Funding Column

 

New Centers Of Excellence Grants Available

 

By Nicole Toomey Davis

Director, Centers of Excellence Program, Governor's Office of Economic Development

 

During the 2007 Legislative session, the Utah State Legislature passed House Bill 125, and Governor Huntsman signed it into law on February 23^rd of this year. The bill adds an exciting new source of funding available to Utah's technology-based entrepreneurial community. The introduction to the bill states, the statutory changes provide "…that, in addition to state colleges and universities, Centers of Excellence grants may be awarded to companies that are working in partnership with colleges and universities and their researchers to transition their research generated technologies into industry for economic development…"

With this legislation, Utah Centers of Excellence (COE) program can now grant funds to companies as they work to transition technologies developed in Utah's colleges and universities into industry. The COE goal of this private sector commercialization is to help create great jobs for Utah citizens. Companies that are eligible include both existing companies and entrepreneurial startups, and also include companies which are direct licensees with the university, as well as sub-licensees through another entity. This allows companies which are sub-licensing a certain "field of use" from another company or a holding company (perhaps a small company founded by the professor ) to be eligible for these grants.

The philosophy of this program is to put between $500,000 and $750,000 of funds into a specific technology that shows significant commercial potential. This has been COE's historical range and will continue to be the target. Now those funds can be divided between universities teams and their licensees, or possibly, be directed completely to licensees.

The funds are grants, and the obligation of the company, under contract with the state, is to move the technology toward market. The state does NOT take any equity; it receives its return on investment when great companies create high-paying jobs in the state, and the state looks closely at opportunities that will keep and grow jobs for Utah citizens.

When applying for these funds, the company must provide a basic statement of the use of funds but appropriate uses include technical advancement of the technology, from "research" toward product, as well as marketing and sales activities and general business purposes. The program requires that the licensee provide matching funds of $1 for each $1 granted by the state. These matching funds can come from founder's equity, equity investments, or revenue, but must be invested funds, not loans.

This year, given the short time frame since the legislative changes for the 2007-08 funding cycle, only those licensees of technology developed in a former or current Center of Excellence were eligible. The guidelines for subsequent years will be developed during 2007-08. This first year is giving the Centers of Excellence program the opportunity to learn how to best work with the business community to put these funds to work for Utah.

The state and the Utah State Legislature understand the challenges in the earliest stages of company development, as well as the challenges of raising crucial start-up funds. In other parts of the country "friends and family" often provide this capital. In Utah early stage funds are often difficult to come by. Angel and venture investors often want to see significant progress past the technology stage before investing. It is the goal of the Legislature, the Governor's Office of Economic Development and the Centers of Excellence Program that this new access to funds will help propel compelling technologies developed in our state over the "wall" into industry, to grow our economy and create great opportunities for our citizens.

 

Nicole Toomey Davis is the director of the Centers of Excellence Program for the state of Utah. She also serves as president and CEO of Enclavix, a Draper-based software and technology development company.

 

Launch - May/June 2007

 

 

For the full "digital magazine" version of May/June 2007, visit: http://www.nxtbook.com/nxtbooks/growutah/launch0507/