Proof of Concept Centers in the United States: an exploratory look

In this paper we identify the population of 32 US university-related Proof of Concept Centers (PoCCs), and we present a model of technology development that identifies the economic role of PoCCs within that model. We examine the broad technology transfer challenges that PoCCs have been established to address. Further, we argue that PoCCs are a growing technology infrastructure in the United States, and they are important as a possible element of our national innovation system.


Introduction
Since the passage of the University and Small Business Patent Procedures Act of 1980 , also known as the Bayh-Dole Act of 1980, there has been widespread and growing public-sector support of the commercialization of university-based research. Evidence of this is most visible through the trend at universities to establish and operate technology transfer offices and offices of innovation and commercialization.
More recently, the Obama Administration reiterated this support in September 2009 through the release of A Strategy for American Innovation: Driving towards Sustainable This RFI is designed to collect input from the public on ideas for promoting the commercialization of Federally funded research. … the RFI seeks public comments on how best to encourage commercialization of university research. … [and] on whether PoCCs [Proof of Concept Centers] can be a means of stimulating the commercialization of early-stage technologies.… And, in addition to stimulating the commercialization of early-stage technologies there are, of course, positive economic development consequences associated with any effort that enhances university technology transfer.
PoCCs gained broader recognition as a potentially important element of the nation's technology infrastructure when President Obama announced in March 2011, as part of the Startup America initiative, the i6 Green Challenge. 2 A total of $12 million will be awarded to establish or expand PoCCs that have the potential to enhance the commercialization of technology and entrepreneurship in support of a green economy, increase US competitiveness, and leverage job growth. Six organizations received public funding. 3 Despite this flurry of policy interest and activity, discussions as to the basic definition and specific role of PoCCs are conspicuously absent from both policy conversations about PoCCs and the academic and professional literatures. And, there is a void of any systematic investigation of the structure and analysis of the economic impact of these centers.
A broad definitional framework might view PoCCs as a collection of services to improve the dissemination and commercialization of new knowledge from universities in order to spur economic development and job growth. A more narrow perspective might simply view PoCCs as an investment by a university or universities for improved technology transfer.
This paper contributes to the literature by identifying what is, to the best of our knowledge, the population of university-related PoCCs in the United States. And, it sets forth an economic role of PoCCs in an effort to motivate future empirical research on the topic. More specifically, we present an economic model of technology development in Sect. 2 and we emphasize the role of PoCCs within that model. In Sect. 3, we define the current population of US university-related PoCCs, and we briefly describe each center. Finally, in Sect. 4, we conclude that PoCCs are a growing technology infrastructure in the United States, and they are important as a possible element of our national innovation system. with the PoCC by assisting with IP and licensing responsibilities, providing representatives for advisory services, and connecting inventors with outside funding sources.
Thus, PoCCs enable inventors to evaluate the commercial potential of their research; within PoCCs, early-stage products can be developed and prototypes can be tested. Proving a concept makes it easier for inventors to obtain funding from outside investors, such as angel investors or venture capitalists, for further product development. 7 In Table 1 we offer an initial taxonomy of the challenges that PoCCs are intended to address in an effort to move toward a more systematic understanding of their economic role. This taxonomy comes from a review of the extant literature, and that literature is summarized in the Appendix to this paper.

PoCCs: an inferential analysis
Reflecting on a broader view of technology transfer, we conceptualize PoCCs as a critical technology infrastructure. PoCCs are important not only for remediating technology transfer challenges but also for accelerating the advancement of Proof of Concepts into the market application stage.
To better understand this technology infrastructure, 32 PoCCs were identified from public sources based on the definitions discussed above. 8 Table 2 describes what we have identified from public-domain sources as the current US population of university-related PoCCs. Also shown at the end of Table 2 are 6 additional PoCCs that are labeled as ''forthcoming''.
From the description of the PoCCs in Table 2 it is clear that commercialization of university-generated technology is an important goal of each center, and that this goal is being approached differently in different PoCCs. For example, some PoCCs are based at a single university and others have an integral relationship with several universities. Differences in achieving commercialization success through a PoCC infrastructure underscores the relevance of our claim above that the economic role of the PoCC-accelerating innovation from the laboratory to the market-can occur throughout the university technology transfer process and thus is appropriately not given a particular node of reference in Fig. 1.

