Published in Economic Development

Rule change opens access for smaller universities to get tech commercialization funding

BY Sunday, November 11, 2018 08:02pm

Smaller public universities in Michigan will have to come up with less matching funding to secure state grants that support startup companies coming out of research labs.

The change to the Michigan Translational Research and Commercialization (MTRAC) program implemented a tiered structure for matching dollars as a way to attract proposals from smaller institutions. The move aims to open up the program to institutions outside of the big three research universities — the University of Michigan, Michigan State University and Wayne State University — all of which have a much broader funding base.

Fred Molnar COURTESY PHOTO

“We want to make certain they can participate because they may have awesome or excellent ideas that the other universities have, but they just don’t have the resources to participate. This will allow them to compete,” said Fred Molnar, the vice president of entrepreneurship and innovation for the Michigan Economic Development Corp. (MEDC).

“Other state universities have great ideas and we’ve heard them say to us, ‘Hey, I want to participate in this, but I just don’t have the match. I can’t do it,’” Molnar said.

In the past, a university landing a MTRAC grant would have to provide a 100-percent, dollar-for-dollar match.

Under the new structure approved last month by the Michigan Strategic Fund board, the 100-percent match is now for universities with annual research expenditures exceeding $150 million. Universities that spend $50 million to $150 million on research annually would have to provide a 75-percent match, and 10 percent if their expenditures are less than $50 million.

“This provides a more realistic approach to the match requirement and allows for the smaller institutions to participate in the MTRAC program,” Denise Graves, university relations director at the MEDC, wrote in a memo to Michigan Strategic Fund board members last month.

Although the change lowered the match required by smaller institutions, the criteria for judging proposals for funding remains the same, Molnar said.

“It’s lowering the financial bar, but it’s not lowering the technology bar,” he said. “It still comes down to the best proposals win the money, but if their proposal is strong and they get picked, then their financial match component is considerably less.”

MTRAC works to support the transfer into commercial applications of technology research at all Michigan-based colleges and universities, hospital systems and nonprofit research organizations. The program awards grants to researchers who are seeking to move their innovations out of university labs and build startup businesses around them, or license the technologies to other companies to commercialize.

Aligning resources

The Michigan Strategic Fund operates MTRAC through five statewide “innovation hubs” administered by universities. Oversight committees for each innovation hub — representatives from universities, each industry and venture capital professionals — make decisions on which projects to fund.

The innovation hubs include agriculture and biology at MSU, life sciences and advanced transportation technologies at U-M, and advanced materials at Michigan Technological University in Houghton. 

Grants typically run up to $100,000 for ag/biology projects, $75,000-$100,000 for advanced transportation, $100,000-$200,000 for life sciences, and $50,000-$70,000 for advanced materials.

MTRAC also awards “kickstarter” grants of up to $35,000 to validate market feasibility for a technology and to “see if there’s something there,” Graves said.

The Michigan Strategic Fund board that oversees the MEDC also decided in October to create a new innovation hub for advanced computing. It would focus on funding projects in emerging technologies in artificial intelligence, machine learning, blockchain, internet of things, financial technology, data communications, and cybersecurity.

The MEDC sought to add an advanced computing hub to MTRAC because “we were missing a piece of that and what we could be supporting in the market,” Graves said.

Meeting expectations

Since the Michigan Strategic Fund established the grant program in April 2016, MTRAC has received 483 proposals and funded 185 projects through Sept. 30. The funding led to the formation of 38 startup companies that created 132 jobs, the licensing of 30 technologies, and follow-on funding totaling $138 million, according to Graves.

MTRAC was a new concept for supporting startups when created by the Michigan Strategic Fund, Graves said. The state started the grant program without specific expectations “because it was such an early tranche of funding,” she said.

Based on what’s occurred in the two and a half years since the launch, the MEDC is satisfied with the results.

“When I look at the projects that have received funding, and the startups and the jobs, it’s doing a good job,” Graves said. “The program is doing what it’s supposed to do. It’s pulling technology into the marketplace.” 

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Editor’s note: This story has been updated from its original version. 

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