EXCLUSIVE INTERVIEW
Utek CFO Carole Wright: Marrying University R&D With Businesses

Each year, thousands of discoveries are made at universities, and many of them are left on the shelf because they can't find a suitor to take them to market.

That problem has been turned into an opportunity by a Plant City, Fla., specialty financing company called "Utek." The eight-year-old enterprise has cleared many of the obstacles to marrying academic tech with growing businesses through a creative model that allows companies to swap equity for the innovations they need.

Recently, the E-Commerce Times spoke with the CFO of Utek, Carole Wright, about that model and how it's enabling small to mid-sized businesses to turn the world's universities into their own R&D departments.

E-Commerce Times: How does Utek turn universities into R&D departments for growing companies?

Carole Wright: We start with the customer. Once we have a customer, we find out what area of technology they're looking for.

Then we go searching. We have a search database that's been put together over the last year that has about 40,000 technologies that we've found in universities and labs in the U.S. and abroad. We have a scientific team that reviews those technologies, and if they find one that's a leading technology and a fit for our customer, we let the customer look at it.

If everything goes well, we will set up a company to purchase the license for the technology. We may also put in money to help with the marketization and pay consulting fees to the inventor. Then we will transfer the technology to the customer company in exchange for stock.

E-Commerce Times: So you always start with a company looking for technology first?

Wright: Yes. We never purchase technology without a customer in place. That's how we're different from our competitors. A lot of them own the technology before they have customers for them.

E-Commerce Times: How does your model level the R&D playing field for small and mid-sized companies?

Wright: It levels the playing field because it allows companies to pay for technology with stock rather than cash. A lot of these companies are low on cash. Also, having a new technology within their company gives them a little better edge for getting financing. If you have a new technology and it's really promising, you usually have a better ability to get financing from outside sources.

They're able to get new technology into their company without spending millions of dollars that they don't have for research because the university has already spent those millions on the technology.

E-Commerce Times: How do universities benefit from your U2B model?

Wright: What we offer them is 100 percent of their royalties. Some of our competitors take part of the royalty stream later on as the the technology starts to produce revenue. We don't take any part of the royalty stream.

The university is very happy about that because they use royalties to not only pay themselves, but they usually pay the inventor from those royalties.

E-Commerce Times: Is another issue here that businesspeople and academics are often like oil and water -- they don't mix well together?

Wright: That's right. One of the things our founder, Cliff Gross, brought to this company was his experience as an inventor who worked in the university system. We also have several scientists who have worked there. So we have people with a background in how that system works.

We can usually get universities to move faster on deals than they would ordinarily move. We usually can close a deal with a university in between six weeks to three months. Normally, a university negotiating one of these deals on its own will take one to two years to do it.

E-Commerce Times: Many universities have in-house technology transfer departments. Do you ever get into turf wars with them?

Wright: Usually not. They just find us as another source to get their technologies out to the world. When they find out we don't want any part of their royalty stream, they don't view us as a competitor. We're not really taking anything from them. We get no fees from the university. The only person that pays us is the company that's our customer.

E-Commerce Times: Financing developing technologies with your own money sounds like a risky business. How do you manage that risk?

Wright: It is risky, and the fact is that a lot of these companies that we're investing in may not make it, but we have a five times markup on technology costs that helps us make our money back.

E-Commerce Times: How does that work?

Wright: Five times is an average. It may be three or eight times. What we look at is the amount of cash we're outlaying and ask for five times that amount in equity. So if we give a company $100,000, for example, we would review $500,000 in stock.

E-Commerce Times: What technology areas do you see as hot for investment in the next 12 months?

Wright: Anything in the green space -- fuel economy, anything ecological -- and healthcare industry technology.