Does government funding yield enough photonics licenses?

Jan. 1, 2008
Q: My impression is very few photonics technologies that came out of government-sponsored research, even when they are useful product ideas, are ever licensed.
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Q: My impression is very few photonics technologies that came out of government-sponsored research, even when they are useful product ideas, are ever licensed. Why is that?

A: Licensing does take place; I have sat on both sides of the table in licensing negotiations. In fact, with the dismantling of our institutional research icons and the fact that companies do more “D” than “R” today, more licensing logically should be the trend.

The variables are funding agencies, researchers, and companies in the photonics business. The purpose of some funding agencies, such as the National Science Foundation, is to advance science, which means impact on commercialization could be indirect and in the future. Department of Defense (DOD) funding is biased toward the needs of the military, which may or may not have large consumer markets, and we don’t hear about successes that are classified. We also don’t always give credit where credit is due, such as the contributions of DOD/DARPA to information technology and the Internet, or the National Institutes of Health on genetic research that resulted in major medical breakthroughs.

Researchers have the ultimate control over the outcome of their work. They can pick the projects they take on with potential commercialization in mind, at least with a peripheral vision to enhance those odds. They can also speed up the commercialization process by, for example, encouraging others to simultaneously develop related technologies needed to make commercialization practical. For this to occur, a technical person has to take some interest in business. I have been promoting the benefit of technical people taking an interest in business, and I believe the professional societies can play a bigger role in that aspect of our career development.

Cooperation between academia and industry can go a long way toward incubating technologies and future technology leaders. And since licensing is an efficient way to quickly gain a business edge, photonics companies will eventually adopt a more nurturing attitude toward start-up companies. It is likely that photonics leaders who are now in executive suites will eventually become senior statesman and take a more nurturing attitude toward academicians and start-up entrepreneurs. Licensing in our industry will logically increase over time, because it is practical, it makes sense, and it is idealistic. I am hopeful.

A: From your venture-capitalist perspective, how can I improve on my executive summary to raise money?

I understand an executive summary has to be kept brief, but it still must address the key issues every investor would want to know. The executive summary is your “elevator pitch” to get an investor excited; it must paint a full picture of your business proposition, about the nature of the business, its potentials, and why you are likely to overcome competitionall in one or two pages.

You need to provide more details. You did not get into the business aspects of your idea, which implies you either don’t know or lack confidence in your business strategy. Your write-up boils down to saying your technology is better than others currently on the market, and you can put together a research team to develop the technology if you can get funded. You assert that, because this is a great invention, sales will roll in and you will likely be acquired for a handsome valuation. Professional investors are not likely to get excited by this storyline, which they get all the time.

What you have written is more of a proposal for R&D funding as speculation rather than a business proposition. A crisp executive summary is distilled from a business plan and can only come from a clear vision of the business. I recommend that you gain that clarity by working through the outline of a typical business plan. A while ago I wrote an outline of a business plan for Laser Focus World that is posted at www.incubic.com and at www.laserfocusworld.com/articles/27813. It can provide a checklist of issues you need to address with factual supporting data. Until you have done that, the executive summary is likely to come through muddled.

About the Author

Milton Chang

MILTON CHANG of Incubic Management was president of Newport and New Focus. He is currently director of mBio Diagnostics and Aurrion; a trustee of Caltech; a member of the SEC Advisory Committee on Small and Emerging Companies; and serves on advisory boards and mentors entrepreneurs. Chang is a Fellow of IEEE, OSA, and LIA. Direct your business, management, and career questions to him at [email protected], and check out his book Toward Entrepreneurship at www.miltonchang.com.

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