Q&A: Cashing In.

The head of Caltech's Office of Technology Transfer has secured the university an ongoing stake in its entrepreneur's inventions

WHEN researchers at California Institute of Technology and Jet Propulsion Laboratory made a technological breakthrough in years past, the university left it to private industry to take the initiative.

If a company was interested in marketing an invention, the university issued a license and hoped that one day Caltech would receive royalty payments if and when the product ever came to market.

All that changed in 1995 when Larry Gilbert came to Caltech to create the Office of Technology Transfer. A former patent attorney and later licensing director at MIT, Gilbert attempts to transform Caltech 's inventions into marketable products by helping faculty and students launch their own start-ups.

Gilbert's office helps the homegrown entrepreneurs with everything from writing a business plan and finding legal talent to securing venture financing and interviewing candidates for executive positions.

In return, the university takes a stake in the start-up, typically 5 percent.

Since creating the office six years ago, Caltech has received equity in more than 70 companies. The university scored its first big payday last year when it received $7 million following an equity sale by one of its start-ups.

Christopher Woodard

Question: Why take such an active role in bringing Caltech's inventions to market?

Answer: We used to license our inventions (to the private sector) and wait for royalties. Once you grant that license, though, you've given up control. Say you license some software to Microsoft. They may choose not to use it because it competes with something they have. All of a sudden your invention just sort of withers on the vine. If you're really enamored with what you've done and you think it can make a difference, it's better to do your own start-up.

Q: What's in it for the university?

A: It helps provide the community with jobs and new products. In addition, it demonstrates that the Institute is being a responsible citizen to its surroundings. Also, it can succeed monetarily. Money we make goes to the general fund for research and educational purposes.

Q: Has the university ever enjoyed a payday from one of its inventions before?

A: Let's just say there have been a lot of lost opportunities. One of the reasons they wanted to create the office was to enable the university to better capture these opportunities. The upside potential in our view is on the equity side, not the royalty side. There are few inventions that generate large amounts of royalties.

Q: How has the tech downturn affected your ability to find venture capital?

A: We have the same contacts who are still interested in working with us. They just take a much longer time to make a decision. They're consumed by fixing up their damaged portfolios. I think things will gradually come back. At the end of 2002 and beginning of 2003, we should see a significant upswing.

Q: How do you measure your success?

A: The key indicator is the number of invention disclosures (the formal documents that start the process of licensing an invention) that Cal Tech receives. Caltech receives about $150 million a year in research funding, so we should be seeing 150 disclosures (a year) from faculty and students on campus. In fact, we had been receiving about 60. Last year, we had 157 disclosures based on about $150 million in research or about one disclosure for every one million dollars in research. That suggests we're seeing most of what is out there.