Measuring Knowledge Commercialization A Presentation By Denzil J. Doyle Making Technology Happen TM June 12 th, 2007 Prepared For: Federal Partners for Technology Transfer 2007 National Meeting Halifax, Nova Scotia

Contents: Licensing and Spin-off FamilyTrees Measuring Knowledge Commercialization – The Model The Commercialization Engine Economic Impact Results from the Model Implementation Measuring Knowledge Commercialization: FPTT National Meeting 2007

1. Licensing and Spin-off FamilyTrees Measuring Knowledge Commercialization: FPTT National Meeting 2007

2. Measuring Knowledge Commercialization – The Model

Measuring Knowledge Commercialization: FPTT National Meeting 2007 Measuring Knowledge Commercialization

 Licensing & Cost recovery dollars go to the laboratory.  Highly visible & measurable.  Shorter time frame.  Tax dollars go to the government.  Less visible & measurable.  Longer time frame.  Tax dollars much greater than the licensing and cost recovery dollars.  Taxes typically 20% of sales.  Royalties typically less than 5% of sales.  Cost recovery can conflict with long-term payback – scientists may hoard the technology to provide a test or calibration service that should be delivered by the private sector. Some Things to Note About the Model: Measuring Knowledge Commercialization: FPTT National Meeting 2007

3. The Commercialization Engine

Measuring Knowledge Commercialization: FPTT National Meeting 2007

 The TTO is an amplifier whose gain is controlled by the investment community. - IRAP, VCs, angels, SREDs, corporate treasuries, etc. - No money, no commercialization.  New companies – companies that would not exist without the transfer of people or technology from the lab.  Licensing rates will vary depending on the end use – products, services, or processes.  The cost recovery box may or may not have a multiplier associated with it. Some Things to Note About the Commercilization Engine: Measuring Knowledge Commercialization: FPTT National Meeting 2007

4. Economic Impact Results from the Model

Measuring Knowledge Commercialization: FPTT National Meeting 2007 Source: Estimates by Doyletech Corporation, October CRC Spin-offs – Number of Companies

Measuring Knowledge Commercialization: FPTT National Meeting 2007 Source: Estimates by Doyletech Corporation, October CRC Spin-offs – Annual Employment

Measuring Knowledge Commercialization: FPTT National Meeting 2007 Source: Estimates by Doyletech Corporation, October CRC Spin-offs – Annual Sales

Measuring Knowledge Commercialization: FPTT National Meeting 2007 Source: Estimates by Doyletech Corporation, October CRC’s Cumulative Licensing and Contract Revenue

 If a company pays a royalty of 2.5% on sales of products, its product sales are forty times licensing revenue.  This ratio was used for product-oriented licensees.  For service-oriented licensees, a ratio of 20:1 was used.  For a number of reasons – like a service company cannot develop its own technology so easily.  For the licensing of a process – a factor of 10:1 was used – incremental sales are not usually a priority – efficiency is. Extrapolating From Licensing Revenue to Sales: Measuring Knowledge Commercialization: FPTT National Meeting 2007

 Multiply all Canadian product licensing revenue over some period of time (5 year intervals were used) by forty to get Canadian cumulative sales over that period.  Do the same with Canadian service licensing revenues (using 20:1 multiplier) and with process licensing revenues using 10:1.  Add them all up to get Canadian cumulative sales.  The result is the next slide. The Extrapolation Process: Measuring Knowledge Commercialization: FPTT National Meeting 2007

Source: Estimates by Doyletech Corporation, October Cumulative Canadian Sales (Summary Total)

To Turn this into Employment: Industry Canada  A sales/employee figure of $200,000 was used for all licensees.  The result is cumulative person-years of employment.  See next side. Measuring Knowledge Commercialization: FPTT National Meeting 2007

Source: Estimates by Doyletech Corporation, October Cumulative Canadian Person-Years of Employment (Summary Total)

Summary:  CRC’s 62 spin-off companies are generating $1.6 billion of sales (in one year) and 6,378 in employment.  CRC’s licensing activities have generated $520 million of cumulative sales and 2,602 cumulative person-years of employment over 17 years.  A typical high-technology company generates tax revenues of all types (employee, corporate, GST, EHT, stock options, etc.) of 20% of revenue.  The $1.6 billion of spin-off sales is generating $320 million of tax revenues per year.  The $520 million of cumulative sales has generated about $100 million of tax revenue over the past seventeen years. Measuring Knowledge Commercialization: FPTT National Meeting 2007

5. Implementation

A Model for Assessing the Local Economic Impact of Spin-off Companies:

Making Technology Happen TM Completed By: Doyletech Corporation Project Team: Denzil Doyle, Jeffrey Doyle, and Glenn McDougall Project: Measuring Knowledge Commercialization Federal Partners for Technology Transfer