Ryan Pawell

Ryan Pawell is an entrepreneur, engineer, inventor and scientist. He completed a Bachelors of Science at the University of California, Santa Barbara while working with NuVasive to a tool for spinal surgery and developing portable oxygen concentrators obstructive lung disorders with Inogen. Ryan is completing a PhD at the University of New South Wales developing disposable microfluidic devices for processing cells and was the youngest graduate NSW Health & ATP Innovations Ignition Medical program. He also founder of a venture-backed startup developing a new class of therapeutics.

How to Herd Cats — Commercialising University Research

Opinion

This post was, inspired by a recent article by James Alexander from Incubate.org.au where he compares wrangling academics to herding cats.

Organising researchers is often said to be like herding cats. Answer = move the food bowl

Recently I attended a few events about the strategic direction of research in Australia and how to improve research outcomes including commercialisation and innovation.

Clearly there are issues with this in Australian Universities but we are not alone.

The authors of “Keys to the Kingdom.” recently published in Nature Biotechnology compared spinout deals and commercialisation policies at universities in the US and the UK.

For spinout companies in the US, the Universities equity stakes range from 0% at the University of Wisconsin, Madison to 100% at the California Institute of Technology with some universities allowing for negotiations.

In the UK, disclosed equity stakes range from 20% to 67% depending on the University with many of the equity stakes being non-negotiable.

The article also describes some of the challenges for entrepreneurs including, long negotiations, inexperience, lack of funding and access to experienced legal counsel.

The companies surveyed felt Universities who took large equity stakes tended to make academic contributions or overestimate their offering.

However, one of the more tangible benefits from the Universities was more research funding and resources (this generally required further negotiations and legal fees for new inventions).

It is important to remember that early stage laboratory results cannot always be replicated in a commercial environments, accordingly deals should be structured so the academy is remunerated if the technology really works.

ED: Having cleaned up a number of University VC funded spinouts where technology & staff didn’t work as planned I can say that this would have been a nightmare to define and measure. It doesn’t matter anyway as without working technology the companies where worthless.

The main purpose of this article is to attempt to suggest improvements and determine best practice. According to the “Keys to the Kingdom” regions with the best track records also had TTOs that took the smallest piece of the pie:

Notably, the regions attracting the most life science investment and with the most successful life science spinouts rewarded the academics and investors the most. The data would suggest that TTOs taking less upfront and leaving more to the academic and investors who will actually carry the idea forward pays off in the long-term.

Simply put: holding a smaller piece of something is still more valuable than a large piece of nothing.

So what has all this go to do with Australia? Well if you are trying to figure out what sorts of deals Australia universities and publicly funded research agencies are doing then have a look at their annual reports and financial statements.

It’s reasonable to conclude Australian TTOs are robbing themselves of commercial returns by demanding too much equity and taking too long to do a deal when there is so much development work still to be done and funded.

Universities largely overestimate the value of their contribution, often making the TTOs role much more difficult.

So what is the Australian academic innovation system to do?

Move The Food Bowl

The innovation system does not exist without a steady flow of inventions and a will to commercialize them.

Typically, there is very little incentive for the majority of academics to take the personal risk of launching a startup, their KPIs are structured around publications, disclosures and any commercial services income or grant funding awarded.

Further to the Cat food bowl analogy, perhaps funding could be tilted a bit more to commercialisation outcomes than publication citations.

Simple, Easy to Execute Deal Terms

TTOs should move towards simple, easy-to-execute deals and clear, performance-based terms.

The best example of this might be Peter Thiel’s Breakout Labs offering up a standard NDA and terms sheet for early-stage science startup capital that also encourages the founders to maximise capital efficiency while moving quickly.

This model rewards the Thiel foundation for creating successful startups by returning significant but not excessive contributions to the foundation, which is then used to fund the next generation of companies.

Y-Combinators also offers similar documents, which are designed to allow startups to maximise the value of investment in the shortest period of time.

Standardised Term Sheets, Shareholder and funding Agreements save startups and investors money in legal fees and reduce the time spent negotiating the terms of the investment.

Fund Raising

Money can be difficult to find in Australia for University Startups and the size of our deals is significantly smaller than the US.

For example, early stage funds for Australian science startups is in the low to mid six figure range (e.g., Zenogen and Clarity Pharmacueticals) whilst US science startups can range from millions (e.g., Perlstein Lab and Cytovale) to hundreds of millions (e.g., Juno Therapeutics and Calico).

Early rounds for Australian science startups are small, but they do have the little known advantages of being able to leverage matching funds from the Entrepreneurs Infrastructure Programme and other funds such as the NSW Medical Device Fund and various R&D Tax Incentives.

