline, but I am also in awe at the rate of change in some areas of medicine. I am also cognizant of the importance of thoroughly evaluating each proposed change as it is put forward. A headlong rush based on the thrill of newness and profitability is not always the best approach. The most obvious example in my field is what can happen when a drug is rushed to market without allowing time for full evaluation of its potential side effects ( thalidomide and DES during our lifetimes).

    Having said that, I would like to take a look at Mr. Bell’s proposal from another perspective. That of numbers. He didn’t provide any except our current population and current student numbers. So what is being suggested by the idea that “too many students” are leaving Davis after graduation ?  To know if you are losing “too many” you have to have decided what is the right number to stay ?   So I have some questions for those interested in the future of our city and the future in general.

    How many of these graduating seniors are currently in STEM fields ?  What is the “right number” to stay ? What is the “right number” to go back to their own countries or to their own regions of our country ? What would be the optimal number to go to our surrounding communities ? I cannot believe that the author of this article, or really anyone thoughtful would believe that all graduates would aspire to or believe that it is reasonable that they stay in Davis permanently. So what do you consider a reasonable projection on a yearly basis ?  What is the goal in 5 years, 10, 25 ?

    And, no, “grow as fast as we can” is not any more acceptable to me than would be “never change”.

     

    1. Davis Entrepreneur

      Tia, thanks for your comments and input, hopefully I can clarify my views a little bit for you.
      It is not the sheer number of students that we lose each year from the Davis start-up ecosystem, but the chance of attracting the “special” ones to stay in Davis which I think of as the lost opportunity for our town as a truly, game changing capable entrepreneur is a rare individual.
      Compounding the problem is the difficulty of matching entrepreneurs with game changing scientific breakthroughs as entrepreneurs are naturally inclined to pursue their own ideas, rather than commercialize the science developed by someone else. Adding to this problem is the way faculty are incentivized to master their specialty throughout their academic career as their top priority, with very little incentive given to bringing the science to the market place. For example commercialization does not count towards tenure which is in direct contrast an entrepreneur’s top priority which is to seek ways to add value, so the miss-match between the two cultures is amplified in a similar vein of the US/UK joke of two nations being separated by a common language.
      We have somethings working in our favor though:
      1. Starting a business when you are a student is actually one of the best times in your life to attempt this extremely rigorous endeavor and out of 30,000 students on campus, there should be some potential. Some of the best student entrepreneurs have gone onto to create truly game changing companies, people like Jerry Yang of Yahoo, Michael Dell of Dell computers, Mark Zuckerberg of Facebook and Bill Gates of Microsoft are some examples.
      2. Stats indicate that 8% of all start-ups commercializing university intellectual property “go public” through the IPO process in comparison to a “going public rate” of only 0.07 % for other U.S. enterprises.
      This means our town of Davis has tremendous opportunity to tap into this well of intellectual property and human capital residing on the U.C. Davis campus. It is tough to compare U.C. Davis with Stanford as they are a bit like apples and oranges, but it is illustrative as to what the potential might be here in Davis. Stanford alumni and faculty have created nearly 40,000 companies since the 1930s, which, if gathered collectively into an independent nation, would constitute the world’s 10th largest economy, Canada.
       
      I am suggesting that we try to get together as a community and not let the next big one get away!

      1. Tia Will

        Davis Entrepreneur

        Stanford alumni and faculty have created nearly 40,000 companies since the 1930s, which, if gathered collectively into an independent nation, would constitute the world’s 10th largest economy, Canada.”

        Interesting that you should put it that way. One major point for me is that all of these companies are not aggregated together physically. Nor should they be. We have communications systems that allow us to collaborate across nations, not just across towns or the street. We no longer have to physically “own” an enterprise in order to benefit from it. This exposes what I suspect is a major philosophic difference between us.

        I will use medicine as my example since it is my area of expertise. Medicine is an endeavor that has the possibility of benefitting all, not just those who have enough to pay for it. I truly believe that all research should not be owned for commercial profit, but should be freely shared for the benefit of all. This is not some utopian nonsense. We have an example of it right now in some of the Zika researchers who are putting their experimental data on line in real time in the hopes of averting further disaster associated with major fetal malformations. This is the antithesis of the research for profit school of thought. My belief is that we would advance much faster and with far fewer missteps if all research were freely shared instead of carefully guarded for personal profit.

