Legislature(2013 - 2014)BARNES 124
02/18/2014 11:15 AM House ECON. DEV., TRADE & TOURISM
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| Presentation(s): University of Alaska | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE, AND
TOURISM
February 18, 2014
MEMBERS PRESENT
Representative Shelley Hughes, Chair
Representative Bob Herron
Representative Harriet Drummond
Representative Geran Tarr
Representative Pete Higgins
MEMBERS ABSENT
Representative Lynn Gattis
Representative Craig Johnson
Representative Kurt Olson
Representative Lance Pruitt
COMMITTEE CALENDAR
PRESENTATION(S): UNIVERSITY OF ALASKA
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
HELENA WISNIEWSKI, PhD
Vice Provost for Research and Graduate Studies
University of Alaska Anchorage (UAA)
Anchorage, Alaska
POSITION STATEMENT: Provided a presentation on clustering
economic development with universities and commercialization
efforts at the University of Alaska Anchorage.
DAN WHITE, PhD
Associate Vice Chancellor for Research;
Director, Institute for Northern Engineering
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Provided a presentation on commercializing
innovation at the University of Alaska Fairbanks.
ACTION NARRATIVE
11:18:38 AM
CHAIR SHELLEY HUGHES called the House Special Committee on
Economic Development, Trade, and Tourism meeting to order at
11:18 a.m. Representatives Higgins, Tarr, Drummond, and Hughes
were present at the call to order. Representative Herron
arrived as the meeting was in progress.
^PRESENTATION(S): UNIVERSITY OF ALASKA
PRESENTATION(S): UNIVERSITY OF ALASKA
11:19:10 AM
CHAIR HUGHES announced that the only order of business would be
presentations by the University of Alaska Anchorage (UAA) and
the University of Alaska Fairbanks (UAF).
11:20:35 AM
HELENA WISNIEWSKI, PhD, Vice Provost for Research and Graduate
Studies, UAA, provided a brief history of her background.
11:21:54 AM
DAN WHITE, PhD, Associate Vice Chancellor for Research and
Director, Institute for Northern Engineering, UAF, provided a
brief history of his background and said he is in charge of the
intellectual property portfolio for UAF.
11:22:32 AM
DR. WISNIEWSKI referred to a national report on "clustering" to
build economic development, and said she would discuss the
lessons that have been learned and how research and technology
at universities play a part. The [unidentified] report has been
circulated amongst industry to facilitate decision-making on
where to locate. Some of the top states that attract industry
are Massachusetts, New York, New Jersey, and Texas; Dr.
Wisniewski said she would provide overviews on four states. The
top-ranked states that are successful in economic development
and that attract industry, attract investment, grow their
universities, and increase jobs, have the following in common:
state funding for research and development programs; a state
fund to expedite commercialization and attract companies in
focused areas; innovation zones that provide infrastructure;
incubators; tax incentives; and state research funding to their
universities. The first example is Boston University (BU),
which receives 7 percent of its research and development funding
from the state and has $1 billion in venture capital funding.
In 2008, the state funded and established the Massachusetts Life
Sciences Center (MLSC) investment initiative to focus
commercialization, co-locate businesses with universities,
provide matching funds for grants to universities and industry,
and provide a workforce development program. The result is that
companies are attracted to innovation zones and the
infrastructure that is in place. In New Jersey, the New Jersey
Commission on Science and Technology promotes economic
development by funding collaborative efforts between
universities and industry with a focus on life sciences,
nanotechnology, and alternative energy. Also, it established
innovation zones that revitalize areas and allow for co-location
with nearby universities. Similarly, in Massachusetts graduates
are funded to work at companies in the state. These policies
foster a good return on investment. Texas leads the nation in
job creation which is motivated by economic development; in 2003
the Texas legislature authorized $295 million to the Texas
Enterprise Fund with a focus of attracting companies by
providing relocation packages and ensuring buildings are
appropriate and located near universities and startup companies.
The fund also expedites commercialization of new technologies.
One difference in the Texas fund is that the state holds equity
in the startup companies and gets a direct return if the company
is sold or pays dividends; the Texas fund also provides research
superiority awards to universities. Texas is home to the
highest number of Fortune 500 companies in the nation, has grown
"thousands of jobs and billions of dollars," and is experiencing
a surge in high-tech companies.
