As the government doubles down on trying to get good science into the marketplace, how are scientists preparing for the commercial world?
Do scientists make good businesspeople? Are they able, after a lifetime of studying in institutions to learn how to become a researcher, then turn their attention to putting that research into application? Can they become less Walter White (sans the Breaking Bad character’s methamphetamine empire) and more Elliott Schwartz, his old lab partner who went on to form a successful pharmaceutical company?
It’s a question, in general rather than Breaking Bad terms, that Justin Hodgkiss has thought a lot about. The deputy director of the MacDiarmid Institute for Advanced Materials and Nanotechnology has spent his whole life in a system that geared him to one goal – to create interesting science.
But then last year a system based on some of his (and others’) research was turned into a spinout company from Victoria University of Wellington.
AuramerBio Ltd uses brand new technology to create better diagnostic testing of, among other things, methamphetamine. But before this process took place – taking researchers’ work, patenting it, creating a company around it and then trying to take it to the market place – Hodgkiss admits he had little idea of how it worked.
“To be honest I have become aware of how it worked after the fact,” he says. “I didn’t know the ins and outs of it at the time.”
And even now it he still doesn’t know exactly how it all fits together.
“It’s a little embarrassing.”
But Hodgkiss’ experience points to an increasingly important area – getting scientists engaged in commercialisation. Because the government has invested heavily in the area.
In 2014 it announced plans to fund three business incubators that would be responsible for handling investment of $31 million over four years to encourage innovative research into the market place.
At the AMN8 conference in Queenstown, where 500 scientists from around the world have come for one of the largest material science events in the Southern Hemisphere, spin-out companies have been part of many of the conversations.
One session which was hosted by Callaghan Innovation focused on this exact issue. Representatives from those three incubators – PowerHouse, AstroLab and WNT Ventures – held a session to demystify some of the unknowns about transitioning into commercial world.
Between them they are responsible for giving out loans of $450,000 of government money along with $200,000 of their own. Smaller grants of $35,000 are available at the early stage of commercialisation to investigate whether a business is viable. All of that money is only repayable on the business turning a profit.
“This scheme is new to catalyse start up companies and reduce the risk,” says Hodgkiss. “It’s quite a big opportunity for scientists.”
Steve Hampson of PowerHouse says since 2010 they have invested in more than 30 companies based on university research.
He says part of the issue is scientists realising that they might have some work that could be commercialised. Then they need to be educated on how to go about starting a process to do that.
But it is not a short-term plan. Hampson says he sees investment in a spun-out company as a 15-year process.
“Strong profit, strong revenue, board management – it’s a long way to go to get to that point. We are there for the long term.”
He wants to see companies that are around for 50 years and ones that can employ more PhD graduates coming out of tertiary institutions.
But in New Zealand there isn’t a developed arena that has always encouraged this kind of work. At the Massachusetts Institute of Technology, where Hodgkiss did his PhD, there is a vibrant startup scene.
“People we’re very much aware that this is what most people are going to do,” he says. “There were always networking events for investors. In places like that it’s not risky to join a startup that might fail in two years because there will be plenty of others.”
Which is part of the challenge for New Zealand. A safer path in either academia or working for another company can have a strong lure, Hodgkiss says.
But the reality is that most PhD students are not going to get jobs as academics.
“The numbers just don’t add up,” Hodgkiss says. “What will really make an impact is if we open their eyes to the business world and give support that goes beyond normal PhD support. This is the world that most of them will be heading.”
Then is the trouble of motivating scientists who don’t own the intellectual property on work they do at universities.
Rory MacGillycuddy of AstroLab, another incubator, says that there are a number of ways a researcher can participle in a startup. He says it can be a way to boost a scientist’s profile over and above publishing papers but, more importantly, each business is dealt case by case.
“We strive to ensure the team collectively has a sense of economic interest in the venture.”
Dr Carla Meledandri of Otago University, who is in the process of spinning out a company from some of her work in nanotechnology, says tertiary institutions could do better at recognising entry into the commercial world as not inherently seperate from academic obligations to publish papers.
“It’s a long a difficult process. People say ‘why would I do it if it’s not going to further my [academic career]?’”
She says universities are getting better at this but it points to some of the teething issues of trying to create an ecosystem where progression from research to commerce is natural.
“Signs now are all pointing in the right direction,” Hodgkiss says.
At the MacDiarmid Institute, researchers are schooled in how to communicate their work to a non-scientific audience.
“We tell them to forget everything they know about the science but actually think about the benefits because that’s really all the investor cares about. That and how it will make money. The science is 10% of what’s important.”
He says students in academic institutions who go through the churn of examinations and tests are trained to tell people everything they know.
“That’s the easiest way to turn off an investor. Their eyes glaze over.”
But investors also want the scientist to be engaged in the process.
“The potential company is dependent on it, to have that scientific weight behind it.”
This is part of a series of articles for the Spinoff about and from AMN8, The Eighth International Conference on Advanced Materials and Nanotechnology, in Queenstown from February 12-16 2017. For details on public events in Christchurch, Wanaka, Queenstown and Nelson, click here. This content series is sponsored by the conference’s hosts, The MacDiarmid Institute for Advanced Materials and Nanotechnology, a national institute devoted to scientific research.
The Spinoff Weekly compiles the best stories of the week – an essential guide to modern life in New Zealand, emailed out on Monday evenings.