Geographic distribution of PoCCs
We examined several characteristics of the population of PoCCs summarized in Table 2. First, it is clear that PoCCs are fairly evenly located throughout the United States. Based on US Census Bureau regions, among the 32 operational PoCCs, 7 are in the West, 9 in the Midwest, 10 in the Northeast, and 6 in the South. Of the 6 forthcoming PoCCs, 4 are in the Northeast.

Growth trend of PoCCs
Second, based on the year that each PoCC was started (see Table 2), we constructed Fig. 2. The figure suggests a general upward trend in the formation of PoCCs beginning in 2007. That trend was exaggerated as a result of the Startup America initiative. The post-2007 trend in Fig. 2 suggests that PoCCs might have been a university response to the economic downturn in the United States that began in December 2007. Certainly, the Startup American initiative was designed to be pro-cyclical. However, if the United States is entering a period of sustained moderate growth, then the number of new PoCCs started in future years might level-off.

Institutional placement of PoCCs
Third, of the 32 university-related PoCCs identified in Table 2, we were able to identify the year that the TTO at 30 of the 32 universities was established. 9 Five PoCCs are associated 8 Some might take issue with the centers that we have subjectively classified as PoCCs. If this is the case, it underscores that an accepted definition of a PoCC is evolving. 9 Year of establishment was determined from the Association of University Technology Managers (AUTM) data. When more than one university is associated with a POCC, the year of establishment for the oldest TTO was considered.

PoCCs and research expenditures
Fourth, we explored the relationship between the establishment of a PoCC and the level of R&D research conducted at universities. Based on the total level of R&D research funding of the largest 100 academic institutions in the United States, as reported by the National Science Board (Tables 5-10, 2012), 20 of the top 100 academic institutions have a PoCC based on information in Table 2. The mean amount of 2009 R&D research funding in those universities with a PoCC was $460.2 million; the mean amount in those universities without a PoCC was $406.9 million. These mean amounts are not statistically different from each other. 10

PoCCs and university startups
And fifth, in an exploratory manner, we considered the potential economic impact of PoCCs. For each single university related PoCC in Table 2, we calculated the number of university startups before and after the founding of the PoCC. 11 Table 3 shows that for the 9 PoCCs for which sufficient data were available, the number of new university startups increased in the years after the founding of the PoCC. Of course, no other factors related to changes in the number of university startups are held constant in this descriptive comparison. The t value for a test of differences in means assuming equal variance is -1.07 and the t value assuming unequal variances is -1.01. This same result follows from a probit model of the probability of a university being associated with a PoCC. Also held constant in the probit model was a binary variable for whether the university was public or private. 11 The underlying information came from the AUTM data.

Concluding remarks
The description of US PoCCs offered in this paper should be viewed as a possible starting point for future research on this subject. Putting aside the obvious caveats associated with assembling information on economic institutions from public sources, much more is to be learned about PoCCs. In particular, given the conceptual importance of PoCCs as an element of technology infrastructure that enhances university technology transfer, questions to be answered include, but are not limited to: (1) the motivation, from the university's perspective and from a faculty perspective, for establishing a PoCC, (2) sources of funding (e.g., state vs. private) used to establish the PoCC, and (3) the actual and expected impact that the PoCC has on the university (e.g., on its revenues and on its scholarly output) and on related regional economic development.

