The University of Illinois at Chicago is launching a $10 million fund to help inventions advance from the research stage toward potential commercial opportunities, becoming the latest academic institution in the area to channel increased resources toward homegrown startup activity.
The Chancellor’s Innovation Fund will allocate $2 million a year for five years. Each year, $1 million will go toward proof-of-concept funding and the other $1 million will be used for equity seed investments in companies that are further along in the commercialization process. Proof-of-concept funding is used to plug the gap between basic research and commercialization, a void that the industry calls “the valley of death.”
IllinoisVentures, an early stage technology investment firm launched by the University of Illinois, will manage the Chancellor’s Innovation Fund. But while IllinoisVentures backs companies that come out of various Midwestern universities, the new fund is dedicated to UIC projects. The money for the fund comes from proceeds of past commercialization efforts, and the idea is for the fund to become self-sustaining when projects become successful.
“We’re working toward creating sustainable startups,” said Nancy Sullivan, CEO of IllinoisVentures and interim executive director of UIC’s Office of Technology Management. “As some of these projects work through the process and hit their milestones, they might be a licensing opportunity for a big company or they could be a startup opportunity.”
UIC’s new initiative is similar to ones underway at the University of Chicago and Northwestern University. U. of C. has spent just over $1 million from a dedicated proof-of-concept fund on 19 projects in the last two years. Northwestern is raising money for such a fund.
These types of initiatives are “something that universities and peers are realizing are important, but it’s not easy money to raise,” Sullivan said. “Chicago has seen a big upswing between the three institutions working very hard.”
Sullivan said UIC conducted a “proof of concept for proof of concept” before university officials approved the fund. The Office of Technology Management raised $500,000 toward projects. Applicants had to first complete a one-page application about their technology and goals. Research deans selected a smaller group to apply for a second phase, which required a five-page proposal and presentation similar to a venture capital pitch. Seven to eight projects have been funded so far from the $500,000, which is separate from the $10 million, Sullivan said.
The launch of the Chancellor’s Innovation Fund also underscores UIC’s successes in getting research concepts to market, since those proceeds made the fund possible. One of the highlights of recent years is Prezista, a treatment for HIV developed by medicinal chemistry researchers at UIC and the National Institutes of Health. The university inked a licensing deal with Johnson and Johnson and earned more than $10 million in royalties on the drug in fiscal year 2011. Prezista was also one of the top royalty-generating technologies for UIC last year.