Commercializing university technologies. An entrepreneurial opportunity?

"This is a big problem. I'm glad there is someone from Kellogg working on this." For an entrepreneur looking for an opportunity, a response such as this from a potential customer just warms the heart. So what is this "big problem" that I'm working on through the startup?

US government funded research programs have played a key role in many technological advances, such as nuclear energy and even Lyrica, the Northwestern University developed drug contributing over $200M in annual licensing revenue to the university. Nevertheless, total income generated by all US universities through licensing research is a mere $2.4Bn a year, despite almost $50Bn a year in investment by the US government. Innovations developed in academia struggle to reach the market.

Through a Kellogg marketing research class, we interviewed 36 practitioners in industry about their experiences with technology transfer. A central theme emerged: While the "blue sky" nature of university research means it has the potential to create large scale impact, companies have difficulty in determining how university technologies can be commercialized into tangible products and services. The mechanics that make Lyrica effective for neuropathic pain, for example, were only determined accidentally during industrial development.

For companies, the royalties and upfront fees that universities demand is unreasonable for the investment they must make to find a market for unproven technologies. The price is too high. Yet, particularly in times of recession, such as the current time, universities are an untapped source of new product innovations.