Technology and Innovation, Vol. 16, pp. 215 222, 2014 1949-8241/14 $90.00 +.00 Printed in the USA. All rights reserved. DOI: http://dx.doi.org/10.3727/194982414x14138187301614 Copyright Ó 2014 Cognizant Comm. Corp. E-ISSN 1949-825X www.cognizantcommunication.com PowerBridgeNY: A Cleantech Proof-of-Concept Center Kurt H. Becker,* Orin Herskowitz, Micah J. Kotch, Emily Wheeler, James Aloise, Julia Byrd, and Jeffrey M. Peterson *Department of Applied Physics and Department of Mechanical and Aerospace Engineering, New York University Polytechnic School of Engineering, Brooklyn, NY, USA Columbia Technology Ventures, Columbia University, New York, NY, USA New York University Polytechnic School of Engineering, Brooklyn, NY, USA New York State Energy Research and Development Authority, Albany, NY, USA This article describes the establishment and operation of a consortium of two Cleantech Proof-of- Concept Centers funded by the New York State Energy Research and Development Authority. These centers aim to create an early stage lab-to-market support structure, including access to funding that will enable the development and validation of promising clean energy technologies emerging from research laboratories and ultimately lead to the formation of startup companies located in New York State. The two centers, one led by New York University in partnership with the City University of New York and the other one led by Columbia University in partnership with Stony Brook University, Brookhaven National Laboratory, and Cornell University s new New York City Applied Science campus, operate under the umbrella of a single organizational structure as PowerBridgeNY. Here we describe the motivation for the establishment of the center and summarize the various aspects of its operation through the first round of project selections since the center s inception in early 2013. Key words: Proof-of-concept center; Cleantech; Lab-to-market; Startup formation INTRODUCTION In 2012, the New York State Energy Research and Development Authority (NYSERDA) published a program opportunity notice (PON) soliciting proposals to establish one or more Cleantech Proof-of- Concept Centers (POCC) in New York State. The POCC initiative was motivated by the belief that scalable startup companies are engines of both technology commercialization and economic growth. Many universities have established technology transfer offices, whose roles include the management and commercialization of intellectual property (IP) created by faculty, students, and postdocs. Traditional routes to IP commercialization include licensing, joint development ventures with industry partners, and the creation of startup companies. In recent years, the creation of startups has become an increasing focus for technology transfer offices. Many inventions coming out of academic research laboratories never reach the stage of startup formation because of a key gap in the early stage of the technology development, a ditch of death at the proof-of-concept stage (2). The objective of NYSERDA s POCC program is to create an early stage support infrastructure that will enable the development and validation of promising clean energy technologies that are, or will become, the platform for startup companies located in New York State. As stated in the PON, the objective of the POCCs is to design and implement sustainable programs Accepted August 22, 2014. Address correspondence to Kurt Becker, Vice Dean of Academic Affairs, Polytechnic School of Engineering, New York University, 15 Metro Tech Center, 6th Floor, Brooklyn, NY 11201, USA. Tel: +1-718-260-3608; E-mail: kurt.becker@nyu.edu 215
216 Becker ET AL. that 1) accelerate the commercialization of innovations out of research institutions and into the market place, particularly through startups; 2) match emerging clean energy technologies that have scalable commercialization potential, based on real market need, with the investment community; and 3) establish sustainable regional innovation ecosystems of potential investors and entrepreneurs in clean energy technologies and solidify the research institution linkages to them. Furthermore, the POCC aims to develop and sustain relationships with regional entities that support technology-based startup companies (which may include incubators, angel and venture investors, service providers, venture development organizations, regional technology development organizations, and individual entrepreneurs and executives). While the POCCs are given discretion in how they allocate their resources, the expectation is that a sizeable fraction of the resources are made available as bridge funding to aid in the early stage, prestartup formation technology development and validation, including market research and opportunity assessments, business planning, and business development activities. BACKGROUND Here we provide a brief summary of the key attributes relevant to this initiative of the major stakeholders participating in our POCC NYSERDA as the funding agency and New York University (NYU) and Columbia University as the lead academic institutions of the center and describe its implementation and