        I am suggesting that we try to get together as a community and not let the next big one get away!”

        I respectfully submit that rather than attempting to “capture” the next big one, what we should be doing is enabling as many as possible to learn and develop their potential in whatever venue is best suited to them whether or not that happens to be in Davis.

  2. The Pugilist

    This is a very interesting article.  Pushing on the start up I think is vital.  But to really do startups we need space and commitment from UC and the city.

  3. Frankly

    The most obvious example in my field is what can happen when a drug is rushed to market without allowing time for full evaluation of its potential side effects

    Hmm…  well, I think there are not going to be very many people that agree with you that bringing a new drug into the market is rushed.  It take an average of 12 years and $1 billion to bring a new drug to market.  You want a longer delay and a higher price-tag?

    Let’s play a hypothetical match here.

    Say a new drug comes into the market and it ends up killing some people having certain issues that were not tested.

    And you Tia Will, are the boss of drug testing requirements and you bring down and edict that all new drugs will have to be tested for 15 years instead of 12 so that tragedies like this one don’t happen again.

    And so the next life-saving drug takes another three years to be tested and several people that would have been saved during those three years die because they cannot get access to the drug.

    Wouldn’t you then be responsible for killing those people just as you would make the case that the company that released their 12-year-tested drug killed those other people?

    I think the point here is that a decision to do nothing or a decision to delay is still a decision with consequences.

    1. hpierce

      Interesting point, which is two-edged… many folk abhor ANY risk… many are oblivious to risk if it doesn’t affect them, and/or profit from them… then there are the rest of us…

    2. Tia Will

      Davis Entrepreneur

      Stanford alumni and faculty have created nearly 40,000 companies since the 1930s, which, if gathered collectively into an independent nation, would constitute the world’s 10th largest economy, Canada.”

      Interesting that you should put it that way. One major point for me is that all of these companies are not aggregated together physically. Nor should they be. We have communications systems that allow us to collaborate across nations, not just across towns or the street. We no longer have to physically “own” an enterprise in order to benefit from it. This exposes what I suspect is a major philosophic difference between us.

      I will use medicine as my example since it is my area of expertise. Medicine is an endeavor that has the possibility of benefitting all, not just those who have enough to pay for it. I truly believe that all research should not be owned for commercial profit, but should be freely shared for the benefit of all. This is not some utopian nonsense. We have an example of it right now in some of the Zika researchers who are putting their experimental data on line in real time in the hopes of averting further disaster associated with major fetal malformations. This is the antithesis of the research for profit school of thought. My belief is that we would advance much faster and with far fewer missteps if all research were freely shared instead of carefully guarded for personal profit.

      I am suggesting that we try to get together as a community and not let the next big one get away!”

      I respectfully submit that rather than attempting to “capture” the next big one, what we should be doing is enabling as many as possible to learn and develop their potential in whatever venue is best suited to them whether or not that happens to be in Davis.

    3. Tia Will

      Frankly

      As is common with your posts, your scenario only allows for two possibilities. I do not see the world that way. I also do not see it as a matter of just the number of years, or the dollar amount that are pertinent. There is much more involved in medical research than just time and money. For example, we could save a lot of time and money by doing experiments in unethical ways such as the Tuskegee experiments. But I doubt that you would find many people who would publicly defend this type of research today.

  4. Davis Entrepreneur

    Tia…thanks again for your additional comments, I am enjoying the discourse and your interest in the subject.

    “We have an example of it right now in some of the Zika researchers who are putting their experimental data on line in real time in the hopes of averting further disaster associated with major fetal malformations.”

    We have personal experience with Zika as my wife was unknowingly pregnant with our son last August while we were in Joao Pessoa, about an hour’s drive from Recife, the epicenter of the Zika outbreak in Brazil. We were chowed by the bajillions of mosquitos there so had a fraught 9 months until our son was born healthy about 3 weeks ago, with a head sized in the 95 percentile range, maybe just to prove he was Zika free J  

    “This exposes what I suspect is a major philosophic difference between us”

    I think you might be misinterpreting my comments here as I suspect we are coming from the same philosophic place and highly value individual freedoms. I and most entrepreneurs approach life with an “abundance” mindset rather than a “scarcity” mindset. The patent and protect, scarcity based approach is pretty much obsolete and is rarely successful nowadays, especially in today’s knowledge economy.

