Departments
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Week of 11 September 1998 |
Vol. II, No. 5 |
Feature
Article
Fruits of faculty research cultivated by venture capital
by Brian Fitzgerald
How promising are the fields of information technology and life sciences today? Just ask Matthew Burns, managing director of Boston University's Community Technology Fund (CTF), which provides venture capital to early-stage companies. Burns points to a recent article in Businessweek magazine, which predicts that just as information technology undergirds today's economy, biology will drive tomorrow's.
"We are now starting the century of biology," proclaims the article, which goes on to state that the two industries are likely to work hand in hand: "Biology could transform information technology through such developments as DNA-based computers and software that repairs [biological] flaws the way nature does."
Burns, who has completed 10 successful turnarounds as the CEO of various businesses, pays attention to such economic trends. He cofounded CTF in 1975 and has developed an impressive investment track record that has not only assisted BU faculty, researchers, and employees in commercializing intellectual property, but has also helped BU build on its endowment over the past 23 years.
"In 1974, John Silber believed that Boston University could accomplish several objectives by investing in venture capital, by creating an active patent and licensing program, and by having an active program for the commercialization of faculty-invented science and technology," recalls Burns.
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Technology developed at BU clears Internet traffic jams Traffic congestion isn't limited to Boston's notorious highways and byways -- those who use the Internet know that fact all too well. Enter InfoLibria, Inc., a Waltham-based company that was founded last year with $6.5 million in venture funding from Adams Capital Management, Patricof, and other investors, including BU's Community Technology Fund (CTF). CTF also worked with these companies, along with specialists at BU, to evaluate this investment opportunity and to close the equity financing. "InfoLibria's technology, a distributed network-caching hardware product developed at Boston University, dramatically improves Internet performance by intercepting Internet requests that it can fill more efficiently," says spokesperson Sarah Lawson. DynaCache, InfoLibria's first product, was the result of three years of Internet performance research in the computer science department at CAS. Prior to joining InfoLibria, David Yates and Abdelsalam Heddaya, the company's two founding and senior technologists, collaborated at BU to invent this patent-pending technology. Yates, a former assistant professor of computer science at CAS, is now vice president of software development at InfoLibria, where he manages the design, development, and engineering of the company's products. Haddaya, in his work as a CAS associate professor in the computer science department, conceptualized, built, and implemented research simulation prototypes of the technology that InfoLibria uses. At present, he is the company's vice president of research and architecture. DynaCache technology works by creating data inventories, or "caches," of frequently requested information close to users, and away from the bottlenecks and slowdowns of large internetworked systems. This eliminates the repeated transmission of popular information across networks, which slows Internet performance. |
And since it began investing in 1975, CTF has encouraged high-technology business development by holding equity positions in more than 125 companies through direct investments in venture deals and as a limited partner in venture funds. CTF's office of technology transfer has helped BU faculty and staff identify promising intellectual property resulting from research conducted at the University, protected that property through patents and copyrights, and licensed it to viable companies. CTF also assists Boston University's faculty by providing business expertise to help determine the commercial potential of their research.
"BU has been, in fact, a pioneer in this area," says Burns, because the University enjoys the advantage of having particular strengths in the fields of medicine, engineering, computer science, and photonics, enabling BU to be the source of technologies and new investments for venture capital coinvestors and licensees.
"One of the advantages of this particular structure -- in which the funds in the Community Technology Fund are also the University's -- is that it closes the traditional gap between the technology transfer side and the investment side," says Ashley Stevens, director of CTF's office of technology transfer. "Very few U.S. universities have a venture fund. Most of them do not seem to utilize their opportunity to do this kind of activity with their faculty's research."
Randall Crawford, director of venture capital, states the group's direct investment activity is focused on the life sciences and information technology industries because the future for technology commercialization is most promising in these areas. "In life sciences, CTF focuses on medical devices and instruments, clinical diagnostics, biotechnology, and pharmaceuticals and drug delivery," he says. "In information technology, we target communications and networking, computer systems and components, health care and information systems, and Internet and enterprise software."
Roger Kitterman, director of new ventures, directs two Boston University spinout companies: Pharmadyne, Inc., and Commonwealth Network Technologies. The former, which Kitterman is developing with BU College of Engineering Dean Charles DeLisi, is creating new antiviral therapeutics and diagnostics. The latter he cofounded with Azer Bestavros and Mark Crovella, both CAS computer science assistant professors, whose company specializes in distributed networking and Internet software.
These businesses are two of several companies involving BU technology or expertise in which CTF has made direct investments. Others include CytoLogix Corporation, founded by Steve Bogen, an assistant professor of pathology at the BU School of Medicine; Hemagen Diagnostics, headed by MED Biochemistry Chairman Carl Franzblau; NitroMed, Inc., founded by MED Department of Medicine Chairman Joseph Loscalzo; Sequenom, Inc., which utilizes technology developed by the Center for Advanced Biology's director, Charles Cantor; and Boston Advanced Technologies, Inc., headed by Chemistry and Photonics Professor Richard Clarke.
InfoLibria, a company that was designed to meet the growing demand for speedy Internet access, is one of CTF's most recent spinouts. (See sidebar.) A promising investment? Internet-based companies have been among the fastest growing technology industries in the country, and experts expect the U.S. Internet infrastructure market to grow from about $12 billion in 1997 to almost $50 billion in 2002.
Granted, the tremendous rise in the stock market over the past few years has been good for entrepreneurs. But what about speculation that the recent downturn on Wall Street will slow the venture capital business? "Given a retrenchment of the market, if that's what's going to happen, and institutional and private investors start to pull back and take a more conservative stance, there will be more scrutiny on, and more caution with, investments, but you can't say that two bad days in the stock market are going to blow everything out of the water," says Burns.
Kitterman agrees, noting that the country's technology economy is not in dire straits. "If there is a slowdown, it will be a slowdown from a record pace," he says.
Far from being alarmed, industry experts predict continued growth of technology transfer and an increase in the sale of products that are developed in the course of academic research.
Burns also points out that as more companies look to universities to develop new technology, Boston University has the opportunity not only to achieve a financial return, but also to attract top researchers. "These faculty will see their technology used, whether it's medical or another kind," says Burns. "It's not on the shelf, it's out there in the marketplace, being used to cure patients or solve a technological problem."