Are You an Energy Innovator?

December 2011 / January 2012 By: Tom Michael Volume 9 Number 6

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In the annals of reality television, few shows are as successful as “America’s Next Top Model.” Now, as part of President Obama’s push for more innovation in the American economy, the Department of Energy is riffing on the same theme—except agency officials are tapping American brainpower instead of beauty.
“America’s Next Top Energy Innovator,” a new innovation incentive program that launched in May, is intended to jump-start entrepreneurship and innovation by providing select startup companies with streamlined access to technologies developed at America’s 17 national energy laboratories for a reduced upfront fee of just $1,000.  This represents an average savings of $10,000 to $50,000 on upfront fees businesses typically are required to pay.
The DOE hopes to reduce both the cost and paperwork requirements for startup companies to obtain an option agreement to license some of the DOE’s 15,000 patents and patent applications. The new incentive program launched in May and the first round will expire in mid-December. Another round is expected next year.
“America’s entrepreneurs and innovators are the best in the world” Energy Secretary Steven Chu said in announcing the program. “Today, we're challenging them to create new businesses based on discoveries made by our world-leading national laboratories. Because we've cut the upfront fees and reduced the paperwork, we'll make it easier for startup companies to succeed and create the new jobs our economy needs. Our goal is simple: unleash America's innovation machine and win the global race for the clean energy jobs of the future.”
At present, barely 10 percent of federal patents have been licensed for commercialization. The “America’s Next Top Energy Innovator” initiative hopes to double the number of startup companies coming out of the national laboratories.
Karina Edmonds, DOE’s technology transfer coordinator, told Innovation that the program is a good way for companies who have never done business with DOE to test the waters. “It’s a significant discount and it’s a deferment of a lot of costs,” Edmonds said. “It’s the ability for a new company or an individual to come and license technology from the labs at a very low cost because it’s a fixed low price and also because we’re deferring patent costs for a couple of years.”
She also said the program is aimed at spreading the word that cutting-edge, DOE lab-generated technologies are available.
Under the new program, other license terms, such as equity and royalties, will be negotiated on a case by case basis and will typically be due once the company grows and achieves wide-scale commercial success. The fees help support the department’s continuing research activities to develop new technologies.
So far, Edmonds said at least 27 companies have qualified for participation in the new program. Entrepreneurs who complete the process and demonstrate progress toward executing their business plan and commercializing the technology will have the opportunity to be showcased at the 3rd annual ARPA-E Energy Innovation Summit in 2012. The summit brings together leading technology startups and clean energy investors from around the country.
As part of the “America’s Next Top Innovator” announcement, the DOE also announced it would make it much easier for companies to use the national laboratories’ facilities to conduct collaborative research and development activities. Previously, companies had to make an upfront payment covering the first 90 days of research work—a requirement that was often difficult for startups to meet. Now, the advance payment requirement is just 60 days. This change aims to benefit all companies—not just startups—but could be valuable for those participating in the “America’s Next Top Energy Innovator” challenge.
The program is a part of a larger White House initiative called Startup America. Launched in early 2011, Startup America was designed to  accelerate high-growth entrepreneurship throughout the nation. In announcing the initiative, President Obama called on both the federal government and the private sector to dramatically increase the prevalence and success of entrepreneurs across the country. At least five different regional startup  efforts under the program have since taken root.
 The administration hopes the initiative  will help unlock access to capital, connect mentors with aspiring innovators and entrepreneurs, reduce barriers to commercialization, accelerate innovation and unleash market opportunities.
“America’s Next Top Energy Innovator is DOE’s answer to Startup America,” Edmonds said. “There are a number of components and our component deals with reducing barriers for new companies being created who want to license out of our labs. Those barriers are cost and time.”
Who can participate? Edmonds said the gates are wide open at DOE. “Everyone is eligible—we provide everyone an option,” she said. “The competition is that we’ll select what we believe is the best company—the company with the largest market potential. This is not a competition to get a license. We could have a hundred options; we could execute a hundred agreements. It’s not like only one person gets a license. We can have a hundred people get a license. But what we’re going to do here is have a peer review process. If a hundred companies would like to be considered for the competition then we will judge them internally here with program managers for those topic areas and then we’ll select the one company that shows the most promise in terms of market and commercial and societal impact.”
Edmonds said the program seems to be on track to meet the DOE’s goal of doubling the number of companies that are started based on DOE technologies.
“We want to lower the barriers for entrepreneurs to come and leverage technology developed by the department to start their companies, and I believe we are on track to meet our goal,” she said.  “There is ample evidence to show that it is new small businesses that are the economic engines of job growth. “Granted, it is typically a long-time horizon between when a company gets started and they become commercially viable. But these are important seeds we must plant today. If we end up not planting these seeds we’ll have nothing to harvest. This is accelerating the transfer of new technologies out to the marketplace.”

Tom Michael is Innovation’s Washington bureau chief.

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America's Next Top Energy Innovator was born out of one of Startup America's main goals is  to reduce barriers to innovation.  The program intends to cut down the costs and paperwork for startup companies trying to license patents from DOE national labs.
For an upfront fee of $1,000 (a total savings of $10,000 to  $50,000), an entrepreneur can license up to three patents.  Some perks include:
• Licensing option for up to 12 months
• Portfolio of up to 3 patents for a specific technology from a single laboratory
• Deferment of patent costs for up to 2 years.
• Optional VC mentoring
• Showcase opportunity at the ARPA-E Innovation Summit in 2012.
To apply, entrepreneurs should submit a business plan indicating how they plan to use the patents from the DOE national labs of choice and complete the lab's Option Agreement.