Science Parks' €”Where Collaboration Works

December 2004 / January 2005 By: Eric Billingsley Volume 2 Number 6

Print this Article

E-mail this Article

North Carolina-based Mi-Co is one step closer to breaking into a new market, thanks in part to being headquartered in a science park. The five-year-old tech startup recently landed a Small Business Innovation Research (SBIR) award from the National Institutes of Health's Cancer Institute. The award funded a study of how the company's digital writing and hand-held data capture technology could make clinical trial data collection more efficient.

The young company, headquartered in the renowned Research Triangle Park, one of the first science parks in the U.S., partnered with neighboring University of North Carolina's School of Medicine to apply for the contract. UNC agreed to evaluate the technology in its radiology department, a move that, according to Mi-Co officials, strengthened the SBIR application.

As a result of the collaboration with UNC, Mi-Co gained "proof of concept," a major step toward commercialization in the clinical trial data collection market. "The SBIR contract has been huge for us," says Brent Joyner, the company's marketing vice president, adding that being based in Research Triangle Park was key to making it all happen.

Successful collaboration between private business and research institutions, such as that experienced by Mi-Co and UNC, is commonplace in many science parks in the U.S. Science parks can be loosely defined as clusters of private companies and research laboratories in one geographic location that support the development and commercialization of technology. Most often they're centered on funded research at a major university or national laboratory.

Technology innovation is a cutthroat business, with every startup hoping to land the next equity investment. And the U.S. has stiff competition from countries such as Taiwan that have developed highly respected science parks such as Hsinchu, funded largely by the government, that houses 300 tech companies with combined revenues exceeding $20 billion.

As a result, the United States is increasingly developing science parks as a tool for encouraging and commercializing technology in universities and national laboratories. The idea is to create physical settings and support systems that encourage private companies and research institutions to collaborate with each other, hastening the process of tech commercialization.

"States and laboratories have come under increased pressure over the years to commercialize," says Bill Drohan, director of the Association of University Research Parks (AURP). He says that billions of dollars are spent each year in universities and national laboratories developing technologies for defense. Now there is a push, with science parks at the forefront, to spin off these technologies into the marketplace and reap the financial rewards.

Stanford Research Park in Palo Alto, Calif., was the first science park in the U.S., opening in 1951. As the birthplace of Hewlett Packard and considered by some to be the forerunner of Silicon Valley, it acts as a point of inspiration for startup science parks.

Science parks combine a physical real estate development, a park staff that acts as a resource for growing companies and in the majority of cases as an incubator for startups. Dominant technologies in U.S. science parks include medical biotechnology, information technology, mixed/other technologies, computers/electronics, software development, aerospace/electronics and agriculture.

Since the 1950s, 200 science parks have popped up in the U.S., according to statistics from AURP. New park construction spiked in the 1980s when 25 facilities broke ground, up from only four in the 1970s. The trend continued into the 1990s when 32 new parks were created. Since 2000 only eight have been constructed, largely due to poor economic conditions.

"During economic booms there is a lot of money to start new science parks," says Drohan. Despite the drop in the new millennium, he says that a tremendous amount of opportunity exists for new park construction and that the momentum is still strong.

In fact, much to the delight of Drohan and others, Senator Jeff Bingaman (D-N.M.) recently introduced the Science Park Administration Act of 2004 (S. 2737). "It is in the best interests of the nation to encourage the formation of science parks to promote the clustering of innovation through high technology activities," says Bingaman.

Introduction of the bill comes on the heels of Bingaman's recent travels to the Hsinchu. In Taiwant. He has been working to establish a cooperative relationship with Hsinchu officials, so U.S. science parks can learn from their successes.
"What we're creating in science parks are technology communities," says Jackie Kerby Moore, executive director of the Sandia Science and Technology Park in Albuquerque, N.M., which is adjacent to Sandia National Laboratories. "Providing physical proximity between companies and research institutions is a starting point in the commercialization process."

Approximately 77 percent of science parks are operating research parks, 8.9 percent are planned research, 7.6 percent are operating technology incubators and 6 percent are planned tech incubators. About 62 percent of parks claim to have a business incubator operation.

