Thank you. I'll read my prepared remarks.
Thank you sincerely to the committee for inviting me to share my views today. The subject on the table, technology transfer, is an area where I have deep interest, many years of experience, and a strong desire to see improve.
I've been an entrepreneur and a technology industry participant for more than 25 years. I began my career at IBM in Toronto before moving to the United States in 1997. Since that time I've been a founder of three venture capital-backed technology companies as well as an investor in 38 other companies. In total, the companies I've been a part of have gone on to create more than $2.5 billion in enterprise value.
I moved back to Canada in 2013 with my family to settle here in Ottawa, and I'm currently the founder and managing director Mistral Venture Partners. Mistral is a Canada-based venture capital firm focused on making investments in early-stage Canadian companies, including a number that were developed, at least initially, at Canadian universities.
We currently manage a little over $50 million on behalf of more than 60 investors, and we've made 16 investments to date. One of the main reasons I moved back to Canada from California—beyond the weather, of course—was a personal desire to participate in the entrepreneurial ecosystem in my home country. After working for many years in the United States, it became increasingly clear to me that, for Canada to remain competitive globally, it would be critical that we embrace entrepreneurship and innovation.
Foundational technology developed by university-led research is one of the strongest assets we have to compete in this age of global innovation. Careful consideration of how best to spend public investment dollars should be a top priority for Canada to ensure we remain competitive and growing on the global stage.
In my view, the challenge we have—or better said, the opportunity—is that between $6 billion to $10 billion is spent annually for research initiatives at Canadian universities, while only about $60 million in IP licensing income is received. By contrast, the total licensing income related to technology transfer from universities in the United States in 2015 was $2.5 billion. That's nearly five times as much as Canada on a per capita basis.
The University of Utah was recently ranked the top technology transfer university in the United States by the Milken Institute based on a number of quantitative measures. The most interesting result in my opinion is that they have been able to average $136,000 in licensing revenue for every $1 million of investment over the past four years. I estimate Canada's equivalent metric to be between $8,000 and $10,000 per $1 million of investment spent.
In an effort to propose specific and concrete ideas on how we can improve our system here in Canada, I suggest the following list as a starting point:
One, legislate that a specific percentage of research dollars given to universities be directed solely to technology transfer activities. As a starting point, I would suggest between 0.5% and 1%.
Two, I would share licensing income with the professors and students in such proportion as to attract the brightest minds from a global pool.
Three, I would streamline technology transfer as much as possible across the country to minimize the friction, i.e., reduce the learning curve for market participants to find and buy technology. Specifically, I would create a standard equity template or royalty model and avoid one-off agreements that only seek to optimize returns that are perceived to be of higher value.
Four, I would weave tech transfer success metrics into the tenure decision process, the goal being to attract and retain world-class talent and to focus research on areas of commercial promise.
Five, and maybe this should be number one, measure and publish the results of university technology transfer across common metrics, normalized by the amount of research dollars spent. These metrics might include things like patents issued, IP licences contracted, or the number of start-up companies created. Over time, this market-driven force will more efficiently allocate research spending dollars. The competitiveness of Canadian universities can be measured by their output, patents, licences, and start-ups created relative to the input of research expenditures.
Public and private university research provides fertile soil from which foundational technology germinates. Efficiently nurturing these seeds of innovation is the key to fostering technology-based economic development. Other critical ingredients are necessary as well, including the creation of the highly trained human capital that industry desires, as well as the structures and methods by which innovation can move easily from the lab to the factory.
There are a myriad of ancillary and multiplier effects to foundational research, including the creation of middle- and high-skill jobs through commercialization and technology transfer. This is why your focus on this topic will provide real leverage for the Canadian economy.
Thank you very much.