With so many great universities and medical facilities here, the question is often asked, “Why hasn’t Northeast Ohio developed more technology companies?” Until recently, one impediment was an antiquated law regarding academic ownership.
“The law was in place because if you were a faculty member of any public university and the government was providing funds for the research, the idea was they shouldn’t benefit personally,” says Len Cosentino, a shareholder in law firm McDonald Hopkins’ business development practice. “The realities of today’s economic development made this an obstacle to creating jobs. (A few years ago), they amended that law. Now any faculty member or other employee that does research can own an interest in a company.”
The idea was that there would be more incentive for doctors and scientists to move their work beyond the academic journal and into the entrepreneurial world if they could personally benefit. But the process is complex, and — especially with medical and pharmaceutical products — long.
“There are a variety of different ways to commercialize technology,” says Cosentino. “The university comes up with ideas. And some of those ideas they patent, and either through tech transfer (commercialize it) or license or sell the technology to a player in industry.”
Outside of the Midwest, tech transfer has become the lifeblood of some communities, with technology meccas popping up around these universities.
“Stanford is a good example, but you have the University of Illinois, Carnegie Mellon, MIT and Harvard,” says Cosentino. “There are a couple of reasons for that. Those schools tend to be on the coast, and there is more of a culture of technology investment and an infrastructure in place that fosters that investment. It’s not so much that there are more inventions but more of an environment of investment.”
In reality, a great idea stays just that unless an investor can be persuaded to take a chance.
“The change in the law is one step, and the public attention in press and politicians are now on board,” says Cosentino.
One good sign is that Northeast Ohio got the lion’s share of the most recent granting of $29 million in the Third Frontier Project, which grants money to promote the advancement of technology in Ohio. Two other grants — one to stem cell research and the other to neuro-stimulation — have also been awarded to local research.
The real challenge lies in getting the private investor and venture capitalist to take a risk on new technology.
“It is not a lot different (from other investing), although sometimes the time frame to market is longer, and depending on the level of regulation, it can take many years to see a return,” says Cosentino. “You need patient investors, and you might need more time in developing the product from conception to get real money.”
Patient money — and more of it — is what the area needs, and it needs it sooner rather than later.
“(Tech transfer) is very lucrative to the medical institutions and to the local economy,” says Cosentino. “There are companies here that have good product, but if they leave, they leave because the money is not here and they are getting investment from elsewhere, because the tech investment community infrastructure is elsewhere.
“But one day, I hope we will be known as a knowledge economy. And with everything here, how could we not?” How to reach: McDonald Hopkins, (216) 348-5400 or www.mhbh.com