Rose-Hulman Ventures Boosts Indiana Startups With Student R&D Teams

[Editor’s note: This story is part of a series examining tech transfer and innovation initiatives at Indiana colleges and universities.]

A temperature-controlled, pressurized dispenser of liquid chocolate; a WiFi-enabled garbage bin that sends electronic alerts when it needs emptying; a medical tool that helps guide placement of other equipment during brain surgery.

Those items are quite dissimilar, but one common thread is all are complex products that required some serious engineering work to come to fruition. Another link between them? Undergraduate students performed much of that engineering work.

That might surprise some people, but not those familiar with Rose-Hulman Ventures (RHV), a department within the Rose-Hulman Institute of Technology, a top-ranked private engineering college located in western Indiana. RHV operates an engineering consulting business that serves as an outsourced research and development team for high-tech companies commercializing ideas in medical devices, software, manufacturing, agriculture, and more. Trade Secret Chocolates’ chocolate “keg,” eCeptacle’s smart garbage bin, and Nico’s brain tool are just three examples of the projects RHV has worked on for clients, which include startups, large corporations like General Electric (NYSE: GE), research universities, and other organizations.

RHV has seven full-time engineers on staff who have industry experience and oversee the organization’s projects. But Rose-Hulman students handle a lot of the designing, creation, and testing of products, says RHV vice president Elizabeth Hagerman. RHV typically employs 30 to 50 student interns at any given time, she adds.

“We’ll hire all the way from freshman to senior-year students,” says Hagerman, who is also an Xconomist. “That surprises people when they see the complexity of the projects. We’re competing with other engineering consulting firms. The real key is with proper project management guidance you can take an inexperienced student and help them perform to a high level.”

Rose-Hulman certainly isn’t the only higher education institution to experiment with programs that let undergraduate students build real-world products and collaborate with industry. Related initiatives include The Commons in Wisconsin, for example.

But RHV has an interesting and unusual approach that has helped turn it into a key contributor to Indiana innovation and the state’s startup cluster over the past 16 years.

“We do have quite a different model than large research universities do with tech transfer,” Hagerman says. “But I think it’s been a nice complement.”

Indiana University, for example, has tapped RHV’s expertise for a number of projects in the past decade, mostly building prototypes of medical devices conceived by IU researchers, says Tony Armstrong, who leads IU’s tech transfer arm. The institutions have recently started collaborating more on software products as well, Armstrong says.

The collaboration makes sense for IU, which doesn’t have an engineering school on its flagship Bloomington campus. RHV brings product development and manufacturing know-how to the table, and it can turn products around quickly, Armstrong says.

RHV has “helped us accelerate the development of some of the ideas we have,” says Armstrong, an Xconomist. “They’re outstanding, the work they do. It’s a great educational experience [for Rose-Hulman students], and for us, we get a tremendous product.”

RHV competes with professional engineering firms, some of which are larger operations with more experience. Hagerman says RHV sometimes wins projects because the client graduated from Rose-Holman Institute or has some other tie to the school. Sometimes clients choose RHV because it generally has below-market rates for its services. “That’s not to say that we’re cheap,” Hagerman adds. “Many of our clients, especially the startup clients, are very careful about their finances anyway.”

But the main differentiator for RHV, she says, is that it’s willing to tackle projects that traditional engineering firms skip.

“We’re a little bit more daring in some of the projects we’ll take on,” she says. “A lot of our projects are still in the discovery stage. You might have a great idea, you might even have an initial prototype, but you might not have in-house design resources.”

RHV launched in 2000 with a grant from the Indianapolis-based Lilly Endowment, Hagerman says.

“In the original days [of RHV], there was also an investment arm, where we would invest in startup clients either through in-kind work or actual dollars,” Hagerman says. “A few of those had a good payoff.”

Those investment returns were pumped into a small endowment for RHV. Between those funds and revenue from clients, RHV typically breaks even in its budget, Hagerman says.

But RHV stopped investing in startups around 2004, partly due to some leadership changes at the institute, Hagerman says. The shift in RHV’s strategy happened before she joined the organization (in 2012), and she wouldn’t discuss it in further detail. (Meanwhile, Hagerman says the institute has separately invested in one startup in recent years—Nico, the brain surgery device firm.)

Hagerman says RHV officials frequently get asked whether they’ll start investing in startups again. “We don’t have the [investment] personnel structure set up anymore,” she says. But “we haven’t closed the door entirely.”

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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