Under Former Indiana Gov. Mitch Daniels, Purdue Pumping Out Startups
[Editor’s note: This is part of a series of stories examining tech transfer and innovation initiatives at Indiana colleges and universities.]
During the 2012-2013 school year, Purdue University counted eight new startups built on technology licensed from the school. The next year, that number tripled.
That’s a significant increase in university spinouts almost overnight, and it put Purdue in the top three universities nationwide in fiscal year 2014 for companies created based on a university patent, according to Association of University Technology Managers data cited by Purdue. Purdue ranked behind the University of California system and the University of Texas system that year, and ahead of Stanford University, the University of Pennsylvania, and MIT.
That level of startup activity at Purdue was apparently not a fluke: after announcing those 24 spinouts for the 2013-14 school year, Purdue reported 25 startups in fiscal 2015 and 27 in fiscal 2016. By comparison, Purdue says it didn’t spin out more than 11 companies in any given year from 2010 through 2013.
And those numbers don’t include other startups created by Purdue students, faculty, or staff members without patents licensed from the university. The university began tallying those types of companies in 2014; it counted 21 that year, 15 in 2015, and 11 in 2016. A Purdue spokeswoman says those companies are counted in the year in which they filed papers to incorporate their businesses, while the other category of startups are tallied in the year in which they struck a deal to license university-owned patents—although some of those companies were also formed the same year.
The startups that have emerged from Purdue in the past several years span the life sciences, medical devices, agricultural technology, robotics, clean energy, software, and more. They include Akanocure Pharmaceuticals, which is trying to develop cancer drugs made from natural products; SpeechVive, which makes a device that it says helps people with Parkinson’s disease speak louder and more clearly; VinSense, whose software helps vineyards better manage their crops; and Adranos Energetics, which is working on a new type of rocket fuel.
So, what has spurred all this new startup activity on Purdue’s campus?
It has been driven by policy changes from the top, says John Hanak. He is the director of Purdue Ventures, the organization that manages the university’s five startup investment funds, and he’s also an entrepreneur in residence at the Purdue Foundry, which offers a variety of services to help students, faculty, staff, and local alumni build startups.
“It really starts at the leadership level with Mitch Daniels as the president of the university and Dan Hasler as the president of the Purdue Research Foundation,” Hanak says. “There was a recognition three years ago when those changes took place that we really needed to increase our efforts at putting Purdue-developed technologies into the marketplace.”
Daniels (pictured top right) took the helm at Purdue in January 2013 after serving two terms as Indiana’s governor. The former Eli Lilly executive made commercialization of university technologies a priority almost immediately. In his second month on the job, he hired Hasler, who previously was the state’s secretary of commerce and CEO of its economic development organization. Hasler also spent 31 years in various roles at Indianapolis-based Eli Lilly (NYSE: LLY).
“I have asked all around the university and outside of it, and the opinion is consistent that Purdue is not fully realizing the innovative potential of its brilliant researchers and students,” Daniels said in a 2013 press release announcing Hasler’s hire. “With this move, we seek to create an ecosystem conducive to invention and entrepreneurism, from the newest undergraduate to the most senior researcher. We are assigning to [Purdue Research Foundation] and to its new president the lead role in coordinating the many offices and activities already working toward this goal.”
Turning a public research university into a startup factory might seem to run counter to the mission of higher education institutions. But, for better or worse, both public and private universities around the country are emphasizing startup creation and investing in campus resources for aspiring entrepreneurs. And top university leaders have been driving those efforts.
The University of Wisconsin-Madison, a fellow Big Ten school, appointed former U.S. commerce secretary Rebecca Blank to be its chancellor in 2013. She has made entrepreneurship a key piece of her agenda and has supported new startup programs on campus.
On the West Coast, the University of Washington has more aggressively pushed commercialization of campus research in recent years, while building closer ties with industry. Stanford University has invested in the nonprofit accelerator StartX, which was founded by Stanford students in 2009 and supports startups with ties to the university.
On the opposite coast, MIT President Rafael Reif has pursued several new entrepreneurship initiatives since he took over in 2012, including one partly aimed at better connecting the school’s myriad student groups, programs, and centers focused on entrepreneurship. And Harvard University has tried to bolster and unify its entrepreneurial activities under the Harvard Innovation Lab, which was launched in 2011 and supported by the university’s president, Drew Faust.
These schools have been investing in entrepreneurship amid a boom in startups nationwide. If done well, the benefits might include boosting their prestige, attracting more of the brightest students and researchers, and increasing revenues from the university’s stakes in its spinouts.
At Purdue, new policies have made it easier for students, faculty, and staff to start companies, Hanak says. For example, the university introduced “express licenses” that standardize the contracts for startups to license university-owned technology, a practice that has been instituted at other schools. Express licenses have helped Purdue turn around those deals more quickly, Hanak says. “It used to take months, if not in excess of a year, to negotiate a license.”
In addition, the university clarified its intellectual property rules to make it clear that students own the rights to any technology they developed on campus, as long as any resources they used were “part of a course and were available to all students in the course; that the student was not paid by the university or a third party; and the class or project was not supported by a corporation or government grant or contract.”
The policy changes “were really critical in helping to foster a culture and an atmosphere” where researchers, students, and staff are now more comfortable turning their ideas into startups, Hanak says.
The university also invested in new programs, such as creating the Purdue Foundry in 2013. The organization offers startups access to office and lab space. It also puts on events and helps campus entrepreneurs connect with mentors and potential investors, work on business strategy and market research, and access other services.
Now the challenge for Purdue, like a lot of other schools, is to continue producing spinouts and entrepreneurs—and helping them build successful businesses. That’s much easier said than done. But at least one outside observer thinks the university is on the right track.
“I like what they’re doing,” says Don Aquilano, a managing partner of Allos Ventures, a venture capital firm based near Indianapolis. “They made IP and tech transfer more staff- and faculty-friendly. They’ve really invested in buildings and shared working space, but also the programs that help support that ecosystem there.”
Aquilano says Allos hasn’t invested in any Purdue spinouts, but he’s keeping an eye on what’s happening there and hopes to find one (or perhaps more) that are a good fit for his fund.
“I think they’re a top-notch university that has one of the better tech transfer models in the country,” Aquilano says. “They’ve really started to cultivate an entrepreneurial culture.”