"Working close to other companies and research institutions is what really makes Research Triangle Park unique," says Joyner. "I run into people connected to Duke, North Carolina State and UNC on a daily basis." He says each company and university has a niche that can be tapped to help Mi-Co's products, whether that's medical facilities, engineering expertise, and a host of other services.
Danny Sachs, President of Team Specialty Products (TSP) Corp. in the Sandia park, says customers from the lab drive by his business every morning and evening. Also, the other businesses in the park make it possible for TSP to bring a product from concept to fruition all within the park's confines. "I can simply go next door to look at a component on a molecular level," says Sachs.
Since 1998, tenants in the Sandia Science and Technology Park have provided Sandia Laboratories with $17 million in funds-in and in-kind services. There have been 16 partnership agreements between the lab and tenants and in excess of 100 contracts, the latter worth an estimated $76.2 million. Contracts among tenants top $2.7 million. The level of collaboration between tenants and research labs varies greatly from facility to facility.

Technology commercialization is another benefit.

Michael Gaiss, senior vice president at Lexington, Ky.-based Highland Capital, says investors want to see as much evidence as possible that a company will be profitable within five to seven years. Operating out of a science park is by no means a guarantee that a company will attract investment dollars but collaboration among companies is a good first step, says Gaiss. "A science park has crossed a substantial hurdle when companies start to come in around a given technology. As parks gain momentum, and build the scale of the operation, it gives them credibility, which makes it easier for a venture capitalist to spend."

Stanford and Research Triangle house hundreds of companies, employ thousands of technology and research workers, and have a proven track record of spinning out successful startups. The broad base of support companies —€”especially startups—€”receive in parks such as these, according to Gaiss, is what investors are looking for. It gives them more confidence that a company will reach profitability sooner than later.

There are a number of obstacles that stand in the way of realizing the full potential of science parks in the U.S. The No. 1 impediment to growth is the availability of development funding. Approximately 69 percent of parks were established with the use of public funds. According to Drohan, there are those parks on the fast track that often land a major tenant with significant research funding. For example, a research park at Florida Atlantic University recently landed Scripps Medical Institute as a tenant. This can quickly result in attracting other companies to the region that support Scripps's research and boost interest in the park from the investment community.

On the other hand there are "grass roots" science parks that scramble to bring together money from myriad sources such as universities, cities, the private sector and more. "A number of parks have had to start on a shoestring," says Drohan. He says Bingaman's legislation is a positive because it should help some of the smaller struggling parks. "Business, government and academia need to work together. It's music to my ears that the federal government finally gets this."
Access to venture capital is cited as the second major impediment. And ever since the dot.com bubble burst the problem has worsened as investors have become increasingly selective in the companies they sink money into.

Lyle Hohnke, general partner with Connecticut-based Tullis Dickerson, reiterates Gaiss's statements that with the capital gap widening, investors are looking for companies with product, versus those that will take many years to develop. "Whoever is leading a research park effort has to be realistic about their core strengths and build on them."

Many venture capitalists do not want to invest in companies in rural or remote areas unless that location is relevant to the technology. "If a company has a good technology but no ability to attract talent [because many CEOs and engineers do not want to live in a second or tertiary market], it's an impediment. Early stage companies especially need a lot of monitoring." He says parks attracting a major tenant, even if they are in a secondary market, is viewed as a positive by investors.
One of the other and more esoteric hindrances is fighting the ingrained mindsets of many scientists and laboratory officials. According to people in the science park industry, many of these officials have not fully embraced the commercialization process. They still prefer to prove the worth of research by simply publishing papers. However, there are increasing numbers of converts to the commercialization mindset and the younger generation seems to be more business-savvy than generations past.

While science parks can facilitate and even speed up technology innovation in the U.S., most agree they need to be viewed as long-term projects. The fact is it often takes years and even decades to find the land to house a science park. And then it can take equally as long to attract that first significant tenant. Growing companies and gaining a positive reputation with the investment community result from years of proven success stories.

It has been said that research parks are evolving. The first step is to build the physical structure. The second step is attracting and building the soft infrastructure. And eventually, the idea is to spark collaboration between all of the parks in the U.S.

Lora Lee Martin, who is helping to launch the Monterey Bay Education Science and Technology Center in California, sums up the idea of science parks: "We all have a lot to learn from each other and to share, versus just competing against one another."

Eric Billingsley is a freelance writer based in Albuquerque.