operation. The New York State Energy Research and Development Authority (NYSERDA) NYSERDA s mission is to advance innovative energy solutions in ways that improve New York s economy and environment (6). NYSERDA serves as a catalyst to advance energy innovation and technology, transforming New York s economy, empowering consumers to choose clean and efficient energy as part of their everyday lives. As part of this effort, NYSERDA provides funding for the POCC initiative, which supports Governor Andrew M. Cuomo s energy economy to ensure the state s energy system is more reliable, resilient, and affordable. Working with state, citizen, and industry stakeholders, the way of doing business in New York is moving to a more market-based, decentralized approach. In addition to funding POCCs, NYSERDA also supports other clean energy entrepreneurship initiatives, including six Cleantech business incubators around the state; an entrepreneur-in-residence program that links experienced business mentors with Cleantech startups; two Cleantech executive transition programs to bring experienced business executives to the management teams of early stage startups; and Green Capital Empire, a NYSERDA-sponsored initiative designed to bring early stage funding to New York-based clean energy businesses. New York University (NYU) NYU is the largest private university in the US with a total student population of about 50,000. In addition to its main campus in New York City, it also has international portal campuses in Abu Dhabi and Shanghai. Patent protection, technology transfer, the commercialization of IP generated by NYU faculty, students, and postdocs, and research collaborations between NYU researchers and industry are managed by NYU s Office of Industrial Liaison (http://oil.med.nyu.edu/). The many entrepreneurial activities across the various schools and colleges of NYU are coordinated through NYU s Entrepreneurial Institute (http://nyuentrepreneur.com/). A cornerstone of NYU s entrepreneurial ecosystems are three incubators operated by the NYU Polytechnic School of Engineering, one in Manhattan and two in Brooklyn (7). This incubator initiative, which started in 2009 with support from NYSERDA and the New York City Economic Development Corporation (NYCEDC), has generated more than $250 million in economic activity and has created more than 1,000 jobs. Incubator companies have raised more than $100 million and 7 of the 42 startups have been acquired (8). In September 2014, NYU opened a new hub for entrepreneurial activities, the Leslie elab, a 5,900- square-foot collaborative space, where NYU entrepreneurs can meet, connect, collaborate, and tap into a vast array of resources to help develop their efforts to drive innovation in New York s clean ideas and inventions into startups (https://www.nyu.
PowerBridgeNY 217 edu/about/university-initiatives/entrepreneurshipat-nyu/leslie-elab.html). Columbia University Founded in 1754 as King s College, Columbia University in the City of New York is the fifth oldest institution of higher learning in the US. Columbia University continually seeks to advance the frontiers of knowledge and to foster a campus community deeply engaged in understanding and addressing the complex global issues of our time. Columbia University s technology transfer office, Columbia Technology Ventures (CTV) (http://www. techventures.columbia.edu/), manages Columbia s intellectual property portfolio. Its core mission is to facilitate the transfer of inventions from academic research to outside organizations for the benefit of society on a local, national, and global basis. Each year, CTV manages more than 350 invention disclosures from faculty, 70+ license deals, and 15+ new startups, involving approximately 45 multidisciplinary, full-time staff across Columbia s two campuses. CTV currently has over 1,200 patent assets available for licensing, across research fields that include biotech, IT, Cleantech, devices, nanotechnology, and material science. Over the years, CTV has been involved with launching over 150 companies based on Columbia s technologies. Of these companies, over 40 have received VC funding, with 27 successful acquisitions or IPOs to date. THE CONCEPT OF POWERBRIDGENY Most people in the world of startups are familiar with the concept of the valley of death (4), which refers to the high probability that a startup will fail before a steady stream of revenue is established. This frequently happens after a startup has received its first round of financing and subsequently incurs significant operating costs because of expansion in terms of space and staff. However, additional financing is scarce during that period, which leaves the startup vulnerable to the perils of a period of negative cash flow. By contrast, much less well known is the notion of the ditch of death (2), which refers to the gap in the development of an emerging technology when is no longer available, yet the technology has not been sufficiently developed to attract private capital. Moreover, many inventors from academia lack the proper market knowledge as well as the willingness and talent to engage meaningfully with the customer