Michigan State Creates Spartan Innovations to Launch Spin-Offs

4/27/12Follow @XconomyDET

Michigan State University is stepping up its efforts to turn research into viable startups with the newly formed subsidiary Spartan Innovations, which will help the university’s faculty and students form spin-off companies based on technology developed at MSU, while also building the local culture of entrepreneurship.

“Our goal is to accelerate the formation of companies and optimize MSU research innovations,” says Charley Hasemann (pictured above), executive director of the MSU Innovation Center. “We want to pull together all the pieces that cause entrepreneurial excitement.”

The move to establish an entity to bolster MSU startups came after, as Hasemann describes it, years of “the doldrums.” MSU’s tech transfer office had been mired in a “leadership transition” that had persisted since it was established in 2007 as executive directors came and went.

Hasemann says Spartan Innovations will provide five key resources: university-wide entrepreneurship education that engages the community, stipends to support student startup business participation, CEO mentors-in-residence to help manage startups and take MSU technology to market, access to a network of external angel and early-stage investors, and gap funding from the MSU Foundation to support the earliest stages of MSU technology development.

“We have to have a network of folks to help with business development—that talent piece is really important,” Hasemann says of the five-pronged approach. “The gap funding will make the startups more attractive to VCs because we’ll have some skin in the game ourselves.”

Hasemann says he traveled across the country looking at other university programs to find which components were most successful. Spartan Innovations is taking the lead from the University of Utah’s technology commercialization strategy.

Spartan Innovations will join MSU Technologies and MSU Business-CONNECT in the MSU Innovation Center, which is located in a building in downtown East Lansing that used to house Barnes & Noble. Also located there is the City of East Lansing’s Technology Innovation Center (TIC), a business accelerator for tech startups, as well as The Hatch, a joint program between the TIC and MSU designed to provide a collaborative working environment for MSU student entrepreneurs working to develop their own business ventures. “It’s the center of gravity for commercialization and entrepreneurship in East Lansing,” Hasemann says of the Innovation Center. “I think we’re the only ones physically co-locating everything to maximize resources and avoid becoming siloed, and I think that’ll make us successful.”

Hasemann says MSU is currently in the process of trying to find the person who will lead Spartan Innovations and help direct the approximately $350 million the MSU Foundation has in the bank to reinvest back in the university. Hasemann says the foundation will never take on the role of angel investor, but will come in as a “ride along investor” where it sees the potential for a significant return after seed money is provided by someone else.

The executive director position will report to a board made up of Hasemann and two members of the MSU Foundation board—a structure that was intentionally set up to mimic a corporate board and reinforce the idea that Spartan Innovations is a stand-alone entity operating outside of the university. Hasemann expects a final hiring decision no later than June.

Hasemann also describes the perfect qualifications for the mentors in residence: experienced people between gigs who know how to take an idea to market, have worked with startups, and are looking for their next opportunity. Ideally, Hasemann says, they’d find startups in the program that they’d deem worthy of investment.

Hasemann says that with $500 million total in research funding, MSU has unique opportunities in plant biology, plant engineering, and materials—areas in which it already leads. “In 1855, it was about how do we help farmers?” he adds. “In 2012, it’s about how do we get graphene into the market?”

But the overarching goal of Spartan Innovations, Hasemann notes, is to capture and re-create some the entrepreneurial excitement that has boosted other cities in Michigan. As Hasemann puts it, ”Everyone’s not going to drive to Detroit and Ann Arbor for all of this stuff. We need a local cycle of entrepreneurial events that people can count on. If [revitalization] doesn’t get exciting, it doesn’t happen.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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