Inadvertently, this makes our startups relatively inexpensive for overseas investors due to the lower valuations, lower burn rates (e.g., from lower salaries) and the current exchange rate.

An Innovative Australia Exists

So how does the Australian academic innovation system work out the above issues? Adopting the simple, easy to execute deal terms can be accomplished by downloading the ones linked above and using them. The rest is a bit more difficult, but not impossible.

To provide some context, Stanford is a household name when it comes to innovation. The Stanford TTO funnels technologies from a network of 1,600 academics with total returns of $1.33B from 1970 to 2010 and $65.5M in revenue for 2010. Stanford churned out Google — Google has 53,600 full time employees. And, Columbia University made $790M for its gene delivery technology. Academic technologies can be quite valuable from a financial perspective while also having tremendous impact on society and the economy.

A good estimate for the number of STEM academics in Australia can be obtained from the National Collaborative Research Infrastructure. NCRIS supports 35,000 academics with 1,700 employees across 222 institutions in research areas that generated the highest returns for early-stage capital over the past decade.

Despite these facts, a TTO executive explains “we [Australia] are the worst” according to OECD statistics.

Once could point the finger at the Australian TTOs — over the past two decades 13% of TTOs surveyed by the Association of University Technology Managers broke even. That, however, is not the purpose of the article.

Let’s get back to the point. The purpose of the article was discuss the challenges for academic entrepreneurs in an Australian context and propose the first step. This can be accomplished by adopting simple, easy-to-execute deals that reward entrepreneurs and high-risk capital more than anywhere else.

Australia is already set up to do this — exchange rates are favourable, rounds are smaller and funds can be government matched.

As demonstrated by the Nature Biotechnology article discussed above, good deals attract the most cash and best talent.

It is likely that a few good deals will have follow-on effects. Making deals easier to execute and rewarding the academics who take the risk more than anything else will help Australia benefit from the unusually large volume of STEM academics supported by a single organisation.

Image CC from Kathleen Murtagh

A better approach to generating commercial returns from University Research

Opinion, , , , , ,

Recently, the Australian Financial Review ran an article about the CSIRO discussing why the people who pay for publicly-funded research should enjoy greater access to some of the tangible outcomes.

The author Adir Shiffman mentions that taxpayers essentially own intellectual property created by publicly funded research because taxpayers fund it. He goes on to suggest that a great way to increase the impact of these inventions would be to allow entrepreneurs access and use the intellectual property.

Adir also mentions that technology transfer people are difficult to deal with and I have my opinions in that space, but this is not the purpose of the article.

The purpose of this article is to provide an overview of how things are done then make a few suggestions that might increase the successful invention hit rate and also increase industry engagement which is minimal in Australia.

Normally a scientist would apply for research funding from a lab budget or grant. The funding is then used to look at some new phenomena, and if things go well then the technology transfer office may file a patent on any discovery or results and try to market it.

Marketing the invention might involve putting a brief summary up a webpage, presenting the results at some industry conference, trying to build a relationship between the scientists and industry through a series of events. All of this takes up lots of time and costs a lot of money. My understanding is few of these inventions get very far even when marketed using ‘entrepreneur and industry friendly’ schemes.

If you have funding and prefer more tangible research outcomes then there are a few things you can do before starting experiments to improve your odds of success.

First, you will want to identify a handful of companies in your industry with enough money. Yahoo! Finance can be used to identify publicly traded companies in your industry and determine how research-friendly they might be.

For example, if you are into electric cars Yahoo! Finance will tell you Tesla Motors (TSLA) “designs, develops, manufactures, and sells electric vehicles and electric vehicle powertrain components” and spends $232 million on research and development.

tesla model s photoPhoto by oskay

Next, it is useful to look at how Tesla might do things. Publicly-funded research often starts with a literature review, start yours by going to Google Patents and searching “inassignee:”Tesla Motors, Inc.”

This will give you a good overview of Tesla processes and you might have a few ideas while reading them. Reading patents is also useful as someone needs to spend thousands of dollars just to file a patent while journal articles just need to get accepted.

Next, you will want to contact someone at the company. The front desk may not be good at following up and emails sent to generic email addresses may not get returned. Yahoo! Finance lists the names of key executives and Elon Musk is on LinkedIn.

If that doesn’t work there are a few other tricks. Make sure to keep things simple, a couple sentences asking to start a conversation on research into electric cars could get you a phone call, but remember to not disclose any ideas.


tesla model s photoPhoto by jurvetson

If you can get a meeting with a senior person in the R & D office, you might spend as much time as they will give talking about their biggest challenges and the areas they need to make breakthroughs.