base. As a result, many promising new technologies never go beyond the academic research lab and thus never achieve their potential to become a successful product in the marketplace, create jobs, generate tax revenue, and improve lives. This motivated the National Science Foundation (NSF) to start its Innovation Corps (I-Corps) program in 2011 (http:// www.nsf.gov/news/special_reports/i-corps/), a set of activities that prepare scientists and engineers to extend their focus beyond the laboratory. Some results obtained for NSF-funded basic research have the potential for broader applicability and impact in the commercial world with near-term economical and societal benefits. I-Corps combines experience and guidance from established entrepreneurs with the Lean Launchpad methodology (see www. steveblank.com) (10) to teach grantees to identify valuable product opportunities that can emerge from academic research and offers entrepreneurship training to student participants. NYSERDA s POCC program is another attempt that aims to bridge the same gap between research breakthrough and product opportunity, albeit limited to clean energy technologies. Figure 1 illustrates the place of the POCC program in the lab-to-market path of an emerging technology. In 2013, NYSERDA announced the winners of the POCC competition, NYU (in partnership with the City University of New York, CUNY) and Columbia University (in partnership with Stony Brook University, Brookhaven National Laboratory, and Cornell University s new New York City campus, Cornell NYC Tech) as well as High-Tech Rochester (their POCC is called Nexus-NY). Each POCC was awarded $5,000,000 for a 5-year grant period from NYSERDA, supplemented by a required 20% institutional cost-share contribution. The NYU and Columbia teams soon engaged in conversations on how to leverage the attributes and activities of their two POCCs, how to avoid unnecessary duplication of efforts, and how to maximize the return on investment given the close geographical proximity of the two centers. Both centers had proposed federal funding for a breakthrough or an invention to engage a support network of mentors, coaches,
218 Becker ET AL. Figure 1. The POCC as a bridge between academic research and commercial enterprise. judges, advisors, and entrepreneurs, many of them drawn from the same pool of individuals, to implement their respective mission. Both centers also planned to exploit similar networking and other events to facilitate matchmaking between the various stakeholders and to educate the teams. While the centers are separate contractually with NYSERDA and remain fiscally independent and report separately to NYSERDA, the two centers function operationally and in some aspects also administratively as a single POCC under the name PowerBridgeNY (PBNY) that serves the partner institutions in New York City and on Long Island. This allowed the centers to build a single, strong network of extremely competent and dedicated mentors, coaches, advisors, judges, and entrepreneurs to support the mission of PBNY. The centers also take turns in organizing and hosting networking events and other events as well as entrepreneurial boot camps under the umbrella of PBNY. Lastly, PBNY also leverages the NSF-funded I-Corps Regional Node, NYCRIN, a collaborative effort between CUNY, NYU, and Columbia. PBNY realizes its mission by identifying emerging clean energy-related technologies from researchers at all partner institutions. The primary focus of the center s activities are technologies at the postbasic research level but before the company formation stage (technology readiness levels 3 7), for which the inventors have already filed for IP protection with the tech transfer office of their home faculty, PBNY designated individual campus representatives as liaison between the PBNY team and the faculty at each partner institution. The key components of the services provided by the POCC include: Providing financing to competitively selected teams and their emerging technologies to help accelerate the transition from bench top to prototype. Providing the tools to assist the teams in customer validation and market assessment, including exposure to the Lean Launchpad methodology. Preparing the teams for pitch day. Introducing the teams to angel investors and the VC community. The funding provided to the competitively selected teams consists of up to $150,000 during an approximately 12-month validation phase, which will be released in installments based on meeting technical as well as business milestones. This funding is NOT for carrying out additional basic research, but rather for addressing the so-called jugular technical experiments and commercial feasibility studies that might stand in the way of a successful commercial launch. At the end of the validation phase, another $50,000 may be made available for company formation ( ignition grants ) for those startups that remain in New York State. We note that the POCC business model does not require the teams to give up any equity or future revenue share to the institution. In order to maximize engagement with POCC, nor does POCC funding impact IP ownership.
PowerBridgeNY 219 Table 1. Mutual Expectations of the POCC and the Selected Teams in Terms of Relevant Technical and Business Aspects What the POCC expects from the team What the team can expect from the POCC Technical Develop initial prototype Key tests to derisk the technology Conduct in-field testing Mentors and coaches Funding for technology development Funding for SBPI/STTR proposal development and conference travel Access as needed to 33Students and interns for design and testing 33Technical program managers 33Testing and characterization facilities Business Market assessment Competitive landscaping Customer interviews Business plan development Pitch development Seek out potential investors SBIR/STTR applications (if relevant) Identify potential additional entrepreneurial team members Mentors and coaches Financial support in addition to project funds for business and external assistance Access as needed to 33Students and interns for business and marketing support 33Educational panels and boot camps 33Networking with VCs, industry, and entrepreneurs 33Subsidized tax, law, accounting assistance Table 1 provides an overview of the mutual expectations, that is, what does the POCC expect from the teams and what can the teams expect from the POCC in terms of technical as well as business aspects. THE FIRST PBNY COHORT Figure 2 shows the timeline of the first project/ team PBNY selection cycle. After a series of outreach and marketing sessions at the partner institutions, in which the objectives of the POCC and the expectation for prospective applicants were presented, the window for two-page preproposal submissions opened in late September of 2013. Similar to the NSF I-Corps teams, all proposing PBNY applicants were encouraged to have a Ph.D. student or postdoc on their team to serve as the entrepreneurial lead. The key components of the brief preproposal included: An abstract describing the fundamental innovation of the technology and the envisioned product. A description of the specific problem addressed by the new technology, for example, energy efficiency, consumer energy demand, production of renewable energy, etc. The novelty of the new technology, application, or process or what existing technology will be improved significantly. A list of the most important technical and business milestones to be achieved with the validation funding. Figure 2. Timeline of first PBNY cohort.
220 Becker ET AL. Experience of the team. A rough budget outline and budget justification. The IP protection status of the new technology. We received 48 preproposals, which were reviewed and evaluated by a panel of judges comprised of representatives from academia, industry, the VC community, and entrepreneurs. Judging criteria for both the preproposals and the subsequent full proposals included market potential, feasibility of technical and business milestones, team qualifications, market potential and impact on market, feasibility of budget, and strength and scope of IP. Of the 48 preproposals received and evaluated, 14 teams were invited to submit full proposals; however, one team dropped out so that a total of 13 teams moved to the full proposal round. The teams were given 2 months to prepare the full proposals, and each of the 13 teams was paired with at least one mentor. In the full proposals, the teams were asked to elaborate on the points covered in the preproposal and provide more details about the envisioned product, the specific technical aims and milestones, an assessment of the target market and the competitive landscape, and challenges to commercialization. Key evaluation criteria also included the qualification and commitment of the team and the envisioned interaction with the assigned mentor(s). The mentors met regularly with their assigned team to review and provide detailed feedback on the full proposal application and the pitch presentation. For the teams selected for funding, the mentors are expected to stay on in order to provide critical guidance on how to meet the business and technical milestones throughout the technology validation phase, such as: Customer discovery. Completing and refining their business model canvas (business plan). [The concept of the business model canvas was first proposed by Alexander Osterwalder in his Ph.D. thesis at the University of Lausanne (9).] Completing and refining their financing strategy and investor pitch. Building out their team. Sales and go-to-market strategies. Marketing. Technology development and resource acquisition. Assistance with planning for manufacturing. Similar to the I-Corps program, teams are required to get out of the building and talk to potential customers, partners, and other contacts to identify weak points and further refine their business model. The mentors are a key part of this process, as they both help teams identify the best contacts to pursue and make introductions to those contacts when possible. We