Appendix
See Table 4.  Characteristics of the university entrepreneur Audretsch (2000) University entrepreneurs tend to be older and more scientifically experienced Druilhe and Garnsey (2004) The type and intensity of resources academic entrepreneurs require for realizing a business opportunity vary considerably according to the type of activity undertaken and the amount of resources already possessed by the entrepreneur (e.g., prior knowledge, contacts, and experience) Etzkowitz ( (2004), Samson and Gurdon (1993), Wright et al. (2011) Successful spinoff entrepreneurs typically sever ties with the incubating institution; some scientists pursue academic entrepreneurship indirectly by leaving universities to work for corporations before they start their ventures Roberts (1991), Roberts and Peters (1981) High-technology entrepreneurs have educational background in science or engineering, young, and have industry experience; high need for achievement Kenney and Goe (2004) The decision of a professor to engage in entrepreneurial activity and the process of doing so is influenced by the policies, formal institutional rules, and general ethos of support for faculty involvement in business activity promulgated by the university; and, by the reward incentives, normative expectations, and ethos of support by a professor's department, and network of colleagues in the discipline

Commercial experience
Murray (2004) Faculty attitudes are shaped by career in academic sciences that typically does not include industry experience Nicolaou and Birley (2003), Franklin et al. (2001), Radosevich (1995) When faculty spinoff a company they typically lack the business acumen needed for successful spinoff and instead focus on scientific aspects of the enterprise O'Gorman et al. (2008), , Grandi and Grimaldi (2005) Previous experience working within industry, including co-publication, co-patenting, and serving on company scientific advisory boards may be prerequisite for commercialization success as an entrepreneur Proof of Concept Centers 369  Dietz and Bozeman (2005), Gulbrandsen and Smeby (2005), Roberts (1991) University scientists with industry experiences have a higher propensity to patent, license, consult, and establish a company Vohora et al. (2004), Nerkar and Shane (2003) Experience working with industry improves an entrepreneur's ability to recognize ''entrepreneurial opportunities'' Highly productive faculty Agrawal and Henderson (2002) Faculty involvement improves the performance of technology licenses Di Gregorio and Shane (2003), Louis et al. (2001), Zucker et al. (1998) Higher intellectual capital ''rates'' (or ''intellectual eminence'') within specific universities lead to greater numbers of university spinoffs Meyer (2006) Nano-scientists who patent appear to outperform non-inventing peers in terms of publication counts and citation frequency Shane (2004), Jensen and Thursby (2001), Franklin et al. (2001), Thursby et al. (2001) Faculty involvement is critical to the continuing development of university technology, including its scientific basis and application Thursby and Kemp (2002) Researchers in biotechnology tend to have a culture that is more encouraging of commercial activity than is the case in the physical sciences Zucker et al. (2002), Zucker and Darby (2001) ''Star'' scientists enhance the performance of US biotech firms in terms of patents granted, number of products in development, and the number of products on the market Social networks external to the university Bercovitz and Feldman (2006) Social interaction, local networks, and personal communication are important for knowledge transmission Grandi and Grimaldi (2003) Faculty relations with the non-academic, professional world help mediate how well technology is transferred to a spinoff Grimpe and Fier (2010) Informal contacts improve the quality of formal relationships; formal contracts are accompanied by an informal relation of mutual exchange on technologyrelated aspects Link et al. (2007), Powell (1990), Liebeskind et al. (1996) Social networks, which can include academic and industry scientists, university administrators, TTO directors, and managers/entrepreneurs, appear to play an important role in university-industry technology transfer processes Martinelli et al. (2008), Landry et al. (2002) Informal networks often facilitate more formal relationships that facilitate spinoff (and licensing arrangements with established firms) O' Gorman et al. (2008) Networks helped academic entrepreneurs understand the opportunities for applying and commercializing their expertise in retrieval software-and help the entrepreneur develop a business plan, raise early-stage finance, and develop links with potential customers Rappert et al. (1999) Informal networks are important to the commercialization success of a spinoff Table 4 continued Rothaermel et al. (2007), Johansson et al. (2005), Murray (2004) The quality depth, and diversity of a faculty member's non-academic, professional network is important to the success of their spinoff University factors: academic culture Bercovitz and Feldman (unpublished) Faculty members have difficulty combining