LOS ANGELES--- University of Southern California Survey of Venture Capitalists Uncovers Five Key Factors Associated with Success

LOS ANGELES, Feb. 3 /PRNewswire-USNewswire/ -- The USC Stevens Institute for Innovation at the University of Southern California today released a white paper detailing the findings of a comprehensive national survey exploring the issues affecting university-venture capital (VC) relations in an effort to better understand -- and ultimately improve -- the spinout process for all of the stakeholders involved.

The suggestions in the white paper titled, "Venture Capital -- University Interface: Best Practices to Make Maximum Impact," come from insights shared by venture capitalists and cover five key areas: understanding investor motivations, supporting entrepreneurs, streamlining bureaucracy, improving access and visibility, and fostering a culture of innovation on campus.

"As hotbeds for technological innovation, university research labs create groundbreaking innovations that have been at the heart of many successful start-ups. Unfortunately, university technology transfer professionals and venture capitalists have often struggled with cultural disconnects, hampering efforts to make maximum impact for university research," said Krisztina "Z" Holly, USC Vice Provost for Innovation and Executive Director of the USC Stevens Institute for Innovation. "A key piece in developing a healthy technology ecosystem, in any area, is to improve the efficiency of converting university research into viable, growing startups. We hope that by empowering university tech transfer professionals with the key findings from our study, we will help build and strengthen our economy nationwide."

The research identified many areas where investment professionals think universities can improve, such as faculty outreach, training within tech transfer offices about the venture capital world, and better packaging and marketing of ideas for Vcs to review.

Some recommendations from the study include:

- - Understand how to fit into a venture capital fund's business goals. Venture capital funds have a fixed life span in which to provide the venture and limited partners with a cash return on investment, typically in the form of an IPO or acquisition.

- - Package ideas in VC-friendly ways. Overwhelmingly, investors agreed that universities need to get better at gathering, filtering, translating, and packaging new ideas. This involves more than simply eliminating "academese" from business plans presented to Vcs -- it means coaching would-be entrepreneurs on how to discuss their ideas in compelling business terms, not technological jargon.

- - Do not consider venture capital funds ATMs. Vcs are not an endless source of cash for unproven or infeasible inventions, nor are they in the business of writing blank checks -- they expect to be highly involved in their portfolio companies. This is especially true of the early or "seed" stage investments that characterize the majority of ideas originating in university labs.

- - Be ready to make a deal. Technology transfer offices must strike a balance, maintaining an efficient business-like relationship without sacrificing legal protections for the university and its entrepreneurs. What investors would like to see from universities is a genuine effort to make the deal process as smooth and expedient as possible, including a standardized, transparent deal process.

- - Focus on the people: Although protectable intellectual property is important, investors are primarily interested in the inventors they expect to be involved in the start-up. However, faculty should be cautioned they should not expect to run the company as the CEO.

Added Holly, "This paper is not a comprehensive roadmap for spinout success, or a comprehensive set of solutions to some of the issues facing technology transfer professionals. But our hope is that this research sparks a productive, long-term dialogue within and between the university and venture capital communities, and serves an important first step toward refashioning university technology transfer as a more straightforward, more productive, and more mutually beneficial process to maximize the impact of university innovations."

About the Study:

Over a four-month period, the USC Stevens Institute research team conducted 94 in-depth interviews among a geographically and commercially diverse sample of venture capitalists to gain deeper insight into the current model for academic spinouts, and which elements of that process help or hinder the efforts of venture capitalists to develop those ideas into thriving businesses. All of the interview subjects were senior managers of active venture funds (partner or managing director level) that invest in seed and early-stage companies.

To read the entire white paper, please visit http://stevens.usc.edu/docs/vcstudy.pdf

About the USC Stevens Institute for Innovation

The USC Stevens Institute for Innovation (http://stevens.usc.edu/) is a university-wide resource in the Office of the Provost at the University of Southern California designed to harness and advance the creative thinking and breakthrough research from USC for societal impact. USC Stevens Institute identifies, nurtures, protects, and transfers to the market the most exciting innovations from USC, and in turn, provides a central connection for industry seeking cutting edge innovations in which to invest. Furthermore, USC Stevens Institute develops the innovator as well as innovations, through educational programs, community-building events, and showcase opportunities.