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Vanderbilt venture developer notes 'disconnect' with Venture Capital
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Vanderbilt University's technology-commercialization startups have not enjoyed particularly strong connections to Tennessee venture-capital sources.

On Sept. 11, VU New Venture Development Manager Christopher Rand told a group of biotech executives, investors and industry observers that Vanderbilt has made 27 founding investments in startups since 1999, when the university created a $10 million Chancellor's Fund for such purposes.

Among other benefits, Vanderbilt technology transfer and commercialization efforts produced more than $30 million in royalties and licensing revenue for the university, during a recent five-year period.

Rand told VNC, while Vanderbilt has not made any new investment in a porfolio company in about two years, the Office of technology transfer and commercial development continues to work with campus-bred startups and its existing porfolio of 25 active companies.

Rand explained that on just three occasions have its upstart portfolio companies attracted investment from Tennessee-based venture-capital firms, athough, he added, some of the portfolio firms have attracted both Tennessee angel investment and VC from other states.

During his presentation last Friday, Rand cautioned against making a "huge generalization" in interpretation; but, he also suggested the numbers are indicative of a sort of "disconnect" between startups spawned by campus researchers and the readiness of instate VCs to participate.

In addition, said Rand, during the past five years, eight of 17 VU startups have left the state, to reside elsewhere.

Rand told VNC, "It is probably not realistic for 100 percent of the [VU] portfolio to remain in Tennessee, for a variety of reasons. We do, however, want as many of our companies as possible to remain in the state."

He cited as an example of startups that have "resisted the tug of other locations" Pathfinder Therapeutics, a provider of image-guided surgery technology and services.

Rand said Vanderbilt was a founding investor in Pathfinder, "helped write the initial [Pathfinder] business plan, and helped the company raise capital over time," working closely with Chief Operating Officer Jim Stefansic and founder Prof. Bob Galloway, in order to keep the company here.

In contrast, Rand noted that Molecular Sensing is "a company whose founding CEO lived in Silicon Valley and it made a great deal of strategic sense to locate the company there. This is a decision that the faculty member, and VU were comfortable with."

Rand and other Vanderbilt executives have been increasingly stressing the university's interest in local partnerships, as when a few months ago VU announced an expanded partnership between the VU Dayani Center for Health and Wellness, and the Aegis Health Group, through which Aegis uses Vanderbilt-developed e-health technology to support extension of its hospital-based wellness program into employers' workplaces in the community.

Rand noted that while the state's venture-investment infrastructure is relatively well developed for startups in the healthcare services and business services arenas, ventures in pharmaceuticals and other life-science sectors face enormous challenges as they attempt to bridge the gaps between research and seed-stage development, and then between seed and venture-capital investment.

Rand and many others may be hoping that gaps in the state's capital-resources continuum will be plugged by new venture funds that are being spurred by the impending lift-off of the state's TNInvestco capital-formation program. (Also: Related blogpost.)

Before joining OTTED, Rand earned an MBA at Vanderbilt's Owen Graduate School of Management. Earlier, he was with PricewaterhouseCoopers in its corporate valuation consulting group, which provides business and intellectual property valuation and consulting services.  He earned his bachelor's in accounting at the University of Notre Dame.

Rand's Sept. 11th comments were delivered during the annual meeting of the Tennessee Biotechnology Association. ♦ 

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Tags: Aegis Health Group, angel capital, Bob Galloway, Christopher Rand, commercialization, Dyani Cener, intellectual property, Jim Stefansic, licensing, Molecular Sensing, Owen Graduate School of Management, patents, Pathfinder Therapeutics, PriceWaterhouseCoopers, research and development, royalties, technology transfer, tninvestco, Vanderbilt University, venture capital

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