commercial and academic goals Etzkowitz (2003), Jacob et al. (2003), Clark (1998), O'Shea et al. (2004 Universities must transform their mission and culture to encourage technology transfer and entrepreneurship if they are to promote better commercial outcomes Friedman and Silberman (2003) A mission focused on licensing and royalty income is indicative of leadership and university culture; an entrepreneurial climate is conducive to a university generating more licenses Kenney and Goe (2004) Faculty are more likely to engage in entrepreneurial activity when socially embedded in departments and a larger university community that are supportive of entrepreneurship Samson and Gurdon (1993) Academic culture is a key inhibitor to spinoff formation and success Shane (2004), Bauer (2001), Feldman and Desrochers (2004), Hsu and Bernstein (1997), Roberts (1991) Entrepreneurial culture, social norms, and role models are critical to the formation of university spinoffs Slaughter and Rhoades (2004), Franklin et al. (2001), Chiesa and Piccaluga (2000), Samson and Gurdon (1993), Lee (1996), Siegel et al. (2003) ''Traditional'' norms, attitudes, and institutional rules of academia often clash with a more recent focus on commercialization outcomes Owen-Smith and Powell (2001) A key to successful tech transfer is creating an entrepreneurial culture among faculty and an institutional environment supportive of commercial and basic science activities University policy Bekkers et al. (2006), Kenney and Goe (2004), Shane (2004), Tornatzky et al. (1995) Leave of absence and other personnel policies help faculty become involved in commercialization activities including spinoff Di Gregorio and Shane (2003) The policies of making equity investments in technology licensing office start-ups and maintaining a low inventor share of royalties increase new firm formation activity Friedman and Silberman (2003) Policies to attract technology industries and private sector research will have spillover benefits and generate feedback effects through increasing university technology transfer Golub (2003) Spinoff activity increased at New York University when restrictions were removed on the use of facilities by spinoff companies Lockett and Wright (2005) University policies to pursue growth in the size of TTOs without also focusing on the faculty capabilities base may not be conducive to meeting revenue objectives for technology transfer activities Proof of Concept Centers 371 Table 4 continued Markman et al. (2004), Colyvas et al. (2002) Financial incentives play little or no role in motivating faculty to commercialize their research compared to traditional academic awards and the prospect of additional federal R&D grants O'Gorman et al. (2008), Siegel et al. (2003) Faculty reward systems influence technology transfer; faculty members take traditional academic awards into account when considering the payoff of commercialization activity Renault (2006), Shane (2004), Matkin (1990) Conflict of interest rules have a ''chilling'' effect on the formation of university spinoffs Siegel et al. (2003) Public universities may have less flexible universityindustry technology transfer policies than private universities regarding startup companies and interactions with private firms University IP policy Clarysse et al. (2007), Steffensen et al. (2000) Aggressive university patenting and conflicts over intellectual property rights are one of the biggest barriers to the dissemination and commercialization of new knowledge Conceicao et al. (1998) Successful technology transfer initiatives should consider the integration of technology policies as part of an overall policy portfolio for economic and social development Di Gregorio and Shane (2003), Jensen et al. (2003), Shane (2004) Making equity investments in lieu of charging patent and licensing costs is important to spinoff success; the inventor's share of royalties also matters Roberts and Malone (1996) Nonexclusive licenses favor the open dissemination of new knowledge from universities Shane (2004) Exclusive licenses encourage spinoffs especially in the biosciences Siegel et al. (2003) IP policies and organizational practices can enhance or impede technology transfer effectiveness University TTO characteristics  Scientists who lack entrepreneurship networks typically seek guidance from the TTO; the TTO typically recommends licensing the technology. Conversely, scientists not assisted by their TTO are more likely to choose entrepreneurship as their mode of commercialization Bercovitz et al. (2001) The structure of the TTO provides a set of independent variables (information processing capacity, coordination capabilities, and incentive alignment properties) that may be used to explain technology transfer outcomes across universities Chapple et al. (2005) Invention disclosure, total research income, number of TTO employees, and protection of licensee affect TTO's licensing performance Shane (2004), Bauer (2001) The perception of the TTO as a regulator or enabler matters to the success of university spinoffs Jensen et al. (2003) University TTOs act as an agent for both the administration and