This entire process might take an hour and if things go well after that you’ve got (1) a good idea of valuable research opportunities and (2) the attention of a key decision maker at a company that may partner with you or purchase intellectual property down the road.

Alternatively, one could continue to use current methods where most publicly-funded intellectual property gathers lots of dust, there is limited industry engagement, and after spending a pile of time and money you might get a phone call or meeting with someone who may not buy what you are selling.

A little bit of due diligence and spending more time on the problem rather than the technology in the early stages can pay dividends in the long run.

 

 

NSA Spying - Credit EFF Flickr

Stay Secure – 5 ways to increase your online security

How to?, , , , ,

Photo by ElectronicFrontierFoundation

In the digital age privacy and security are always a major concern, especially since Eric Snowden revealed the National Security Agency’s global surveillance programs. Additionally, in a competitive environment or industry security and privacy are essential. The good news is both privacy and security can be reasonably maintained whilst enjoying the Internet.

Here are a few tips:

  • Use complex and different passwords. If you use the same password for your all your work and personal accounts then your work can access your personal accounts. If your password is ‘password’ or your first name then it can easily be guessed. If you use complex and different passwords do not put them all in a document or note titled, “Passwords,” or use the word “password” in that document. A simple search for the word “password” can be used to find that document and all your passwords – a nondescript or misleading title is ideal.

 

  • Use a virtual private network (VPN) A virtual private network allows your computer, laptop or mobile devices to communicate privately when using the very public Internet. There are a lot of ways to do this, both free and paid. For $70 per year, you can use WiTopia to access a very large number of gateways around the world. Typically you want the closest gateway to you to maximize speed. If you live, however, in an area with restricted Internet access such as Australia or China, then you can just select a gateway in a country without restricted access to “unrestrict” access.

 

  • Use encrypted cloud storage Dropbox recently added Condoleezza Rice to their board and she is a major proponent of NSA’s global surveillance programs. Dropbox claims to respect privacy, but the newest addition to the DropBox board of directors definitely does not. Try SpiderOak for more secure cloud-based storage. 2GB is free, premium subscriptions are the same price as DropBox, UI is fairly user-friendly and offers the same enjoyable features as DropBox along with ‘zero-knowledge” layered data encryption for those who only use the desktop client. SpiderOak even drafted a comforting statement for those generally concerned with cloud-based storage: “Most importantly, however, the outer level keys are never stored in plaintext on the SpiderOak server. They are encrypted with 256 bit AES, using a key created by the key derivation/strengthening algorithm PBKDF2 (using sha256), with 16384 round and 32 bytes of random data (“salt”). This approach prevents brute force and pre-computation or database attacks against the key. This means that a user who knows her password, can generate the outer level encryption key using PBKDF2 and the salt, then decipher the outer level keys, and be on the way to decrypting her data. Without knowledge of the password, however, the data is quite unreadable.”

 

  • For personal email, find a provider that values your privacy You would not want your neighbours reading your personal mail so why do you let Google and the NSA? MyKolab offers a secure email with servers in a country that respects privacy a bit more than others for about $10 USD per month.

 

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Saturn Launcher on the way to launch Saturn V - Credit Nasa

Push or Pull

Opinion,

Generally speaking, there are two types of research and development, those (1) driven by a technology push or (2) powered by a market pull. Academicians and politicians like to push while opportunists enjoy the pull.

A technology push is easy to identify. Often times these efforts are publicly funded, expensive and lengthy, and involve massive consortiums. Pushing demands lots of publicity and – in the long run – generates limited practical results. A great example of a technology push is the moon race.

It was an amazing technological effort and on the American side it cost about a hundred billion taxpayer dollars, took over a decade, involved hundreds of thousands of people, received lots of publicity and now – about four decades later – the moon hosts some footprints, flags and even a few golf balls. During each push, however, lots of people are both employed and trained.

 

R&D based on a market pull is less about ostentatious government spending and excessive intellectual grandstanding. It is more about quickly (and quietly) preparing to exploit an opportunity. These R&D efforts are relatively short and are often completed by a small, effective team with limited resources. An opportunist understands initial R&D time is time given to competitors and money spent on R&D must be earned later.

The purpose of this article is to evaluate the feasibility of an R&D project and may be used to determine how quickly (and quietly) one might move to exploit an opportunity.

After identifying an opportunity it is necessary to either purchase or license the appropriate technology for a reasonable fee or invent a new one. This involves either searching a few relevant patents or patent applications from a directory such as Collective IP or, if you are the creative type, brainstorming novel ways to exploit the opportunity. Most importantly, take the time to determine the best way to skin this cat.

