UW research fuels growth in spin-off, startup companies

Research at the university has fueled a swift rise in new technology-based business ventures in Wisconsin over the past five years, according to a recent study of spin-off and startup companies.

The study, focusing on a 40-year period, was conducted by the University-Industry Relations office at UW–Madison. It identifies 172 Wisconsin companies that have some fundamental connection with the university. Of that total, 62 began in the last five years.

Some recent high-tech firms with UW–Madison ties From promising new treatments in gene therapy to nanometer-scale instruments, many laboratory advances from UW–Madison are the foundation of recent business ventures. Here are a few examples of startup or spin-off companies developed in the past five years: The Mirus Corporation. This company was founded in 1995 by a research team led by Jon Wolff, a pediatrics professor, and the PanVera Corporation. In his research, Wolff developed chemical reagents that are essential ingredients in gene therapy work. They are compounds that help genes penetrate cells. They also manufacture chemicals that help scientists track the transferred genes. Mirus Corp. is making these compounds available to other university- based laboratories and companies that do gene therapy work. It is also on the trail of a “universal” gene transfer reagent that could work on all applications. Piezomax Technologies, Inc. Founded in 1997, this company is developing the research of materials science Professor Max Lagally and researcher James MacKay in nano-scale devices. A nanometer is one billionth of a meter. The company is developing new precision-motion devices that use piezoelectric materials, which expand and shrink when voltage is applied. Precise motion at the nanometer scale is becoming important for applications such as lithography, optical communications and microscopy. Bioassay, Inc. This 1997 company, founded by zoology Professor Stanley Dodson, is developing a simple test that can determine whether new and existing chemicals may cause endocrine disruptions. Christine Merritt, a former postdoctoral researcher in zoology, is the company’s president. The technology has an interesting connection to UW–Madison history. In the late 1800s, zoology professor and lake studies pioneer Edward Birge surveyed plankton in Lake Mendota, including a species called daphnia. Referencing Birge’s data, Dodson and others recently discovered a significant decline in the percentage of male daphnia, indicating the species may be sensitive to the increased amount of chemicals in the lake. The test uses daphnia as a test organism to predict whether a chemical can have endocrine-changing effects. ProCertus BioPharm, Inc. This company is based on the research of William Fahl, an oncology professor and researcher with UW–Madison’s McArdle Laboratory for Cancer Research. ProCertus is developing products that can help alleviate some of the painful side effects of chemotherapy, such as hair loss, bone marrow suppression and weakened immune systems. It is also developing probiotic strains of bacteria that can protect newborn livestock from some lethal infections.

The total number is a dramatic increase from the first study conducted in 1993, says Philip Z. Sobocinski, associate director of UIR and author of both studies. This time around, he was able to identify three times as many companies with close university ties.

“This study shows what a dramatic effect UW–Madison has on Wisconsin’s present and future economy through new business creation,” says Sobocinski.

“We have more researchers than ever before giving thought and effort to the applications of their work,” he adds. “There’s also more peer acceptance in academia today for starting a commercial venture.”

Sobocinski says the business-university connection is defined in two ways. A spin-off company develops products or services that stem directly from research on campus and often are using a license from a UW–Madison patent. The second are startup companies, which are technology-based business ventures started by faculty, staff, students or alumni.

Virginia Hinshaw, dean of the UW–Madison Graduate School, notes that the companies are rooted in some of the university’s most innovative research, in areas such as new materials development, biotechnology, biopharmaceuticals, medical imaging, power electronics and software development.

“This partnership between research at UW–Madison and Wisconsin business is an exciting growth area that benefits both partners,” says Hinshaw. “It is also becoming a source for higher-wage, highly skilled jobs that will keep our graduates in Wisconsin.”

Over the last five years, the study showed that an average of 12.4 new companies were started each year. That’s nearly a 50 percent increase in the growth rate found in the previous five years, from 1989-1993.

Why the recent surge? Sobocinski attributes it to a number of factors. There has been an increase in technological innovations at UW–Madison that have strong commercial potential. There is also more availability of federal “seed” capital through programs such as the Small Business Innovation Research (SBIR) program.

The three arms of UW–Madison technology transfer — UIR, the Wisconsin Alumni Research Foundation and University Research Park — have more joint ventures today to encourage and assist new business creation, he adds.

The information from Sobocinski’s study will be included in an upcoming publication called “UW-Madison Technology and Entrepreneurship: Creating High-Tech Business Growth in Wisconsin.” The book will take stock of the ways UW–Madison makes its mark on the marketplace.

Other key findings from the study:

• More than 92 percent of the firms identified as created over the past several decades are still in business.

• The vast majority of these high-tech firms stay in Wisconsin. Less than 2 percent of non-acquired firms chose to relocate outside of the state.

• These are truly small-business ventures, with the majority of them (66 percent) having fewer than 10 employees. Only 8 percent employ more than 100 people. Most (71 percent) have estimated revenues of less than $1 million annually.

• From fiscal 1983-1997, Wisconsin firms received $58 million in SBIR and Small Business Technology Transfer (STTR) grants from the federal government. Of that total, 67 percent, or $38 million, went to UW–Madison spin- offs and startups.

• The companies are distributed in 13 Wisconsin counties, but the vast majority are located in Dane County.