the faculty Table 4 continued Lockett and Wright (2005) Expenditure of IP protection, business development capabilities, and the royalty regime of the university impact spinoff success Markman et al. (2004) The experience of TTO staff is negatively related to university entrepreneurial activity Siegel et al. (2003) A lack of requisite business skills and expertise could have a significant deleterious effect on TTO productivity; some TTOs may be too narrowly focused on a small set of technical areas, or too concerned with the legal aspects of licensing Thursby et al. (2001) The payment of choice for TTOs is running royalties, followed by patent fee reimbursement, up-front fees, annual fees, and minimum royalty fees Business development factors: development funding Aldrich (1999), Aldrich and Fiol (1994) Less than one percent of all start-ups founded in the US raise more than $1 million in financing Clark (1998) A common element among successful entrepreneurial institutions is a diversified funding base such as industry and private benefactors, though much of university funding is still derived from government sources Gulbrandsen and Smeby (2005) There is a significant relationship between industry funding and research performance; faculty with industry funding conduct more applied research, collaborate more with external researchers both in academia and in industry, and report more scientific publications and entrepreneurial results Heirman and Clarysse (2004), Shane and Stuart (2002), Hellmann and Puri (2002) Initial and operational resources differentiate firms and help predict their success Powers and McDougall (2005) R&D investment by industry appears to be a key element in successful technology transfer; the positive impact of venture capital funding in the university's immediate geographical vicinity supports anecdotal beliefs about perceived disadvantages to universities in venture capital poor states Roberts (1991Roberts ( , 2009 Venture capital, angel capital, bank loans, and friends and family are all important sources of financing among spinoffs in the Boston area Wright et al. (2004) Spinouts typically lack the financial means and managerial expertise to exploit the commercial potential of their technologies; joint venture spinouts may provide a faster, more flexible, less risky and less costly business venturing route to commercializing university IP in comparison to venture backed university start-ups Founding team and surrogates Franklin et al. (2001), Radosevich (1995) ''Surrogate'' entrepreneurs and managers are critical to the success of spinoffs; they bring commercial experience, social networks, and a motivation for financial gain Proof of Concept Centers 373 Table 4 continued Grandi and Grimaldi (2005) The founding teams' intention to set up relations with external agents and their frequency of interaction with external agents are two features that are likely to lead to the success of academic spin-off companies Nicolaou and Birley (2003) The identification and attraction of a befitting surrogate entrepreneur increases the propensity for a technology spinout Rothaermel et al. (2007), Moray and Clarysse (2005), O'Shea et al. (2005), Shane and Stuart (2002), Roberts (1991) Composition of the founding team, their collective industry experience, management capability, and knowledge are critical factors to spinoff success. Unfortunately, most university spinoff teams lack these characteristics Shane (2004) Managerial experience among academic entrepreneurs increases their changes for obtaining development financing Linkages with the ''home'' institution Debackere and Veugelers (2005), Link et al. (2007), Owen-Smith and Powell (2001) University incentive schemes may need to be altered to encourage researchers' cooperation and involvement throughout the commercialization process Druilhe and Garnsey (2004) Informal relationships with industry are often precursors to formal spinouts that do not involve the university Johansson et al. (2005), Rappert et al. (1999) Academic entrepreneurs maintain strong ties to universities with high degrees of trust; spinoffs benefit through access to university expertise, the use of equipment and instruments, and by keeping abreast of university research Klepper and Sleeper (2005), Cooper (1973Cooper ( , 1984 Spin-offs usually inherit general technical and market-related knowledge from their parent organization (company, university, etc.) Nicolaou and Birley (2003) ''Exoinstitutional research networks'' encourage scientist involvement in direct or orthodox spinout formations that do not involve the university Samson and Gurdon (1993), Doutriaux (1987) Spinoff success may depend on completely ''breaking away'' from university culture, norms and regulations Thursby et al. (2001) The university, and sometimes the inventing scientist, might continue to be involved with the organization or entrepreneur to help develop the technology or to maintain the licensing agreement Zahra et al. (2007) Academic spinoffs differ from company-based spinoffs given that their technology is initially incubated in a non-profit educational institution: the university