11:29:20 AM
CHAIR HUGHES recalled the Anchorage Economic Development
Corporation concluded the best policy is to foster the growth of
existing businesses rather than to encourage the relocation of
new industry. She asked whether relocation is best for Alaska,
and if the Texas Enterprise Fund kept its focus on new
companies.
DR. WISNIEWSKI responded that there is a mix of existing and
new; for example, the life sciences industry already had medical
facilities in Texas, but areas for aerospace were newly built.
Texas is a good example of a multifaceted approach. In further
response to Chair Hughes, she encouraged the use of both
approaches.
DR. WHITE supported the need to do both; in fact, UAF and UAA
have examples of both to present.
11:33:48 AM
DR. WISNIEWSKI turned attention to activities at UAA and
described ongoing research related to missing genes and stem
cells; much of the research at UAA seeks to improve the lives
and health of Alaskans by pharmaceutical research. Dr.
Wisniewski described the commercialization structure she put in
place in August, 2012, to leverage the research by UAA faculty
and to establish startup companies domiciled in Alaska. Seawolf
Holdings, LLC, acts as the interface between UAA and other
elements in the commercialization structure by providing
licensing and the use of patents. In turn, Seawolf Holdings
receives an equity position in the startup company. Seawolf
Venture Fund, LP, provides cash to startup companies and also
maintains an equity position. Seawolf Holdings board members
provide mentoring and insight to commercialization, and she
named the board. The focus of the venture fund is to provide
investment in newly staged companies, especially in biomedical
devices, biometrics, therapeutic pharmaceuticals, and sensing
devices, and ideas come from UAA Academic Innovations &
eLearning, and from other universities and companies in Alaska.
The venture fund is seeking $10 million in investments and a
fundraising strategy is in place. The fund is professionally
managed by an experienced firm.
11:39:50 AM
DR. WISNIEWSKI related that in fiscal year 2011 (FY 11) UAA had
three invention disclosures and now has thirty-two, twelve with
patents pending and four with patents awarded. Two startup
companies have been formed, and 43 percent of the invention
disclosures have evolved into patents, which can be monetized by
licensing or by forming startups. One of the startup companies
uses carbon fiber tape (CFT) to heat a surface and keep it snow-
and ice-free. The company has potential customers and the
product has been installed on the UAA campus. Another company -
Zensor, LLC, - provides solar powered sensor technology, and
this market is growing into a multi-billion industry. She said
some considerations for starting new companies are that they
have a market, create jobs, attract investment, and grow.
11:44:07 AM
CHAIR HUGHES questioned whether the Alaska inventor community is
directed to defined target areas.
DR. WISNIEWSKI answered that UAA has a strategic research plan
that identifies certain focuses such as health and biomedical
sciences, which led the Alaska Native Tribal Health Consortium
(ANTHC) to approach UAA with its specific needs.
CHAIR HUGHES observed that medical sciences in Texas are well-
established, but not in Alaska.
DR. WISNIEWSKI pointed out UAA is also conducting research into
Traumatic Brain Injury (TBI), and with three hospitals and the
blood bank, the health industry and pharmaceuticals are growth
areas for Alaska. In further response to Chair Hughes, Dr.
Wisniewski affirmed that with enough resources and focus,
commercializing research in an area can bring a leadership role
in that area to the state; however, she cautioned against
foregoing other areas because with research and technology new
areas cannot be predicted in advance.
11:49:56 AM
DR. WHITE added that unmanned aerial vehicles were a classic
case where UAF - with decades of research on remote sensing data
by its geophysical institute - and Alaska were well-positioned
for cluster development of a viable new technology. In this
instance, opportunity followed previous research. Furthermore,
all of the researchers are Alaskans, who are solving Alaska's
problems to help Alaskans and Alaska businesses.
REPRESENTATIVE HIGGINS acknowledged that Alaska is unique; for
instance, shipping costs hinder manufacturing. He opined that
research in the biomedical field can be done in Alaska, but
manufacturing devices likely will not. He encouraged UAA and
UAF to assess Alaska's assets and bring in other industry,
similar to remote-controlled aircraft, which can be manufactured
here in spite of the challenges.
DR. WHITE suggested that Alaska is leading the country in energy
because it is the location of the only Cold Climate Housing
Research Center (CCHRC) energy test facility designed to look at
technology for remote environments for the military and
industry. Additionally, at the Alaska Center for Energy and
Power (ACEP), energy grids are being tested for use in third
world countries.
