Harry Richards originally operated MycoGenomix, a start-up biotech company, from a spare room in his house. When he and his wife had a baby, MycoGenomix got pushed to the basement.
“It’s not an effective place to run a business,” Richards said.
That will change when the university opens a business incubator this summer for technology companies. Richards will move his business operations to the new building at the corner of Joe Johnson and EJ Chapman Drives on the Agriculture Campus.
The incubator, officially called the Innovation Valley Center for Entrepreneurship, is owned by the university and will be managed by Technology 2020’s Center for Entrepreneurial Growth.
CEG has helped professors transfer their research to private companies since 2003, when it entered into a partnership with the University of Tennessee Research Foundation. Last year, the 14 companies that were started through the partnership brought in more than $3 million in revenue and provided about 60 jobs.
Geoff Robson, who is in charge of CEG on campus, said the new facility will help participating companies start business relationships and give them easier access to ongoing research.
“This is an extension of our services. We will host people here instead of going out to them,” Robson said.
Three types of companies are eligible for a place in the incubator — those who hold licenses to UT’s patents, those who have a formal research partnership with the university but don’t hold a patent and alumni-driven companies.
“I’ve been given some leeway to make a call if they have a strategic fit,” Robson said.
The incubator was built without normal state appropriations, said Fred Tompkins, the executive director of the UT Research Foundation. The foundation received funding from Knox County, TVA, KUB, the state and the U.S. Economic Development Administration to build the new building.
Besides providing a physical location for business activity, CEG gives researchers a detailed plan for starting a business and then helps them execute it. Robson said the three main things they provide are management expertise, access to capital and programs for education and networking.
“Putting together plans is one thing, but execution is what really makes or breaks technology start-up companies,” he said.
Richards said CEG’s guidance helped MycoGenomix advance more quickly to its ultimate goal of being acquired by a large corporation.
“I’ve found that the more I follow their plan, the more independent I become. They really push you to graduate and eventually move out,” he said.
The criteria for being mature enough to move on include having $2 million to $3 million in revenue, paying customers and having a board of directors.
MycoGenomix is developing a pesticide based on a fungus that is deadly to insects. Neal Stewart, a chaired professor in the Department of Plant Sciences, discovered the particular compound in the fungus that kills insects. The company intends to sell both the pesticide and crops whose genes have been spliced with the compound to make them more resistant to pests.
Stewart credited the university’s support of the company as the main reason for its initial success. The first two times he tried to start a business based on his research in plant genetics, the companies failed.
“Start-up companies are almost doomed for failure, especially when it’s being started by full-time faculty. I had the scientific knowledge, but I had no business training,” Stewart said.
But, when Robson called him three years ago about starting another company, Stewart decided to try a third time. He believed the business support the center provided would leave him time to continue researching and teaching. Also, they helped him bring in Richards, who had studied under Stewart as a graduate student, to run the business side and leased a research lab in the Plant Biotech building to the company.
The university owns the same rights to the research Stewart did that started MycoGenomix. They granted MycoGenomix exclusive use of the research in exchange for an equity interest in the company, Richards said.
Tompkins did not discuss specific cases but said the university typically uses equity agreements when granting use of research it owns to private industry. He said the university in some cases also charges payments when the company reaches certain milestones or a running royalty fee.
“If they do well, we do well,” Tompkins said.
To encourage faculty to divulge findings and commercialize them, the university divides profits among the researchers after it has recovered sunken costs. Tompkins said 50 percent of the profits on average end up back with the original research team.
Tompkins said the ultimate reason that the university supports entrepreneurship is to fulfill its obligation as a land grant institution to provide service back to the state.
“I really believe that in today’s world, the most important service the university can provide is economic development,” he said.