Characteristics of the technology and related industry Bekkers et al. (2006) Spinoff success factors differ greatly among biotech and IT-related industries Table 4 continued Gulbrandsen and Smeby (2005), Shane (2004), Golub (2003), Lowe (2002), Thursby et al. (2001), Jensen and Thursby (2001), Geuna and Nesta (2006) Spinoffs are concentrated in high-technology areas such as biotechnology, computer software, medical devices, and pharmaceuticals. Spinoff success is likely impacted by various characteristics of these industries Litan et al. (2007), Thursby et al. (2001), Jensen and Thursby (2001), Shane (2004), Lerner (2005), Siegel (2011), Goldhor and Lund (1983) Potential to generate royalties and other financial returns influences which technologies TTOs choose to develop Nerkar and Shane (2003) The ''radicalness'' of a technology combined with broad patent scope helps reduce new firm failure Perez and Sanchez (2003), Nerkar and Shane (2003), Utterback (1994) Spinoff success is dependent on technological advance; the characteristics of technology inventions affect the likelihood that firms commercialize inventions Siegel et al. (2004) The TTO must understand the field and evaluate where its technology is moving in order to decide whether or not to file a patent should on the discovery Thursby and Thursby (2003), Thursby et al. (2001), Jensen and Thursby (2001), Colyvas et al. (2002), Mitchell (1991) University inventions are very early-stage technologies and have a very high failure rate Audretsch and Feldman (1996), Jaffe et al. (1993), Jaffe (1989) Knowledge tends to spillover within geographicallybounded regions and this promotes clustering among firms in similar industries  Spillovers from universities may affect firm growth; the closer that firms are located to a university and the higher the number of academic papers published at the university, the higher the growth rates for these firms Bekkers et al. (2006), Almeida and Kogut (1999) Company success is correlated with its proximity to industry clusters due to the mobility of labor within Cohen and Levinthal (1990) The capability of a region to ''absorb'' knowledge spillovers is dependent on the scientific and innovation capacity of the industries in the region Di Gregorio and Shane (2003) The availability of VC in the region where the university is located and the level of sponsored research does not have a significant impact on the number of spinoffs from that university Friedman and Silberman (2003) Entrepreneurial climate has a positive and statistical significant impact on all outputs from university technology transfer; policies to attract technology industries and private sector research will have spillover benefits and generate feedback effects through increasing university technology transfer O'Shea et al. (2004) Local and regional economies with a sophisticated technology infrastructure and populated by startups are better positioned to attract knowledgeseeking investment from multinational corporations Powers and McDougall (2005), Degroof and Roberts (2004) Universities in regions with strong entrepreneurial support require little provision of support from the university and vice versa Proof of Concept Centers 375 Table 4 continued Rogers et al. (2001) Emphasizing spinoffs as a technology transfer strategy can lead to an agglomeration of high-tech firms around the university, eventually resulting in a technopolis or technology-based cluster Saxenian (1994), Piore and Sabel (1984) Industrial networks aid in the transmission and absorption of knowledge

Regional factors
Public policy  Incubators improve the flow of knowledge spillovers to university spinoffs Blair and Hitchens (1998) Access to infrastructure, such as entrepreneurship services, financial and technical resources, and incubators is important to university spinoff success Dietz and Bozeman (2005), Dietz (2000) How university research is supported, especially by the federal government, may have a profound impact on the propensity of academic entrepreneurs to spinoff and the subsequent success of these spinoffs Gulbranson and Audretsch (2008) Proof of Concept Centers such as the University of California at San Diego's Von Liebig Center and MIT's Deshpande Center offer intensive services designed to provide resources, technical assistance, and guidance for faculty members (and students) interested in technology commercialization; they may be critical to spinoff success Link and Scott (2005) University spinoffs constitute a larger proportion of firms in parks that are geographically closer to their university as well as parks that have a biotechnology focus Shane (2004), Lowe (2002) Spinoffs from the most prestigious institutions like MIT and Berkeley, respectively, often need to obtain public sector capital before they can obtain private capital Siegel et al. (2003) Firms located within science parks have slightly higher research productivity than off-park firms Storey (1994, 1997) Firms located in science parks (though not specifically university spinoffs) those with relationships with universities have a higher survival rate than those firms without such a relationship