DR. WISNIEWSKI explained one way to continue innovation is to
increase the awards given to UAA faculty. In 2012, there was a
3:1 investment for every dollar spent; in 2013, awards are
projected to be a 10:1 return on investment. In addition, she
established the Patent Wall of Fame to encourage the faculty to
create intellectual property in patents. She concluded that the
university is a resource for energy and talent.
11:56:31 AM
REPRESENTATIVE TARR informed the committee she teaches at the
university and urged for an increase in public private
partnerships related to medical research.
DR. WISNIEWSKI offered to provide Representative Tarr with
additional information on UAA's interaction with ANTHC.
REPRESENTATIVE TARR asked whether research is underway on the
use of natural gas in commercial vehicles, or other
applications.
DR. WHITE said ACEP is designed for industry to test their
products. The first step is to direct companies that are
interested in marketing to Alaska, to use the facility for
developing products. The university has a very business-
friendly environment that allows companies to keep their
intellectual property with no competition. There is no research
underway on gas-powered vehicles.
DR. WHITE directed attention to the PowerPoint presentation
entitled, "Commercializing UAF Innovation: A Win-Win for
Alaska." He informed the committee his work at UAF complements
that of Dr. Wisniewski at UAA. Universities are in the business
of technology transfer by publishing data and research, and
educating students; however, in 2010, UAF and UAA were
reorganized to get technologies into the private sector and
create wealth in the community. Both of the universities sought
to restructure in order to focus on technology that can make
money out in the community [slide 1]. He said this mission is
good for the university and its students, and for the local and
state economies. Dr. White said some feel there are
insufficient venture capital, angel funding, and entrepreneurs
in Alaska but he disagreed, saying what is missing are fundable
opportunities.
REPRESENTATIVE TARR asked whether Anchorage has the only [U.S.
Department of the Treasury's State Small Business Credit
Initiative (SSBCI)] fund in Alaska.
12:02:25 PM
DR. WHITE said the SSBCI 49th State Angel Fund is in Anchorage,
but there are individual and groups of angel investors in
Fairbanks and elsewhere in Alaska; as a matter of fact, UAF's
fund is managed by WBTangels. He returned to the key change in
structure at UAF, which was how to get technologies out of the
university quickly so they could start making money [slide 2].
The new structure, transforming research into technology, begins
with the Office of Intellectual Property and Commercialization
(OIPC), of which Dr. Smith is the director. As soon as a
property is identified it is turned over to Nanook Innovation
Corporation (NIC), where the property is licensed [slide 3].
The role of OIPC is to engage with inventors - some of whom are
faculty solving problems presented during their research - to
perform the initial due diligence, and to protect intellectual
property. Although OIPC doesn't necessarily get patents, it
looks for properties with commercial value that have patents or
derive from trade secrets. An agreement to protect trade
secrets saves the money and time spent to get a patent [slide
4]. The university facilitates Inventor's Forums to bring
faculty innovations before business leaders, investors, and
entrepreneurs to help researchers focus their innovations on
commercial opportunities [slides 5-7].
CHAIR HUGHES asked whether Inventor's Forums include investors
from across the state or primarily from the Fairbanks area.
DR. WHITE said entrepreneurs come from Fairbanks and Anchorage.
He advised UAF faculty members are good at research, but they
need guidance from business and investors; a loop of feedback
from investors, and further research from faculty, leads to
success.
12:07:13 PM
CHAIR HUGHES surmised it is rare for one person to have the
skills of an inventor and those of an entrepreneur. She asked
whether UAF pairs inventors, entrepreneurs, and investors.
DR. WHITE confirmed that UAF works with each inventor to find
researchers and whatever the inventor needs, or vice versa. The
University of Alaska (UA) has the most favorable agreements with
its faculty in sharing revenues; in fact, if a faculty member
invents something, the state owns the intellectual property,
OIPC licenses the property, and the faculty member gets 50
percent of the royalties. This structure has increased the
number of inventions being disclosed by providing an avenue to
commercialization [slide 8].
CHAIR HUGHES inquired as to the percentage at other
universities.
12:09:26 PM
DR. WHITE stated some universities start with a higher
percentage that drops off, for example, the University of
Florida makes a high percentage on Gatorade, but the inventor
makes a very low percentage. In further response to Chair
Hughes, he said this structure is starting to be a draw for
recruiting faculty, and he provided one example. Returning to
slide 8, he pointed out UAF has seventy-three invention
possibilities from which to choose the best investable
opportunities; this is an increase from one invention in 2004.
