MIT’s Deshpande Center for Technological Innovation was created in 2002 to help technologies and ideas developed in the Institute’s labs make their way to the marketplace. So far, at least 20 of those ideas have become the basis for real companies, which have raised over $180 million in funding and created more than 200 jobs. Now, the Obama administration may try to replicate that record by creating similar centers across the country.
Earlier this year, The New York Times said the Deshpande Center was at “the vanguard of a movement” underway at a handful of universities: the creation of centers that help to bridge the gap between the kind of basic research funded by government or foundation grants, and market-ready plans that can raise money from investors and venture-capital firms. That gap, the Times said, is often described as “the valley of death,” because it is so hard for new ideas to find funding to get them to the stage where they have demonstrated enough success to attract further financing.
Washington has taken notice of the center’s success: The U.S. Department of Commerce in September appointed a National Advisory Council on Innovation and Entrepreneurship with the goal of developing similar innovation centers around the country. The council is co-chaired by Gururaj “Desh” Deshpande, founder of the MIT center and a life member of the MIT Corporation, along with AOL co-founder Steve Case and University of Michigan President Mary Sue Coleman. The 26-member council also includes MIT President Emeritus Charles M. Vest, Zipcar co-founder Robin Chase SM ’86, Claude R. Canizares, MIT’s vice president for research and associate provost, and former MIT Entrepreneurship Center Managing Director Ken Morse ’68.
“The Obama administration got very excited about doing more” of the kind of work carried out by the MIT center, says Deshpande, a serial entrepreneur who founded Sycamore Networks and is chairman of the venture-capital firm Sparta Group LLC. This led to the creation of this new council, whose aim is to “see if there’s a better way to leverage the $150 billion we spend every year on research.”
Innovation plus relevance
The idea for center grew out of meetings between Deshpande, a graduate of the India Institute of Technology who had no prior connection to MIT, and Alex D’Arbeloff ’49, who was then the chairman of the MIT Corporation, which Deshpande joined in 2000. Deshpande says it was partly a response to the change in the nation’s research landscape, which in earlier decades had been largely driven by major corporate research centers such as Bell Labs and IBM. “It became clear that the center of gravity in technology and innovation had moved to the universities,” Deshpande says, but unlike those corporate labs, researchers in the universities had much less connection with the marketplace and the business world.
So part of the goal was to help guide university researchers, who have no shortage of innovative ideas, toward those ideas that had commercial potential. Deshpande wondered, “How do you help them pick and choose which ideas to pursue, so that the probability of having an impact goes up?” The formula they arrived at was, in essence, “innovation plus relevance equals impact,” Deshpande says.
The center’s portfolio spans a wide range of MIT research, notes Leon Sandler, the center’s executive director. “We do everything from medical devices to materials, electronics, software — anything anyone can come up with,” he says, as long as it shows signs of being commercially viable. “It doesn’t have to be proven, but we have to see the potential.”
One of the center’s successful launches was 1366 Technologies, a Lexington, Mass.-based company that is producing machinery to manufacture an improved type of solar photovoltaic cells that can achieve efficiencies comparable to those of single-crystal silicon cells (about 18 percent efficient) using the much less expensive multi-crystalline form of silicon. Emanuel Sachs, MIT’s Fred Fort Flowers and Daniel Fort Flowers Professor of Mechanical Engineering, developed the technology and cofounded the company with Frank van Mierlo ’82, and they have so far raised over $22 million in grants and direct investment. The company got off the ground with the help of initial grants from the center, and the two cofounders first met at an event sponsored by the center.
Social network for innovation
Sandler says that in addition to providing grants to promising technologies (some $10 million in grants have been given to more than 80 projects since 2002), the center helps researchers navigate the sometimes-unfamiliar territory of the business world. The center puts inventors in touch with mentors, advisers or potential executives for the companies they create. A group of up to 50 volunteers that includes successful entrepreneurs, venture capitalists and industry specialists helps with that process. “We call them catalysts, and they can provide guidance and help” as a team progresses toward commercialization of an idea, Sandler says. These people help the researchers understand the potential applications of the technology and what steps must be taken to convince investors that the venture is not too risky.
One of those catalysts is Jeffrey Andrews, who is also an advisor to the center, and now senior vice president of an energy technology company called Advanced Electron Beams (which has no connection to the center). Andrews says the center’s power lies in its social network: The Deshpande Center serves as a “virtual meeting place” for entrepreneurially minded professors and students with new business ideas, serial entrepreneurs looking for new projects, and investors looking for the next big thing. “I’m convinced it is the community, more than the grant dollars, that have produced the winning record,” Andrews says.
The center “serves a really important role, fitting in between the National Science Foundation and venture capital,” says Stan Reiss SM ’95, a general partner in the venture-capital firm Matrix Partners, which has been a sponsor of the center almost from the beginning.
Reiss says the center works “not only by helping technical entrepreneurs think through a business plan that can help them land funding, but more importantly in helping steer research in a commercial direction where a couple good results can convince investors to make a larger financial bet.”
For Sandler, a key measure of the center’s success is whether it serves to stimulate innovation at MIT — in short, “Would these projects have happened anyway, or did we play an important role?”
Reiss, for one, is convinced that the center does. “Many of the projects in MIT labs need business guidance … someone that can help guide the team in the right direction,” he says. “The center has done an outstanding job helping commercialize MIT technologies.”