In my recent post, Betting on the Founder: Why Talent is our Greatest Tech Transfer Asset, I explored why investing in people is the most effective way to move academic innovations out of the lab. While I'm a firm believer in the power of the founder, the hard data and financial trends tell just as strong a story.
Basic science is the lifeblood of a research university. It expands our understanding of the world and seeds future breakthroughs. However, that basic science achieves its ultimate purpose when it improves lives, creates jobs, and generates wealth for both the founders and the institution.
Historically, a dominant path for this translation was traditional direct licensing to large corporations. That pathway still exists today, and many companies continue to license early‑stage university patents. Yet recent data suggest a significant evolution in how the broader market, including venture capitalists and acquiring corporations, value early‑stage research: increasingly, university spinouts are emerging as the central vehicle for commercialization.
The National Data: A Shift in Value Creation
The Association of University Technology Managers (AUTM) recently published its 2024 Licensing Activity Survey, which collects data from universities and research institutions across North America. The findings highlight a clear transition in how university IP achieves commercial success.
Consider these key metrics from the most recent AUTM report:
- A Decline in Traditional Royalties: Income from running royalties dropped by more than 40%, and gross licensing income declined by 24%.
- A Rise in Equity Returns: In the exact same period, revenue generated from equity "cash-outs" (exits) increased by 25%.
- A Strong Research Pipeline: Total research expenditures topped $109 billion, and new invention disclosures increased across the board.
This shift comes down to risk mitigation. By the time a larger company comes in to acquire the startup or partner with it, the core technology has been significantly de-risked. The spinout serves as the essential bridge that translates raw basic science into a validated commercial asset, and the AUTM data reflects a market that is increasingly willing to pay for that progress rather than taking on the early technical risk internally.
What this data tells us is not that patents have lost their value. Rather, it shows that the broader market places a growing premium on the tangible progress a startup achieves by advancing the technology, engaging early customers, and navigating the earliest regulatory hurdles.
The Federal Endorsement: A $6 Million De-Risking Pipeline
If there is any doubt that the market has shifted toward this founder-centric model, we need only look at how the federal government is allocating its research dollars. The NSF and other federal agencies explicitly recognize that basic research requires a dedicated, well funded vehicle to survive the gap between the lab and the commercial market.
As I recently detailed in my blog posts about the NSF I-Corps and Translation to Practice (TTP) programs, federal agencies are providing massive capital injections to support teams as they de-risk their technology.
The metrics and funding scale speak for themselves:
- NSF I-Corps Success: Since its launch in 2012, over 3,000 academic teams have completed the I-Corps program. Over half of those teams went on to form startups, which have collectively raised $7 billion in private capital and over $1.7 billion in public funding.
- The TTP Runway: The new TTP program provides tiered, non-dilutive funding tracks to advance technology readiness. As a result, teams can access up to $3.8 million across three distinct phases.
- Stacking the Capital: When researchers combine I-Corps training, the stacked TTP tracks, and subsequent SBIR/STTR Phase I and II awards, a single academic innovation can receive over $6 million in aggregate, over multiple funding stages in federal, non-dilutive support.
This infrastructure exists for one clear reason. The federal government understands that a startup, driven by a trained founding team, is often the most efficient vehicle for advancing early‑stage technologies and validating specific business needs.
The Venture Capital Multiplier
This $6 million federal pipeline serves one primary function: it prepares startups for venture capital.
VCs generally don't license patents or IP directly. They invest in teams that demonstrate early evidence that they can identify, validate and begin execute scalable business models. While VCs are often allergic to foundational scientific risk, federal funding like SBIR and STTR absorbs that early technical risk, making academic startups a much safer bet.
The data back this up. Research by NYU Stern Professor Sabrina Howell, which is a cornerstone of the National Academies' assessments of these programs, shows that early-stage grants act as a powerful certification for the private market. Her findings indicate that NSF awardees were over 5x as likely to raise angel or VC funding compared to similar companies that didn't receive the award.
The most powerful path? NSF I-Corps → SBIR/STTR → VC
Increasingly, the journey starts with NSF I-Corps. This program uses intense customer discovery to sharpen a team's commercialization strategy. The results are significant: teams that complete I-Corps see a 35% increase in their Phase I SBIR success rate, jumping from a roughly 15% chance to over 50%. As stated above, these teams have gone on to raise over $7 billion in follow-on funding.
The NSF's new Translation to Practice (TTP) program builds on this momentum by streamlining the move from lab discovery to spinout. TTP lowers the barriers for faculty by offering dedicated support for product development, IP strategy and team-building. It positions NYU teams to tap into the same federal validation that multiplies their odds of landing VC funding by 5x.
Aligning the NYU Ecosystem with Global Market Trends
Recognizing that startups are a primary driver of commercialization success, we are focused on intentionally aligning our institutional strategy with these market shifts. At NYU, we are further optimizing our resources to ensure that groundbreaking research has a clear, supported pathway from the lab to the world.
To drive this movement, we are focusing our efforts in two key areas:
- Expanding Investment in Commercialization: Through the NYU Leslie Entrepreneurial Institute and our associated programs, we provide the non-dilutive capital, expert mentorship, and structured support necessary to navigate the high-risk transition from discovery to startup. Resourcing these areas ensures that NYU's research is not just patented, but is actively developed into a market-ready asset.
- Building a More Founder-Friendly Environment: To compete in today's fast-moving economy, we are working toward lowering the barriers to entry for our faculty and student innovators. By continually looking for ways to reduce administrative friction and offering increasingly support for spinouts, we aim to make it easier for our researchers to take the entrepreneurial leap and maintain the momentum required for commercial success.
The Path Forward
We do not need to rely on isolated outliers to see success in this space. Across NYU, faculty, postdocs and graduate students are successfully launching companies that deliver profound societal and economic impact on a daily basis. You can see this momentum in action through our Beyond the Bench series, which features NYU research teams successfully navigating this exact journey from the lab to the market.
This doesn't mean abandoning traditional licensing. It means aligning our incentives and infrastructure so that when a spinout is the right path, our researchers are empowered to take it.
How to Get Started at NYU
If you are a faculty member, postdoc, or graduate researcher looking to explore the commercial potential of your work, you do not have to navigate this landscape alone.
The NYU Leslie Entrepreneurial Institute provides the training, mentorship, and connection to federal funding pipelines like I-Corps and TTP that are necessary to de-risk your technology. Whether you are just beginning to think about a use case or are ready to pursue non-dilutive federal grants, our team is here to help you bridge the gap between the lab and the world.
I encourage you to reach out for a coaching session with a member of our team or explore our upcoming Tech Venture Workshops to see how we can support your journey.
