Episode 7 - SBIRLand Interview with Robin Rasor from Duke University's OTC Program (Transcript)
Dr. Nate Warren: Welcome back to SBIRLand. I’m Nate Warren, with Eva Garland Consulting, and today I’m joined by Robin Rasor. She is the Associate VP of Translation and Commercialization in the Duke University Office of Translation and Commercialization, or OTC as we’ll likely refer to it as today. Robin, thanks so much for joining us.
Robin Rasor: Well, thanks for having me.
Dr. Warren: Can you start off by describing the role of Duke’s OTC and then a little bit about your responsibilities there?
Ms. Rasor: Our office is the office that handles intellectual property owned by Duke, so basically the new innovations and inventions made by Duke employees, our faculty, our graduate students, clinicians, et cetera, from identifying new inventions, to protecting them, assessing them, market, license, helping with new ventures, collecting money, distributing money — everything related to Duke innovation and entrepreneurship. My role is to manage the office.
Dr. Warren: Great. What types of funding do Duke startups typically seek? How do companies determine what might be a good fit, whether they want to pursue grants or some other type of funding?
Ms. Rasor: Well, it very much depends on the founders, the company, and the kind of technology. At Duke, we do have a wide variety of startups, from software-type companies, cybersecurity, digital health, all the way to companies that are trying to develop new pharmaceuticals, new therapeutics, gene therapy, things like that. Not only does the type of technology and the market make a difference in the types of funding, but of course the amount of funding that they’re going to look for is very different. It’s much more expensive to get a pharmaceutical through the regulatory process than to get perhaps a software product on the market. So that’s one thing.
Ms. Rasor: And then also it depends on the founders. Many of our founders are very interested in what they would call or we would call non-dilutive funding, meaning federal funding or SBIR funding, versus angel funding or venture funding where the investors are taking a piece of the company. So some of that also is going to depend on the founder, and also it’s going to depend on the stage of the technology. Often they will take early SBIR or angel funding early, and then down the road, as they have larger capital requirements, will then go after a venture or, say, an industry partner.
Dr. Warren: Fantastic. Yeah. You mentioned SBIR funding. There has been an impressive number of Duke spinouts that have had success with the SBIR and STTR programs, that have gone on to commercial success. Versametrics, Tellus Medical, InnoVasc, many others. What type of impacts do you think their SBIR or STTR award had in the success of these companies?
Ms. Rasor: Well, certainly, they don’t call it America’s venture fund for nothing. I would say the SBIR money often helps them de-risk the technology, build a prototype, get it to a certain point where it’s of interest to investors. For good or for bad, most universities, and Duke is no different, have limited translational funding to help companies get through the “valley of death.” So that SBIR/STTR funding is often what really gets them started and gets them on their way. Sometimes that’s all they need to get going, especially those that are successful in getting Phase II funding. That’s often where they start.
Dr. Warren: That’s great, yeah. What are some of the biggest challenges you see faculty-led businesses or university spinouts face? Why do some of these spinout companies fail?
Ms. Rasor: Well, one of the biggest challenges, and people always think it’s money, but it isn’t necessarily money. It’s very hard to find early stage management talent, and even our friends on the west coast, where it’s arguably a little bit easier, there’s more people when you walk into the Starbucks, there’s 10 people who just left their successful startup and looking for their next gig, a little different here in the Triangle, but it’s still a problem. How do you identify the new CEO or the talent to help the company move forward, to help the company get investments? We spend a lot of time trying to identify those people, help maybe attract them to come here into the Triangle or find them if they are in the Triangle. That’s one of our biggest issues.
Ms. Rasor: And often you may have great technology, but if you don’t have the right talent or the right team, it’s hard to get the investment, certainly from venture. It’s that chicken and egg. Well, I need talent to get the money, but I can’t get the money because I don’t have the talent, things like that. Why do startups fail? Well, often they fail because the technology doesn’t end up working. They spun out too early, and by the time they have the money, they realize their prototype’s not going to work or they’re not going to get regulatory [approval]. Sometimes the market passes them by. They struggle for long enough, and then by the time they get the product on the market, somebody else has beaten them with a competing product. And then sometimes they do, they run out of money or they’re not able to find the right talent.