A great starting point is to determine how complex each “cat skinning” method might be and the following questions can be useful for this:

  • How many parts, chemical and/or reagents are required to build your prototype?
  • Are these standard parts, chemicals or reagents?
  • How much do they cost?
  • Are there moving parts? Custom chemicals? Rare reagents?
  • If it is difficult to quantify parts without building and testing a prototype, then how many different phenomena are required? Does the technology require sound, light, electricity, organic chemicals and some nanomagnetoresonantbiosensors?

The more complex the product or service, the more expensive it will need to be and the longer the R&D. When searching for a project it is best to find one that “keeps it simple stupid.”

Cool, simple and cheap will more likely save time and make money. Once you’ve sorted that out it is useful to determine who the suppliers might be. Exploiting an opportunity is all about creating value for yourself and indirectly you do the same for your suppliers. If there is only one or two they will eventually exploit you.

Remember, a promising R&D project does not need to be expensive nor lengthy. Avoid the push.

Enjoy the pull.

Tech Startups are expensive

Pitch your Startup, ,

Not long ago, when speaking to someone with plenty of experience in technology transfer he emphasized the elegance of tech startups – low assets.

He probably still thinks tech startups are cheap and I respectfully disagree.

The opposite of a tech startup might be one based on hard goods or hard science. For the purpose of this article, we will compare two fictitious early-stage startups TechStart and HardScience.

According to Staff.com, the cost of running TechStart in San Francisco – a designer, developer and office space is $263,088.

Credit - http://Staff.com

Credit – http://Staff.com

 

This is $81,000 for the developer, $79,008 for the designer, $22,080 for the office along with an additional $81,000 for other stuff.

Assume both startups are in the idea phase. Over the course of the year TechStart needs to build their MVP and generate users whilst HardScience needs to generate enough data to file a prototype-backed provisional.

In 1999, just under half the articles published in Science, a decent scientific journal were authored by postdocs and these scientists earn about $36,000.

Moreover, in San Francisco, the cost of a dedicated lab bench, a couple postdocs, professional intellectual property searching and provisional filing works out to about $94,000 ($12,000 + 2 * $36,000 + $10,000) or for the bells and whistles lab and office space this is closer to $132,000.

Thus, leaving $131,088 for bits of equipment, consumables, insurance, pizza and beer along with an epic end of year (or end of startup) party. This is roughly $11,000 per month for the extra stuff and many academic labs spend less per year.

But what about all that fancy lab equipment that costs millions of dollars? Do not worry about it. A 3D printer that used to cost more than a hundred thousand is about to cost a few hundred.

Services like scienceexchange.com can be used to outsource experiments to verified labs or, if you are the DIY type, equipment time can be rented from a nearby research institute for reasonable hourly rate. No dramas.

Tech startups are expensive.

ryan-pawell-290x2901Ryan Pawell is PhD candidate at the University of NSW and is developing an affordable disposable microfluidic chip to bring down the cost of delivering gene therapy to HIV patients.

He received his BSci, Mechanical Engineering at the University of California, Santa Barbara and led a team of engineering students to prototype a tool for anterior cervical discectomy and fusion.

He also worked in R&D at Inogen developing a portable oxygen concentrator for the treatment of chronic obstructive pulmonary disease.

You can connect with Ryan here linkedin.com/in/rpawell and see more about his work in the Youtube video at the end of the article

Ryan Pawell is PhD candidate at the University of NSW and is developing an affordable disposable microfluidic chip to bring down the cost of delivering gene therapy to HIV patients.

He received his BSci, Mechanical Engineering at the University of California, Santa Barbara and led a team of engineering students to prototype a tool for anterior cervical discectomy and fusion.

He also worked in R&D at Inogen developing a portable oxygen concentrator for the treatment of chronic obstructive pulmonary disease.

You can connect with Ryan here linkedin.com/in/rpawell and see more about his work in the Youtube video at the end of the article

 

Photo by snre

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It’s a matter of effort

Entrepreneurs, , , ,
Ryan Pawell

Ryan Pawell

Ryan Pawell is PhD candidate at the University of NSW and is developing an affordable disposable microfluidic chip to bring down the cost of delivering gene therapy to HIV patients.

He received his BSci, Mechanical Engineering at the University of California, Santa Barbara and led a team of engineering students to prototype a tool for anterior cervical discectomy and fusion.

He also worked in R&D at Inogen developing a portable oxygen concentrator for the treatment of chronic obstructive pulmonary disease.

