The year 2022 may not have been a record-setting year for tech transfer efforts at the University of Michigan. Still, officials say they're charging forward to be part of an elite group of research universities around the country.
Officials in the UM Department of Innovation Partnerships — which works on tech transfer and licensing for early-stage student and faculty-led startups within the university — have a variety of accomplishments to point to in the past year but also acknowledge several key metrics declined significantly year-over-year.
The department released its annual Impact Report on Tuesday.
The $760 million raised by 16 university-affiliated companies in the 2022 fiscal year would make for a “high-watermark” for most universities, said Kelly Sexton, UM's associate vice president for research and innovation partnerships. But at the Ann Arbor-based institution, the capital raised this past fiscal year pales compared to the $1.5 billion raised by 23 startups the previous year. Additionally, revenue the university received from licensing of technology declined more than 50 percent year-over-over in 2022, falling to $20.4 million, according to the report.
In an interview with Crain's on Tuesday, Sexton said year-to-year variances in metrics are common and identifying specific reasons can be tricky. But one metric Sexton noted was the disclosure of inventions at the university, which fell from 502 in 2021 to 433 in 2022, according to the annual reports.
Sexton pointed out that one potential cause for the decline in inventions was the ripple effects from the early days of the pandemic when students and faculty could not work in labs due to concerns about spreading COVID-19.
A key goal for the university, Sexton said, is to keep those inventions at upward of 500 per year, which she said puts UM among the most “elite” research institutions, pointing to the Massachusetts Institute of Technology, Stanford and Cornell as having comparable numbers.
“We view this as really important because the innovations coming out of our office are going to the new therapeutics and medical devices and the great new mobility and semiconductor startups five or 10 or 20 years from now,” Sexton said. “So we need that pipeline to be big.”
The year did bring successes for companies rooted in the university's tech transfer efforts. In March, for instance, Ann Arbor genomic testing software company Genomenon Inc. closed on $20 million in a Series B raise led by Farmington Hills-based venture firm Beringea, with money from other in-state and out-of-state investors, as Crain's reported at the time.
To some extent, the declining year-over-year figures mirror the broader, slowing startup economy nationwide and overseas. As capital markets took a step back throughout much of 2022 due to macroeconomic headwinds, many startups have had to limp along when compared with the more free-flowing days of later 2020 and 2021.
For instance, in the third quarter of this year, funding for venture-backed companies was $43 billion, below the record year of 2021 but still above historical averages, according to the most recent Venture Monitor report from Pitchbook and the National Venture Capital Association.
“The third quarter of 2022 saw a less resilient venture landscape in the US compared with the first half of the year,” the report states. “Deal activity across all stages recorded signs of distress, and the market continued to become increasingly consolidated with fewer exits than at any time in recent history.”
While acknowledging the decline in many key metrics this year, Sexton with UM said there are some indicators that the early-stage invention development work being done in her office has at least some bit of removal from broader economic trends that might negatively affect more established startups.
In the early days of the pandemic, for instance, when venture capital funding largely took a pause, Sexton said biotech companies within the university's tech transfer apparatus still had some success with fundraising.
“I guess at the end of the day, our technologies and our startups are disruptive, and when they're coming out of the university, they're very early stage,” she said. “And that is an economic sector distinct from what's happening on Wall Street or Main Street.”