Dr. Warren: You mentioned team, and I think that’s so important. I think that really is one of the key things that reviewers are looking for when they’re assessing these proposals. Can they trust the individuals that are saying they can do what they think they can do? I think that’s really important. What are some of the biggest changes that you’ve seen in the startup world over the years?
Ms. Rasor: Well, when I started in this business a hundred years ago, there was a lot of seed funding around. Actually, the venture firms would invest. And when I say seed funding, I mean $250,000 to $2 million, the really early seed money. That’s kind of dried up. If you look at the venture funds now, many of them have billions under management, or certainly hundreds of millions under management, and so they just don’t have the ability to just invest in seed funds. So you’ve seen those dry up, and that’s hard, because that’s the early money that often our startups need. We’ve seen more and more angel groups get involved, but there’s good and bad about angel investing. It works for some, but it doesn’t work for everybody. Those are the sort of downside changes.
Ms. Rasor: The good side changes, at least right now, there’s a lot of money around looking for startups, technologies to invest in. Arguably the valuations are going up, so that’s good for the startups. But it almost seems like there’s a lot of people chasing the 10 best deals, and then we struggle a little bit on what is the appropriate valuation. We’ve had a number of our spinouts have acquisition offers, and now [the question becomes should they hold] back and wait for the next best offer, or should they take that offer? That’s the thing we’re seeing right now. But I would say the loss of seed funding is one of the biggest challenges that we’ve seen in the last five years.
Dr. Warren: Yeah. So much to think about. Like you mentioned before, that SBIR/STTR program certainly is intended to de-risk and fill that void that was maybe left by some VC firms in the last number of years. Duke consistently ranks in the top 10 universities in the nation for issued patents, licensing agreements, licensing income. Can you speak to how critical IP protection is, and maybe a little bit about how faculty should be approaching it?
Ms. Rasor: Well, I would say IP protection tends to be much more critical, at least when we’re talking about patents, in the areas of things like drugs, pharmaceuticals, things like that. When you start talking about software, then you start thinking about things like copyright or keeping things proprietary, trade secrets, things like that. I think what’s critical is, certainly if you’re a faculty member or you’re someone at a university, to work with your tech transfer office early, early, early, well before you’re certainly publishing or before you’re talking to anybody, for just these reasons, to first figure out what’s the most appropriate way to protect your IP? Because it may not be a patent. And making sure that they’re helping you with being strategic about thinking about your IP.
Ms. Rasor: But also thinking about the competing IP. We’ll have people come in and they just think they’ve got a great idea and they’re running with it. And then we will do a tech and a market assessment and we’ll find competing IP or things that will be an issue for freedom to operate. It’s better to find that out sooner rather than later, after you’ve spent a lot of money and time working on something. We always say the sooner you can start talking to us, the better, so we can help you approach the best way to develop your innovation.
Dr. Warren: That’s great. What kinds of coaching or resources are you able to give to companies that might be negotiating license agreements?
Ms. Rasor: When we do a negotiation with a company, we’re not going to coach the company how to negotiate with us. We can certainly help them. We’ll introduce our spinouts with local law firms or other law firms that we work with. We try, I guess I would say we certainly coach our entrepreneurs, on what are the kinds of things that the university’s going to want in a license. I’ve been here now almost five and a half years, so I would say our local community has a good sense of the kinds of deals we do. And frankly, most of the universities, especially in the Ivies or the near-Ivies, we spend a lot of time benchmarking against each other. I would say, hopefully we’re not totally out of the ordinary in terms of what our boilerplate looks like, the kinds of legal things that we need to have in an agreement. And then of course, we can always discuss what the appropriate financial terms are.
Dr. Warren: Great. Good information. I have to ask it — how has the COVID-19 pandemic changed Duke OTC’s daily operations or mission?