You can connect with Ryan here linkedin.com/in/rpawell and see more about his work in the Youtube video at the end of the article

It’s a matter of effort

A few years ago I was a research engineer intern at a medical device manufacturer and after hearing of cuts to the tertiary public education I wondered how the public education system was going to compete with the private system if it had significantly less money. I spoke to my supervisor and he responded with, “I am pretty sure it is a matter of effort.”

Ironically, the business I worked for was started by three undergraduate students in their junior year of college and when getting started the founders lacked sufficient funds to incorporate. Now, thirteen years later the business is valued at over $250 million after a recent IPO. For these ambitious students, it was definitely not a matter of money, but a matter of effort.

While I was there, we were approached by a number of people who were interested in selling components and patents to us that appeared to significantly advance the existing products. However, after reading the fine print and crunching the numbers it was realized these ideas, while both ambitious and admirable, were not feasible. Over the past few years of a few opportunities for joint ventures or research partnerships have popped up and I continue to apply the lessons learned during this internship to each of these opportunities.

Most importantly, always do your due diligence. The internet is a very valuable tool and before spending much time on a new science or technology or when evaluating a potential employer, make sure to use it.

There is no need for an expensive market report or technical evaluation, and I’ve found these reports to lack critical information that may be readily obtained with a quick Google search. Typically, patents serve as the foundation for new science and technology ventures so this is a good place to start. For a small company, an hour or two is all that is required to answer the following questions:

  • Are there any patent applications in the public domain that are assigned to the company?
  • If so, does the inventor work for the company?
  • What do the patent figures look like? Do they contain vague illustrations or hard data?
  • Do the original patent applications have a solid claim set with increasingly broad claims?
  • Do competing companies have any patents in this space?
  • Are any of these patents granted?
  • Which patents have the earliest priority date?
  • Is there any overlap between assigned patent applications and competing patents?
  • If so, who owns the patent with the earliest priority date
  • Also, have any of the granted patents been successfully litigated?

The point of the intellectual property due diligence is to determine if the company has a strong foundation and if the intellectual property portfolio provides the company with the unfair competitive advantage required to succeed. International search reports obtained during the patent review process are very limited and the legal structure of the patent system puts the onus on the patent holder, thus, even if a patent is granted it is important to do a bit more digging.

A new venture with a solid intellectual property foundation cannot succeed without a significant market opportunity. In tech, this can be verified by generating users, however, for hard goods and hard science it is more difficult. Again, with a quick Google search, it is possible to obtain an overview on a variety of markets. Some market research companies list market sizes and growth rates publicly, others require you to pay for the whole report. This part of the due diligence process should be used to determine if the juice is worth the squeeze and should answer the following questions:

  • Are the target markets large or small?
  • Reasonably, what portion of that market does the intellectual property get you access to? Could the venture reasonably generate 100 million in revenue in the long run?
  • Do the numbers from your independent market research match up with those described by the company? If not, why not?
  • For extra credit, it is worthwhile to call up a potential customer or two and carefully determine if the company is solving an actual unmet need, a perceived need or a non-problem?
  • Is there anyone who would be reasonably competing with your product after launch currently in the market place?
  • If so, how far along are they? Series A? Series B? Multinational IPO?
  • Reasonably, how far away is this new venture from product launch? And, how far might your competitors get in that time?

The third and final part is used to vet the team. This is where social media is great. Many people will have a decent LinkedIn or Twitter presence. Online profiles are self-filled, meaning there is always a bit of room for generous self-promotion so you can use their profiles to identify exactly how honest they are and to answer the following questions:

  • Does each member of the team have some relevant qualifications?
  • Do they have the relevant experience?
  • Do they have LinkedIn recommendations from people outside of their current organization?
  • Most importantly, how do they describe themselves in their profile? Can this be verified? For example, do they list himself or herself as an inventor, but only have a failed patent application for 30 years ago in their name?
  • For extra credit, you can Google their name to read any relevant news or articles?
  • Most importantly, if their online presence is non-existent, what does this tell you?

Conveniently, this entire due diligence process can take place in less time than required to drive to and from a meeting. Most importantly, this bit of the due diligence process can be performed without signing a non-disclosure agreement and can be used prior to establishing a more formal relationship to avoid the awkward meeting or phone call required to decline the opportunity if it does not suit you or the due diligence indicates you should do so.

While the above process may seem unnecessary or somewhat overkill. It is best not to judge a book by its cover, some very qualified and experienced people have proposed new ventures that simply did not add up. Lengthy Ivy League letter trains and brand names on the resume are no guarantee that the venture is worth the time.

This article was written in the context of vetting new venture proposals, however, the same questions should be asked if looking to embark on your own.

It is only a matter of effort.

 

UNSW Video on Ryan’s project

Photo by n_sapiens

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