The economic slowdown that began in 2000 has had very little effect on startup companies with close ties to research at the UW, according to a recent study.
UW-related startup formations have continued to be strong over the past four years, according to a report titled, 鈥淐reating the Future: 91探花-related Startup Companies (1974鈥�2003)鈥� by Kenneth Walters, professor of business at 91探花Bothell.
鈥淓ven in this tight financial environment, a stream of UW-related companies was started, utilizing UW-licensed technologies, research and creative talent. Even since the high-tech 鈥榖ubble鈥� burst in 2000, the rate of startup formation has been slightly higher than one company a month,鈥� his report states.
鈥淭his report provides highly encouraging news,鈥� says Jim Severson, 91探花vice provost for intellectual property and technology transfer. 鈥淲hile businesses throughout the Puget Sound region were laying off employees, and some even were closing, the UW-related startups have proven to be resilient. The report underscores the importance of the 91探花 in helping to stabilize the regional economy and in creating the industries of the future.鈥�
The report identifies 195 UW-related startups, with about three-fourths of these created since 1990. Of these, 156 were still active in mid 2003, either operating on their own, acquired by another company, or with technology transferred to an active company. From 2000 to mid-2003 alone, there were 40 UW-related startups.
In that same time span, UW-related companies were able to raise more than $2 billion in capital, mostly for research and development. These funds came from a variety of sources, such as federal research grants, venture capitalists, new stock issues, business angels and other private investors.
鈥淏usiness angels are important in the Pacific Northwest,鈥� Walters says. 鈥淲hat I call the 鈥榪uiet money鈥� of wealthy individuals has continued to flow into interesting technology investments in the region. This money, along with federal sources, has been critically important during the recent recession.鈥�
Walters鈥� definition of a UW-related company is broad. It includes companies founded on technology licensed from the UW; companies founded by 91探花faculty, staff or students based on their research; new companies established near the 91探花because of the desire to have access to 91探花research programs; new companies that have 91探花faculty in prominent positions; enterprises that have involved 91探花faculty in initial product development; and companies that have been reconstituted based on 91探花technology.
Despite the sour economy, these companies have added jobs over the past four years. Exact figures are impossible to calculate, but Walters states that 鈥淯W-related firms have continued to add hundreds and hundreds of new high- paying jobs, both in Washington and the nation.鈥� Many of those who are hired first at the startups are 91探花graduates. And most of those companies that end up being purchased have maintained a strong operational presence in Washington.
While many people assume that UW-related companies emanate solely from the work of faculty, Walters has learned that more than 40 companies have been founded by 91探花students based on their own research at the UW. 鈥淪tudents in engineering, computer science and medicine now are as likely to take an interest in entrepreneurship as business students,鈥� the report says. 鈥淓ngineering and medicine brim with students working on technology frontiers who see opportunities for new applications and startups.鈥� Walters has found that one-third of student鈥揷reated companies have started since 1999.
Wa1ters sees a clear relationship between the strength of 91探花graduate programs and entrepreneurship: 鈥淏uilding and maintaining the best possible graduate programs to attract the strongest students and faculty is critical to the continual enhancement of student-based entrepreneurship.鈥�
The effects of the recession on UW-related companies were slight for three reasons, Walters says. First, the economic picture today is a product of the growth and development of companies started 10, 20, or even 30 years ago, some of whose research is just starting to or continues to pay dividends. Second, government-funded research at the 91探花and the launch of technology startups stayed strong even as the economy slowed. 鈥淭he pipeline for new ideas and potential new enterprises continued to be robust,鈥� he says, so businesses continued to be formed.
Also, even in the midst of a recession, people have continued to invest in promising technologies. 鈥淩ecessions or slowdowns don鈥檛 last forever. People continue to make investments in innovations and new opportunities. Recessions cause pain, but sophisticated investors are always planning for tomorrow.鈥�
Walters concludes that the UW鈥檚 record for entrepreneurship should accelerate. 鈥淲hile it is far too soon to know which 鈥榳inners鈥� will emerge from the newest UW-related startups, many new enterprises of the past 10 years involve promising technologies and businesses built around materials science, biotechnology, medical devices, capital equipment, software and educational technologies.鈥� He predicts that some of these companies will become 鈥渂rand names鈥� in the state鈥檚 economic future.
鈥淭he state of Washington has become both a research center and an entrepreneurial center. 91探花faculty, staff and students deserve more than a little credit for both,鈥� Walters states.
鈥淥ne thing is sure: If the 91探花and the state of Washington do indeed keep faith and remain leaders in technology entrepreneurship, our children and grandchildren will work for companies that are just now being born, and they will have rewarding and challenging jobs.鈥