Ms. Rasor: Well, it hasn’t changed our mission. It was of course crazy the first year, just in terms of trying to figure out how to do things remotely. We also had, as you might expect because we’re a big research institution, we had quite a lot of activity related to COVID, not only COVID vaccines and therapeutics, but also devices and software. It was a crazy early days for many of us in university tech transfer offices, navigating that kind of intellectual property and how we were going to deal with it, license it, get it out, and all that kind of stuff, while also trying to manage a remote office with the rules and everything changing daily.
Ms. Rasor: We’re trickling back into the office. We’re certainly seeing more companies, although it’s still very small, coming to visit here. We’re seeing more in-person meetings with our faculty. But it’s going to take some time. We’re on the hybrid model right now, and just trying to learn how to deal with the hybrid model.
Dr. Warren: Right. Everybody’s doing the best they can.
Ms. Rasor: We’re no different than anybody else.
Dr. Warren: Certainly. I understand there’s a new initiative underway at Duke called the Research Translation and Commercialization Effort. Can you talk a little bit about what this initiative seeks to accomplish?
Ms. Rasor: Well, it may be new on the outside, but this is the result of a year-long process initiated by our board of trustees, pre-COVID. The board asked us to look at how does Duke do research, commercialization and translation, and how can we do it better? The board spent a year, they visited four different times here in the Triangle. They met with companies, they visited facilities, they talked to other universities, they had a lot of metrics from us. Then the end result was something that we call the RTC, the Research Translation and Commercialization Initiative.
Ms. Rasor: It really was stepping back and saying, how does Duke do now? How well does it do now? How can we do better, in particular helping our faculty identify innovation, making sure that we’re getting innovation out, but also how do we do better with our partnerships with industry, and also our partnerships with the other institutions in the Triangle, such that we can build up the ecosystem?
Ms. Rasor: The reason this is all important is that it enhances the reputation of the institution. If we’re well known for our innovation and research, that’s important. It enhances the ecosystem. The more companies that move here, the more IPOs, acquisitions that we have for companies that are here, not only does that enhance the ecosystem in the region, but it also helps us attract and retain the best quality faculty and the best quality students, because there are jobs here for their partners, spouses. It just builds up the innovation and ecosystem. That’s really the objective of this, not only enhancing Duke’s reputation, but also being a member of the Triangle and enhancing that reputation and ecosystem.
Dr. Warren: Certainly Duke is, of course, right in EGC’s backyard. We’re lucky to be in such an innovative and great area for this type of technology. What are some of the things that the Duke OTC Office is looking forward to for 2022? Are there any changes coming or any special priorities that faculty members might want to know about?
Ms. Rasor: Well, as part of this, our office did change. We changed our name. The Duke Angel Network is now part of our office, as part of our ecosystem, with the idea of not only having the Duke Angel Network, that alumni members not only invest in Duke’s spinouts, but also participate in helping our faculty entrepreneurs as mentors, helping us select the right projects to invest in, things like that. We’ve also added, we have through philanthropy, some more translational money that we never had before, which should help us do a better job of, because there’s no seed funding, the early de-risking, helping move the technology a little bit farther along so it’s more attractive to investment.
Ms. Rasor: We’re just starting that process. We’ll be collaborating with some others on campus related to that. But we’re really excited about identifying early stage innovations that we can put a little money in, get them a little farther on, and then arguably their SBIR/STTR proposals are better. They’ve got data, they’ve got maybe the initial prototype, they’ve got other things, market analysis, you name it, that can create a better proposal, but also a better investment opportunity, should they decide they want to go to venture or industry partners.
Dr. Warren: Right, and set these companies out on the right foot. That’s fantastic. Robin, thank you so much for joining us today on SBIRLand. It’s been so great to learn more about all of the great things a university tech transfer office can provide for its startups. If you are listening and you want to learn more about Duke OTC’s office, check out otc.duke.edu. Robin, thank you so much again.
Ms. Rasor: Thanks so much.