University Research Startups Bring in Serious Capital, Increase Vendor Sales

The Stevens Institute for Innovation at the University of Southern California (USC) recently released a detailed report on startup companies based on research initiated by their scientists. The study found that 39 USC startups raised more than $800 million over the past 15 years and more than $380 million of that was raised in the past 3 years, in the midst of the global financial crisis. While two companies have contributed over $100 million each to that total over the last 15 years, 18 other companies have raised more than $5 million each. Though startups that attract VC funding tend to be successful and attract large ongoing investments, funding sources have evolved from being predominantly VC-based to more broad-based, including greater reliance on private investors, government grants, and investments by corporations.  Furthermore, life science startups in particular are attracting increasingly large investments, whereas the average investment for non-life science companies has decreased.

According to USC Vice Provost for Innovation and Executive Director of the Stevens Institute  Krisztina "Z" Holly:

"In such a challenging economy, it's exciting to hear that USC startups are raising such high levels of capital, which provides outside validation for their high growth potential. Their success is a great indicator of the broader impact that major research universities can have driving economic growth locally and nationally."

For laboratory equipment suppliers looking to increase scientific sales, the high success rate of startups based on university research can mean several things with regard to sales:

• While you may rely on university research labs for the core of your sales, the transition of some client-researchers to start-up business owners guarantees you an established foot in the door at these new companies.
• Start-up companies need more equipment and supplies than an established lab, which will necessarily account for a certain percentage of their funding, regardless of its source.
• Start-ups from university research often have their growth nursed by incubators and university research parks, keeping their operating expenses low and allowing a larger budget for permanent equipment and supplies.
• Many startups stay close to the parent university as they grow (85% in the case of USC's), so a business in your sales territory is likely to stay there.
• According to a 2010 Kaufmann report quoted by USC, there would be NO growth in the US job rate without startup companies, as larger, more-established companies are more commonly down-sizing or consolidating their work force.  The best source for new sales, then, is likely to be a new company.
• University startups are far more likely to go public and stay in business than private startups, which means your client will continue to need your services as the company grows.

Though USC's success at moving its research innovation into the private sector is especially impressive, its report is encouraging for university technology transfer efforts in general and supports the argument that university science funding is valuable to the US economy in direct ways as well as to support longterm scientific goals.

Biotechnology Calendar, Inc. has been bringing equipment suppliers and university life science researchers together to discuss their lab needs for almost 19 years now.  We know what works and how to make the most of exhibitors' and scientists' valuable time and budget.  We'll be on the USC Health Sciences campus in Los Angeles on April 4, 2012 for our 6th semiannual Southern California BioResearch Product Faire FrontLine event -- then again on October 10, 2012 for our 7th show!

For information on attending as a vendor, click the button below: