With traditional sources of research funding becoming scarcer by the day, universities and their TTOs are naturally on high alert for any new mechanism that can keep their technologies and start-ups moving forward. Much of the buzz of late has focused on crowdfunding. Websites like Kickstarter, RocketHub, and hundreds of other crowdfunding platforms around the world have demonstrated that the approach can find willing donors for the arts and all kinds of consumer-focused causes. But the concept is new to science, and crowdfunding pioneers are only now tip-toeing into this uncharted arena.
There are plenty of skeptics who believe the crowdfunding approach is simply not an easy fit for science, and more than a few universities are clinging to the sidelines until the approach shows more tangible benefits. But one significant wrinkle in the Jumpstart Our Business Startups (JOBS) Act, signed into law in April, makes it hard to ignore the potential of crowdfunding to push new innovations out into the marketplace. The Securities and Exchange Commission (SEC) has yet to unveil the rules on how the provisions will work, but the new law will allow new enterprises to use online funding portals to raise up to $1 million per year from small-dollar investors, who would acquire equity in the project or company.
Still, opinions differ on the potential for crowdfunding to fill critical funding gaps for research and commercialization. Many observers believe the most likely scenario is that the approach will work best at funding smaller projects that require a few thousand dollars or so to build a prototype or take a very early-stage innovation to the next step.
However, this may be enough to loosen the funding chokehold on the tens of thousands of promising innovations that go begging each year.
One of the factors that may be stifling the crowdfunding movement in the university research world is the typical bureaucracy that comes with the territory at most campuses. And the red-tape barriers get even harder to cut through when things like tax deductibility and IP rights enter the picture. Innovocracy, a Pittsford, NY-based start-up, is fashioning itself as the answer to all of these complications for academic institutions that want to take full advantage of crowdfunding to move their early-stage discoveries forward.
“The company really grew out of the frustration of seeing all these amazing things in academic institutions, and realizing that in some situations it may only require as little as $3,000, $10,000, or perhaps $15,000, and very commercially-oriented prototyping, to make the difference between a start-up and no start-up or a licensing deal and no licensing deal,” explains Mikael Totterman, a co-founder and chairman of Innovocracy. “We also recognized that crowdfunding needs to be tailored in a particular way to the needs of the academic institution to make sure that the TTO is fully in the loop, and the
provisional patents have been filed so that the innovator doesn’t disclose all this stuff on the Internet when the right things haven’t been done yet in the technology transfer process.”
“Our focus is specifically on things that are potentially commercializable and will produce businesses,” stresses Richard Glazer, a co-founder of Innovocracy. “So [by using crowdfunding] we are deploying a tool that has become widely accepted for raising money and providing certain incentives that drive donors to contribute to a project that they feel some connection or affinity to.”
Glaser emphasizes that the Innovocracy model is predicated on forming a relationship with technology transfer offices and universities — it’s much more than a web-based place to appeal for donors, he says. “We are patient enough to know how complex universities are, and we understand that the development department doesn’t necessarily talk with technology transfer people, and that they don’t necessarily talk with finance people. But we also understand the mindset of researchers,” he says. “We are sensitive to IP, sensitive to inappropriate use of university resources, and to the potentially inappropriate use of the university name.” A detailed article on this and other crowdfunding initiatives aimed at the university research space appears in the July issue of Technology Transfer Tactics. To subscribe and access the full article, CLICK HERE.