    “I respectfully submit that rather than attempting to “capture” the next big one,

    I totally agree with you and I am not encouraging anyone to capture anybody, I am suggesting we attempt to create the right conditions and start-up ecosystem so that entrepreneurs can thrive here in Davis. To encourage an entrepreneur to stay in our town of Davis so they can create jobs and high value add economic activity rather than us relying on the majority of service type jobs we have now, you have to attract entrepreneurs with the right environmental conditions as the truly gifted ones can go anywhere. The idea is not to try capture these entrepreneurs in some sort of an economic prison as the premise that you could “capture” a good entrepreneur is hubris, they are natural escape artists and would likely relish the escape challenge just to prove the point.

    The problem for Davis is that if you let great entrepreneurs “get away” and head down I-80 to Silicon Valley, then there will be few with the abilities left in town to convert U.C. Davis research into products or services that you and I can use in our daily lives. If this research is commercialized at all, then it will likely be done elsewhere. I can show you a number of examples where this is happening right now with other communities than ours benefiting from this high value add economic activity. The result will be that there will be few entrepreneurs left in town that can create the highly paid employment opportunities that could help us build a vibrant local work/life balance that could be so special here in Davis.
    Instead our town could become a dormitory for the university’s students, a place for retirees that already own their own houses or commuter workers that can afford the expensive housing, Davis essentially turns into an “economically” gated community. The in town employment opportunities will be limited to service jobs, likely filled by workers from out of town, even the large number of above average salary UC staff have to live out of town due to the high cost of housing.

    The challenge with the current status quo is that academics publish, hence share their research just as you suggest in the Zika like research sharing approach, unfortunately that is usually where it stops. This traps the knowledge in a kind of limbo state as the tax payers have done their part funding the work, the academics have done their part by publishing the work, yet society does not reap the benefit from all this knowledge in the form of a product or service they can use every day as only a limited amount of this knowledge is commercialized.

    To give you an idea of the scale of the problem, in 2014, the U.C. Davis Office of Research processed 229 new invention disclosures from the approx. 2,500 faculty. This begs the question, did the other 2,271 members of the U.C. Davis faculty have no ideas at all that year, or is the current methodology for invention declaration and commercialization ineffective?

    Don’t believe me, check it out at:

    http://research.ucdavis.edu/industry/ia/researchers/ia-faq/#3
    Under the Patent Acknowledgment you signed upon starting work at the university, you have an obligation to disclose all of your inventions, whether or not patentable, to UC Davis InnovationAccess for evaluation. 
    ————————————

    “what we should be doing is enabling as many as possible to learn and develop their potential in whatever venue is best suited to them whether or not that happens to be in Davis.”

    This is essentially what the university does every day, hence once the students graduate, they tend to leave our town in the review mirror as they don’t feel that their future has much to do with the town they earned their credentials in. This is leading to the “siloing” of society, the “corporatization” of education and why a lot of people worry about the state of our education system becoming just a business and faculty ending up as just researchers for hire.

    The worry is that we are tending to churn out graduates that are good at passing tests, rather than good at critical thinking and that faculty is conducting research that is incremental rather than step change in nature. We seem to be getting away from rather than heading towards the concept of “it takes a village and an entire community to raise a child” and a university being the place were really awesome science is done.
     
    I am advocating for a much more “local” based community that has all the components needed to create a vibrate work / life balance and am suggesting that town and gown work more in synchronization. Together, we have a unique opportunity for the town to help the gowns reduce their dependence on encumbered funding via crowdfunding their commercialization efforts and so faculty have more unencumbered funds to they can start to engage in more “Blue Sky” type research that can bring about flying cars, travel to Mars and a healthy old age. The Gowns can in return help the town by enabling local entrepreneurs commercialize all the new step change research coming out of the university so help foster an extraordinary community that will be a wonderful place to live and raise a family.

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