note that the mentors may not obtain financial benefits from the competition or any business opportunity that may arise from their involvement with the team, and they may not discuss forming any business or financial relationship with a team until after the initial award period is concluded. All 13 teams attended a 2-day mini boot camp based on a streamlined Lean Launchpad curriculum. Teams were required to present the first iteration of their business model canvases to their peers. The full proposals were reviewed and evaluated by a subset of the judging panel. Based on the feedback of the judges, we allowed all 13 teams to move on to the next stage. On March 5, 2014, the 13 teams presented their 12-min pitches. The judges were allowed to ask a few clarification questions after the pitches, but the teams were kept to a strict 20-min total time limit. Notes taken by the judges and verbal comments recorded during the closed-door judging sessions were provided verbatim to the teams (without disclosing the identity of judges). The winning projects receiving up to $150,000 in validation funding grants were announced on May 12 in a press release by New York Governor Andrew M. Cuomo (3). Because of the contractual, fiscal, and administrative separation of the two POCCs, the NYU POCC made awards only to teams from NYU and CUNY, and the Columbia POCC made awards only to teams from Columbia and its partner institutions. The NYU POCC made five full awards to three NYU teams and two CUNY teams, whereas the Columbia POCC made five full awards to two Columbia teams, two Cornell teams, and one SBU team. In addition, the Columbia POCC made several partial awards to projects that were not at the same level of maturity and development compared to the other 10 projects, but that were deemed to have a high potential of getting there, so that some support was Financial planning/modeling. warranted. Teams began their projects in June 2014
PowerBridgeNY 221 with a partial release of their funding. They must complete at least two technical milestones and three business milestones in order to receive the next tranche of funding. METRICS OF SUCCESS, ANTICIPATED IMPACT, AND A WORD OF CAUTION An important goal of the NYSERDA investment in the POCC program is to establish long-lasting, sustainable initiatives. The intent is for the program to demonstrate sufficient value to the managing institutions that they will continue to operate them into the future. A sustainability plan is due to NYSERDA in the second half of 2015. In an effort to strengthen the case for continued institutional support beyond the NYSERDA funding period, the PBNY team, in consultation with NYSERDA, developed a set of metrics to measure the performance of the POCC. Metrics items important to NYSERDA include: Number of applications for grants and increase in number in subsequent solicitations. Number of projects funded and quality and impact of project deliverables. Progression of technology readiness level of projects. Number of new startup companies formed and selected for follow-on ignition grants and related jobs created (in New York State). Amount of private investments leveraged. Number of visits and regular users to online clearinghouse. Qualitative assessment of active participation by industry and investor communities in POCC activities and events. Metrics items important for the participating institutions include both revenue-generating items and items that enhance the academic environment, visibility and peer recognition, and degree and nondegree program offerings: Number of new IP licenses and amount of license revenue. Number of new patents filed. Number and amount of new grant and contract Number of participants in related educational programming. Extent to which the POCC shapes the clean energy-related research activities at the partner institutions. Increase in number of university graduate students and postdocs employed by startup companies. The measures listed above are based on commonly held indicators of successful economic development policies, particularly as they pertain to POCCs [see, e.g., the Ewing Marion Kauffman Foundation 2008 Report on Proof of Concept Centers: Accelerating the Commercialization of University Innovation (5)]. Ultimately, the most direct measure of success of PBNY will be its economic impact on New York State, the collective impact from the number of technologies resulting in startups that were selected to receive follow-on ignition grants for company formation in New York State, the number of jobs created by these startups as defined and measured according to standard economic impact studies (8), and the amount of private sector investments into the startups. PBNY tracks the metrics above through the quarterly progress reports and annual metrics reports submitted to NYSERDA. Lastly, we want to draw the reader s attention to a hypothesis put forward by Ron Adner in his recent