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President and Executive Director
ONAMI was founded to grow research and commercialization in the state of Oregon, focusing on select areas of nanoscience and microtechnologies where we believed a competitive advantage existed. A critical component of this effort is the ONAMI gap fund, which has been operating for about seven months, with promising initial results.
May 1st, 2007
Nanoscience to Commercialization - a Developing Regional Experience
When we established ONAMI at the end of 2003, we did so with a fairly clear sense of Oregon's strengths and areas for improvement in our chosen areas of interest (nanoscience and microtechnologies), and set goals that, when achieved, would demonstrate the necessary improvement.
In the plus column was, literally, the world's most powerful collection of industrial "small tech" research and development assets - Intel's (semiconductors) and HP's (inkjet, MEMS, microfluidics) lead R&D/advanced manufacturing facilities, FEI - the world leader in tools for nanotech, and Invitrogen's biomolecular imaging/quantum dot division (all doing very well competitively as you may have noticed). Against this were comparatively small and obscure academic efforts, and a much weaker performance in startups and venture capital than should have been the case in one of the world's top technology regions.
To rapidly grow our research base, we built a collaborative research engine involving 137 researchers from three research universities and one national laboratory, and made matching fund and shared user facilities investments focused on four technical thrust areas where we had distinct leadership. The results after three years are encouraging - 64% per year growth in new grants and contracts, a wealth of new ideas and multi-campus projects that most likely would not have happened otherwise, and at least 5 small companies or startups either spun out or seminally enabled (with more on the way).
As an investment in innovation-based economic development from the state of Oregon, we take seriously our responsibility to contribute to the next wave of innovative growth companies, one or two of which we must dare to believe could become an Intel, HP, Invitrogen or FEI of the future, creating not just handfuls or tens of good jobs during their survival and early growth phases, but hundreds and thousands of jobs 5 to 15 years from now. These critical bets on the future are likely to be entrepreneur-led and growth capital financed.
Having made some good initial progress on the important culture and business-thinking issues that often lead to missed opportunity from the wealth of talent and ideas around research institutions, there was still the proverbial "gap". While some lamented that Oregon lacked "access" to venture capital and others countered that the really good deals do get done, there was no denying that we were, in fact, lacking in the kinds of resources required for an idea to become a deal in the first place. In the past few years, however, some pre-seed stage resources have finally started to emerge: a BioScience Innovation Fund at Oregon Health and Science University, a tax-credit-based university venture fund opportunity for campus foundations and, finally, a small portion ($724K so far) of ONAMI funding that could be used for "IP and proof of concept" investments.
It would have been easy to spend this translational research funding on interesting projects and end up with nothing to show for it, so it was critically important to avoid this from the start if we hoped to be entrusted with more such funds. After much thought and benchmarking, the scheme we selected was not 100% original, but nevertheless appears to be working as we hoped. Briefly, we make grants (no IP rights, no strings attached other than milestone-based tranching) to researchers or campus-based facilities which have already negotiated collaborative development and licensing arrangements with an entrepreneur or small business, and for which the ONAMI project goal is to enable the company to raise significant ($Ms) private capital within 12-18 months. Proposals are prepared jointly by PIs and the commercialization partner, "coached" by ONAMI staff, and evaluated by a distinguished group of active VC partner volunteers who find the process an efficient way to learn more about research projects in the state (that ONAMI has already pre-screened) and to get a very early heads-up on potential deal flow. Taking into account panel recommendations, ONAMI makes funding and project term decisions, and tracks progress.
We have executed two grants so far, and approved two more (contracts near completion as I write). The lead project (a microtechnology) is tantalizingly close to a major capital investment that will meet our expectations and then some, and the second one has all the marks of a major success as well. Since the second one is a nanotechnology, and it comes from our green nanotechnology initiative that I have written about before, it may of interest to readers of these columns. Professor Darren Johnson at the University of Oregon has studied arsenic (and other heavy metal) coordination chemistry for years, and was introduced (via awareness, I think, of our green nano initiative) with Crystal Clear Technologies (www.simplyclearwater.com), a startup developing breakthrough low-cost water purification materials (nanocoated porous substrates) and products suitable for both consumer and municipal/global water purification. Prior to the ONAMI grant, which assists with early scale-up and certification of the nanocoating material, CCT won an NSF Phase II SBIR award and was the winner of the California Clean Tech Open in Silicon Valley last year. They have excellent customer traction and generated significant interest with their presentation at last month's NanoBusiness Alliance Conference in New York City.