Some patents filed for upcoming technologies are: therapeutic
hypothermia; a sampling method to search for viruses; decision-
making support tools; and sensors sought by the Department of
Defense and security companies [slides 10-12]. Returning to
UAF's new structure, he reviewed the NIC board of directors
[slide 14]. An example of a NIC company is SwathViewer, an
existing business that asked UAF to develop visualization
software, which was then sold to them [slide 15]. Nanook
Innovation Corporation also licenses proprietary data and he
provided an example [slide 17]. Dr. White explained that
"intra-preneurship" is inventions that can help UAF such as
software to manage the university's research projects [slide
18], and he told the story of volcanic tracking capabilities at
UAF that could have saved hundreds of millions of dollars in
lost revenue when air traffic was closed due to a volcanic
eruption. At this time, NIC is in the process of licensing a
company that will track volcanic ash [slide 19]. Slide 20
illustrated the structure for commercializing technology, and he
noted that NIC is a non-profit supporting UAF that
commercializes its intellectual property, but which does not
hold equity, thus there is a separate tax C corporation, Nanook
Tech Ventures (NTV), which can hold equity. He characterized
this as a "lean startup model" which addresses the specific
question of investment capital. This entity can take an equity
share from a company, license the technology, and enable the
company to take its next step without a lot of money [slide 21].
The first NTV startup company is V-ADAPT, INC. [slide 23], and
he described some other companies.
12:18:22 PM
DR. WHITE informed the committee Alaska is last in the country
in obtaining U.S. Small Business Administration (SBA) Small
Business Innovation Research (SBIR) program and Small Business
Technology Transfer (STTR) program grants. Federal agencies
have funds earmarked for innovative research which are designed
to support companies to develop and sell new products, but the
money has to go directly to the small business and not to UAF.
He opined the grants are easy to get and UAF is going to work
with small businesses to help them apply for these grants; in
fact, like other universities, UAF has several startups using
these grants to build technology.
DR. WISNIEWSKI added that UAA is more focused on having NTV and
private investors fund opportunities; however, UAA will be
looking at SBIR and STTR grants as well.
DR. WHITE described two more startup companies [slides 28 and
29]. In summary: OIPC has received over one hundred thirty
invention disclosures in the past two and one-half years; NIC
has licensed more than thirty-seven pieces of technology,
thirty-six of which are to companies doing business in Alaska;
NTV worked with two startups that are licensing technology and
four startups working under SBIR or STTR grants [slide 31]. He
expressed his belief that the way to transform the culture at
UAF is more through success, and less through the direction
taken by its administrators. Many of UAF's inventors are
students and staff, in addition to faculty [slide 32]. Also,
through economic impact, UAF is giving companies in Alaska an
advantage, helping consumers, attracting talent, and keeping
money in the state [slide 32].
CHAIR HUGHES asked whether there are barriers to opportunity
that the state can remove. In addition, she requested a
comparison of UAF's commercialization office budget to that of
other state universities.
DR. WHITE said the UAF budget is similar to that of Montana
State University. Some universities expect commercialization
offices to be self-supporting; in fact, a few are highly
revenue-generating. He stated that UAF is comparable and
assured the committee that UA "is really focused on this right
now." Dr. White expressed his support for research and
development tax credits.
12:27:56 PM
DR. WISNIEWSKI remarked that on the research side, funding is
related to commercialization and provides a way to get matching
funds and collaborate with corporations. Also, the state can
invest in university funds and achieve a return on its
investment. The University of Alaska has not asked the state
for a specific research or commercialization budget thus the
needs have not been defined, and she recommended a review of her
earlier presentation. In further response to Chair Hughes, she
said her office at UAA does not receive any direct research
funding from the state, but the state provides $4 million to UAA
with a percentage to the Institute for Social and Economic
Research (ISER).
12:31:03 PM
REPRESENTATIVE TARR recalled the Alaska Science and Technology
Foundation that was eliminated in the late '90s was a statewide
research fund.
DR. WISNIEWSKI clarified that the 49th State Angel fund is
federal funding.
REPRESENTATIVE TARR observed that UAA and UAF are in competition
for research dollars but there are a lot of opportunities.
CHAIR HUGHES concluded that research funding requests need to be
tied to commercialization to be successful.
12:32:44 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Economic Development, Trade, and Tourism
meeting was adjourned at 12:32 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Innovation Clusters and Economic Growth.pdf |
HEDT 2/18/2014 11:15:00 AM |