book, entitled The Wider Lens: A New Strategy for Innovation (1). He argues that even after a team of innovators have aligned their product with customer expectations, a successful venture might require more than just an execution focus, that is, a focus on what it takes to deliver the right innovation on time, to specifications, and ahead of the competition. Two other factors are important that can determine the success or failure of a particular innovation, namely, 1) timely coinnovation, that is, the question of what other innovation needs to be brought to market for a specific innovation to be relevant and matter and 2) the existence of an adoption chain, that is, the issue of who else needs to adopt a specific innovation before the targeted end customer can realize the full value proposition. We can well imagine that the notion of such a broader innovation ecosystem is quite applicable to the clean energy-related technology sector, where energy generation, energy storage, energy transmission, energy distribution, energy consumption, energy policy applications in the Cleantech field. and privacy issues, and regulatory aspects form an
222 Becker ET AL. intricate net of inter related facets whose interplay can impact the success or failure of an innovation in the marketplace. CONCLUSIONS PBNY is the combined effort of the NYU Polytechnic School of Engineering and Columbia University (in collaboration with several partner institutions in New York City and on Long Island) to operate a NYSERDA-funded, clean energy- related POCC that creates an early stage lab-to-market support structure to enable the development and validation of promising clean energy technologies emerging from research laboratories and ultimately lead to the formation of startup companies located in New York State. Some key observations from the first PBNY cohort include: There is significant untapped early stage technological potential in Cleantech across the NYS downstate partner institutions as evidenced by almost 50 preproposals. Turning technological potential into a viable technology requires not only a robust and innovative technology, but perhaps even more so a team that collectively has the appropriate balance between technical subject matter expertise, business experience, and entrepreneurial drive. Experienced mentors who can develop a good chemistry with the team and work hands-on with the team are critical during the technology validation phase. Conveying the importance of customer validation of an invention or innovation to an academic inventors is a tough sell to accomplished faculty. At the time this article is written, the funded teams in the first POCC cohort are about 3 months into their projects. In general, we observed that teams find it easier to meet the technical milestones than the business milestones, which is not unexpected. These observations will be invaluable as the PBNY prepares to solicit preproposals for the second POCC cohort. ACKNOWLEDGMENTS: We acknowledge the support of the campus representatives Christopher Snyder (NYU), John Blaho (CUNY), Donna See (Columbia), Bill Worek (Stony Brook University), Bethany Koi (Cornell NYC Tech), and Pat Looney (Brookhaven National Lab) in identifying promising technologies and working with their respective teams and the PBNY team. The authors declare no conflicts of interest. REFERENCES 1. Adner, R. The wider lens: A new strategy for innovation. New York, NY: Penguin Group Publishing; 2012. 2. Arkilic, E.; DasGupta, B.; Voyles, R. I-CORPS: NSF innovation corps. Retrieved October 2014 from http://www. nsf.gov/attachments/121806/public/i-corps_presentation. pdf 3. Cuomo, A. M. Governor Cuomo announces winners of PowerBridgeNY contest to drive development of clean energy products. Retrieved October 2014 from https://www. governor.ny.gov/press/04122014-powerbridgeny-cleanenergy 4. Gompers, P. A.; Lerner, J. The money of invention: How venture capital creates new wealth. Boston, MA: Harvard Business School Press; 2001. 5. Gulbranson, C. A.; Audretsch, D. B. Proof of concept centers: Accelerating the commercialization of university innovation. Kansas City, MO: Ewing Marion Kauffman Foundation; 2008. 6. New York State Energy Research and Development Authority. About NYSERDA. Retrieved October 2014 from http:// www.nyserda.ny.gov/about.aspx 7. New York University School of Engineering. Incubators. Retrieved October 2014 from http://engineering.nyu.edu/ business/incubators 8. New York University School of Engineering. Incubators: Economic impact study. Retrieved October 2014 from http:// engineering.nyu.edu/business/incubators/impact 9. Osterwalder, A. The business model ontology: A proposition in a design science approach. Lausanne, CH: University of Lausanne; 2004. 10. Ries, E. The lean startup: How today s entrepreneurs use continuous innovation to create radically successful businesses. New York, NY: Crown Publishing Group; 2011.