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Many state venture funds arepart of policy programs aimed at encouraging university research to spin-offinto business startups and jobs in surrounding communities. As a NationalScience Foundation study recently emphasized, even smaller universities areplaying a vital role in local job creation. Technology transfer licenses havedoubled in the last 10 years and universities have had $1.6 billion in incomefrom licenses to corporations and startups in 2005.

These localuniversity ties can create businesses loyal to the local economy far moreeffectively than typical tax giveaways. States are using a number of tools toencourage technology transfer on a more regular basis, from creating dedicatedtech transfer investment vehicles, to encouraging university research parks, tospecial tax credits related to technology transfer.

DedicatedTechnology Transfer Investments: The Maryland TechnologyDevelopment Corporation (TEDCO), was established by the Maryland GeneralAssembly in 1998 to provide seed capital and business assistance to encouragetechnology transfer from research universities and federal laboratories tolocal startups. The program has been so successful that TEDCO was recognized as themost active early/seed stage investor in the nation in the July 2007 issue of EntrepreneurMagazine. Similarly, Floridahas been investing directly in attractingnew biotech research organizations, andArizona has appropriated $135 million for five years of funding for the Science Foundation Arizona, which isaimed at leveraging state technology resources to spur innovation and newhigh-technology jobs.

Otherregional groups, such as the Midwest ResearchUniversities Network, help universities share best practices onworking with venture funds to develop local technology transfer.

UniversityResearch Parks: 300,000 workers in North America are employed at auniversity research park and generate an additional 2.57 jobs in the broadereconomy, according to areport by the Association of University Research Parks. Theseresearch parks encourage businesses to take advantage of university researchassets and employ university graduates, thus helping to nurture startup firmsand ideally integrate them into the broader local economy.

TaxCredits for Technology Transfer: While many state tax creditsend up being little more than corporate tax avoidance schemes, Oregon recently introduceda creative new approach-- a 60% income tax credit for donations to stateuniversity programs that commercialize university research. A number ofbusinesses have given donations to state universities based on the program. Thebonus for the state's taxpayers is that any credits that result in income forthe universities through royalties and licenses will be repaid to the state,feeding an "evergreen" endowment to fund future tax credits andthereby limiting the long-term expense of the tax break to state taxpayers.

Resources:

InnovationAssociates and National Science Foundation - TechnologyTransfer and Commercialization Partnerships
Science Foundation Arizona
Midwest Research Universities Network
Batelle and the Association of University Research Parks - Characteristicsand Trends in North American Research Parks
ORSB 582 and SB 853- Relating to University Venture Capital Funds