Assembly Remarks -February 2006
Assembly Task Force on University-Industry Cooperation Legislative Commission on Science and Technology Subcommittee on Manufacturing
Public Hearing: The Role of New York State in
Commercializing Research and Development Innovations
February 27, 2006
By President Anthony G. Collins, Clarkson University
Members of the Assembly:
Thank you for the opportunity to comment on the role of State government in encouraging the commercialization of research and development innovations.
Today I encourage you to consider two unique economic development programs. One is focused on St. Lawrence County and the other on the 12-county Central Upstate region of the State.
Clarkson University played a role in the creation of both programs, which reflects our commitment and our experience with efforts to commercial research and development innovations from our laboratories.
Clarkson is an independent, nationally ranked research university, but more importantly, it is a higher education innovator dedicated to becoming an engine for regional economic development. Clarkson emphasizes research to create knowledge, the identification of opportunities to apply our knowledge, then the engineering of that knowledge into practical, sustainable solutions to today’s problems, and finally the commercialization and marketing of those solutions to create wealth – all within a global marketplace.
We have grown our research and development portfolio to $17 million in projects for industry and numerous federal and state agencies in the last year. We focus institutional resources in five major areas of expertise: advanced materials, biotechnology, entrepreneurship, the environment and energy, and global supply chain management.
Our NYSTAR Center for Advanced Technology, the Center for Advanced Materials Processing (also known as CAMP), has pioneered a cooperative research model with manufacturers throughout the State. Critical elements are the assignment of a full-time technology transfer professional with significant industrial experience to visit manufacturers and to make New York State CAT funds available on a matching basis to develop intellectual property or solve problems that will lead to increased sales, and job creation or retention.
However, Clarkson’s efforts to create new, technology-based businesses
have been limited by lack of early-stage venture capital for start-up funds
for new enterprises. With the support of the New York Power Authority (NYPA)
and New York State Senators Meier and Wright, we have helped to create a unique
economic development fund to fill this gap.
As part of the relicensing of their hydroelectric project on the St. Lawrence River, NYPA agreed to provide economic development funding to the area impacted by the power dam. In September 2005, a working group that included Clarkson University, other regional universities, and leading business and government representatives won NYPA’s support for committing $10 million to an early stage private equity fund with a mandate to encourage economic development in St. Lawrence County.
To our knowledge, there is no other early-stage private-equity fund like it in the State of New York. NYPA will provide $10 million to a new not-for-profit corporation, the Seaway Private Equity Consortium (SPEC). The SPEC board is comprised of community and business leaders who are residents or who have significant business interests in St. Lawrence County. The Trustees collectively have the expertise that represents the major elements of economic development including corporate representation, labor representation, communication representation, commercial representation, local and state economic development organization representation and higher education representation.
The Board has reached agreement with a private investment management company, which will invest two dollars for every one dollar of State funds held by SPEC. This represents a total early-stage venture capital investment of $30 million. The private investment will be managed by Golden Technology Management LLC (Golden), a for-profit entity obligated to seek out new energy, environmental, and other technologies for the purpose of creating new companies that are based on selling products or services related to the new technologies. Golden maintains a team of highly qualified advisors and management staff to make decisions on technologies, companies and to participate in the management of the companies. Golden will be forming companies around technologies developed within St. Lawrence County, at Clarkson University for example, or from any other source.
In recognition of the private investors’ expertise and their 2 to 1 investment in the companies, the SPEC Board will play no role in selecting one investment over another or in managing the companies created by Golden. When Golden brings forward a capital call that requires SPEC to invest in a company, SPEC shall invest in companies created and managed by Golden provided two criteria are met: the companies are headquartered in and principally operated from locations in St. Lawrence County.
SPEC will have a financial interest in all companies created by Golden. The goal is a fund that will become self-sustaining as technology companies return investment capital so that other start-ups will have resources to draw on for growing their business and creating jobs.
While there is always risk in early-stage venture capital investments, this is an innovative, well-constructed program with strong backing. Consider also the costs of not making venture capital investments in terms of lost opportunities and competition from other states.
For example, our neighbor state to the south, the State of Pennsylvania, is investing $250 million in loan guarantees to venture capitalists who invest in entrepreneurs in that state.
I would also like to briefly endorse the Metropolitan Development Association of Syracuse’s Grants for Growth program, another unique economic development program which had its early concepts developed by higher education and industry representatives from the 12-county Central Upstate Region. It was modeled, in part, on the Clarkson CAT’s matching grants program. With a New York State investment of $750,000, the Grants for Growth Program provides awards on a competitive basis up to $50,000 in funds for partnerships between companies and regional universities to turn ideas from laboratories into industrial process improvements or new products. The program was successfully launched earlier this month when seven awards were announced with the potential to create 150 jobs.
As you and your colleagues articulate a strategy for encouraging the commercialization of research and development innovation, I trust you will consider the two programs that I have presented as models worthy of replication in other parts of the State and inclusion as critical elements of that strategy. A key to Clarkson’s involvement in both programs is a flexible Intellectual Property Policy as universities and companies need to work collaboratively.
I would be pleased to respond to any questions, you may have on my testimony or other issues in your hearing notice.
