A richer soil for tech startups: It took awhile, but the national labs are now working closely with private industry and the result is a number of new business successes - Technology Transfer - technology research usage - Brief Article

New Mexico Business Journal, Jan-Feb, 2002 by Scott Randolph

AFTER THE COLD WAR, OFFICIALS of New Mexico's two national labs--Los Alamos and Sandia--described the wealth of weapons technology accumulated behind their fences and dating as far back as World War II as untapped riches, treasure troves of invention, candy stores for technology, an opportunity to beat swords into plowshares.

Problem was, nobody knew what to do with all that scientific backlog. Aside from a few early and exceptional examples of lab technologies making it in the business world (the sensor that triggers an airbag to deploy during an auto accident was invented at Sandia in the 1960s, for example), kicking technology out of the nest was uncharted territory for the labs.

In 1989, Congress enacted the National Competitiveness Technology Transfer Act. The bill not only spelled out ways the labs could interact with industry, it ordered the labs to contribute to "U.S. economic competitiveness."

The age of technology transfer was born, and the labs embarked on a new kind of experimentation.

Recognizing that U.S. corporations--such as those that make cars or computer chips--couldn't afford major, long-term R&D projects and keep prices down at the same time (thereby skimping on the very technological investments that might help them leapfrog their overseas competitors), the labs first sought relationships with large corporations or groups of companies called consortiums--essentially offering to be an industry's R&D department.

To manage these business arrangements, they relied on CRADAs (Cooperative Research and Development Agreements), contractual tools that allowed corporations and lab researchers to work together.

Sandia, for instance, worked with the semiconductor-industry consortium SEMI/SEMATECH to accelerate development of advanced chip-making equipment. Los Alamos worked with computer software giant Cray Research to develop software for everything from automobile engine design to global climate change modeling.

Dave Foster, now program manager for Los Alamos National Laboratory's Technology Commercialization Office, worked for Cray at the time. He says the lab's early efforts were tentative, but worthwhile.

"Partnering with the lab was slow and difficult," he says. "But it was clear that significant government funding had gone into development of software technology for many years, and therefore it was worth the effort."

Encouraged by these early successes, both labs forayed into a host of other tech transfer models. They initiated business assistance programs primarily to help small, local or regional businesses solve sticky technological problems. The technology license allowed rights to labs technologies to be transferred to companies in exchange for fees and sometimes royalties that were reinvested in lab R&D programs. User facility agreements let companies temporarily use expensive, sophisticated, one-of-a-kind research equipment only the labs could afford.

When Martin Marietta Corporation (now Lockheed Martin) won the contract to manage Sandia in 1993, part of the corporation's deal with the Department of Energy was to bolster the state's economy and provide new tech jobs outside the labs. The company founded Technology Ventures Corporation (TVC) in 1993, both to accelerate technology transfer from the labs and to begin to steer venture capital into the state.

Randy Wilson, TVC Director of Business Operations, says TVC helped shift the focus away from industrial collaboration. "It was important to attract investors from all over the country and to build an awareness of the technological wealth here in the state," he says.

As momentum built, the labs established policies that allowed a venturesome employee with an idea to take an "entrepreneurial leave of absence," then return to his or her job at the lab within two years if things didn't work out. The programs were intended to spawn technology spin-offs by eliminating risks to would-be entrepreneurs, and they have.

"The leave policies enable lab personnel to try to make a go of a new venture, and it provides a bit of a safety net in case they don't," says Wilson.

Spin-offs remain among the best ways to create jobs and strengthen the state's economy, he says.

Among other new and evolving services, TVC helps some startup/spin-offs refine their business cases, offers the annual New Mexico Equity Capital Symposium during which promising entrepreneurs present their cases to potential investors, hosts an online high-tech job forum, and provides office space to startups.

TVC and Sandia, in collaboration with the City of Albuquerque and the state, also have created the Sandia Science and Technology Park near Sandia as a place to incubate tech startups.

TVC says it has so far facilitated formation of 46 new companies, brought in more than $300 million in private sector investment capital, and created more than 5,000 jobs. "Essentially we are doing anything we can to create a hospitable environment for entrepre-neurship in the state," says Wilson.

Los Alamos claims relationships with 51 new startups employing 260 people and enjoying $55 million in venture capital, says Foster. The lab is focusing on licensing as well as a new provision in its prime contract with the University of California that allows the lab to take an equity position in promising startup companies or licensees, in lieu of royalties and up-front fees. Foster believes much has changed state-wide with regards to technology transfer.