NSF Program To Encourage University Science Entrepreneurs Set For Slow Start

NSF told Congress about a great new plan for technology transfer but doesn't intend to spend much money on it WASHINGTON -- The National Science Foundation wants more university scientists to get into the technology transfer act. But a new program to do just that seeks only one tenth its originally planned funding. It also offers little assurance that the program will be around long enough to generate any commercial products. Last year NSF presented Congress with its plans for an $85 million College and University Innovation Research (CUIR) program. The NSF report outlined a six-year pilot project that would be modeled after the popular, government-wide Small Business Innovation Research (SBIR) program. The report was presented in response to calls from Sen. James Exon (D-Neb.) that NSF do more to encourage university researchers to transfer technology from their institutions to industry. But instead of asking for $5 million to launch the CUIR, the president's 1991 budget includes just $422,000 for 16 pilot projects that would be supported jointly by specific NSF divisions. In addition, NSF officials have questioned whether the foundation, given its mission to support basic research, should fund any projects beyond the first phase of an expected three-phase program. Supporters say they are happy that the program even made it into the budget request. "It may hurt it to be underfunded, but at least it is getting started," says Philip Speser of Foresight Science and Technology, a Washington, D.C., consulting firm specializing in technology transfer. Yet with such a small amount, there's no telling whether the program will survive the budgetary gauntlet. "CUIR is SBIR in reverse," explains Donald Senich, director of Industrial Science and Technology Innovation at NSF. Both programs provide up to $50,000 for researchers to check out new ideas that may lead to new or better products. Under SBIR, proposals come from the participating companies, and the principal investigators have to be employed primarily at those companies. This requirement has sometimes forced faculty to leave their institutions to start their own companies, or take time off so they could pursue their ideas. "I do not believe that it is advisable to have people leaving the faculty," says Senich, "but we want to move ideas which we think are languishing [in the laboratory] into the market." To solve that problem, the CUIR would allow universities and their faculty to apply directly for funding. These grants would support six-month pilot projects designed to demonstrate the potential of the research. "We're trying to tap into the university-based researcher," says Charles Hauer, program manager for NSF's SBIR program. In Phase II, the two programs would be essentially the same. To get Phase II support, CUIR applicants would need to involve a company. That company could be one started by the scientists themselves. Startups in university - small business incubators would also make good partners, say NSF administrators. The company - what NSF calls a private sector partner - would then work with the scientists to commercialize the project. "They will collaborate in a way that would strengthen the science component of the research and at the same time move it into the marketplace," says Senich. Phase II would consist of two-year grants of about $275,000. During this time, scientists would complete the work needed to prepare the product for development. Some projects would involve training students, and all would be required to show "significant" private sector research participation. Because some research in this phase would be proprietary, NSF would like these grants to be awarded to a small business that would do the work jointly with the university laboratory. Thus, nonproprietary work could be carried out on campus, and proprietary work would take place off campus. During these second and third phases, the faculty would be less and less involved, according to Senich. The Phase III grants would be more open-ended. These grants would not be supported by the federal agencies but would be provided by companies interested in commercializing the technology. NSF wants to limit CUIR support to small businesses for fear that larger corporations might otherwise substitute CUIR funds for ongoing research commitments to academia. It also believes that small high-technology firms are more effective at transferring technology from academia. In addition, university researchers are likely to have more influence over a small company's development than a larger one's. "We would like to see the CUIR expanded to virtually every federal agency," says a member of Sen. Exon's staff. "Linking colleges with the private sector can have all sorts of spillover effects." Foresight's Speser sees the program as a good way to harvest the fruits of small science. Over the decade, the 1,100 SBIR grants awarded (at a cost of $130 million to NSF) have generated $750 million in private sector investment. "SBIR has made significant inroads into innovation and economic development," says Senich. The SBIR program, begun in 1980, requires a dozen federal agencies with large research budgets to set aside 1.25 percent for projects from small businesses. Proponents have similar high hopes for CUIR. NSF had estimated that it would need $5 million a year for 100 awards under Phase I. About 40 of those projects would qualify for Phase II, the agency predicts, which translates into an extra $12 million beginning in the second year. The total outlay over six years would be $85 million. But NSF Director Erich Bloch says he could not support a program with such a price tag. "We need to start small and see how things go," he says. "If the quality is good, then it's possible that other federal agencies would become involved in Phase II." Under the current plan, CUIR administrators would be asked to leverage their funds by getting each NSF directorate to fork up half the support - $25,000 - for Phase I projects in their disciplines. "They have, in the past, responded fairly well [to SBIR proposals]," says Hauer. "They like to be able to say, `Oh, yes, I funded one of these.' " But Hauer and Senich may have to work a little harder to sell their colleagues on supporting ideas that go beyond basic research. "This is not research to develop knowledge," Senich says. "It is research for striving to give an underpinning to technology." The report to Congress also talked about giving special consideration to the have-not institutions, that is, the 130 of the 185 research universities that share just 20 percent of federal research support. Analysis of SBIR showed that 18 states have received 87 percent of all SBIR funds. Hauer says that the details are "still up in the air." Exon has suggested giving bonus points to applications from scientists in those less-funded states. Others have proposed that a certain percentage be set aside for schools currently less involved in technology transfer. It is likely that NSF will evaluate proposals based on relative local economic benefits as well as on the novelty of the project. Reviewers may include experts from industry who could assess the commercial potential of a project. Between now and June, NSF plans to hold informal meetings throughout the country to collect ideas on how the program should operate. The financial obstacles facing the CUIR are formidable. Proponents had hoped that some of the profits from successful projects would be funneled back into the CUIR. But the logistics of such a program are daunting and, most believe, unworkable. The NSF report also suggests that Phase II and III might be better handled through other federal agencies, or even the private sector. But Hauer is dubious. "That, to me, is an unlikely outcome," he says. Speser also thinks that it will fall back on NSF to foot the bill for Phase II. Given that uncertainty, NSF officials are eager to find out how researchers will react to the program. "We must do what we can, given what resources we have," says Senich. "We're going to go out and cast bread on the water and see if it will work." For more information, contact Donald Senich, Division of Industrial Science and Technical Innovation, NSF, 1800 G St. N.W., Washington, D.C. 20550; (202) 357-9666.

NSF Program To Encourage University Science Entrepreneurs Set For Slow Start

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