Sowing the seeds of UW start-ups

By Bob Roseth
News & Information

The Washington Research Foundation (WRF) is in the business of planting seeds and watching them grow.

The foundation, created in 1981, refocused its mission eight years ago on helping early-stage, technology-based start-up companies with strong ties to the UW and other state research institutions. It established a separate operating arm, WRF Capital, specifically to provide the seed funds necessary for early-stage development.

There are at least two benefits to working with the WRF: Its expertise in nurturing startups and its generosity in returning gains to the UW.

“In some ways, we are like other venture capital firms, but we sometimes are willing to tolerate more risk,” says Ron Howell, president of the WRF. “We know the importance of intellectual property management (creation, protection, and transfer) as well as anyone in this community. We will help an entrepreneur to negotiate terms with any third party for obtaining this intellectual property, and that includes working with the UW. We have several experts, including a top-tier attorney, on our staff who have broad experience in this arena.”

Things move quickly with early-stage start-ups, according to Howell. He says WRF has “frequent conversations with the management team and helps with strategic issues. We can help assure that the business plan is logical. If necessary, we can bring other venture capital firms into the picture. In short, we can help the start-up with all of those crucial decisions that occur at the very beginning.”

Ron Howell, president of the Washington Research Foundation, helps UW entrepreneurs fund their start-up companies. Photo by Kathy Sauber

Typically, Howell says, an entrepreneur has several, but not all of the skills, that are necessary in having a start-up succeed. “WRF Capital can help supply those missing pieces,” he says. “If we don’t have the particular expertise that is needed on our staff, we will find the necessary resources.”

While other venture capital firms also supply start-up assistance, WRF has a unique arrangement with the UW. If the company is successful, up to 35 percent of any gains that are realized by WRF Capital will be passed on to the UW. Last year, WRF disbursed more than $11 million in royalty revenue to the UW, providing about 60 percent of the UW’s royalty income stream.

Over the life of the foundation, it has generated and given about $80 million to the UW. Not only that, but the foundation has made donations to the UW, separate from royalties, including the creation of endowed fellowships, chairs, professorships and scholarship support for outstanding graduate students.

Howell suggests that UW entrepreneurs should want to involve WRF Capital even if other venture capitalists are interested in the start-up. “We are very willing to take minority positions in companies,” he says, “and we frequently work with other ‘angels.’ Our involvement enhances the UW position and can reduce the overall risk.”

Start-ups also may benefit from another WRF unit, the Venture Center. Located on Eastlake Avenue, the center can provide a first home for newly created companies, with good lease terms, high speed Internet connections, conference rooms and administrative support.

“Our first goal in the center is to include ‘mission-related’ companies, those with ties to the state’s research institutions,” Howell says. “We also will provide space to other new companies in which our venture capital ‘friends’ have equity interests. And this year, we’ve created an office for the winners of the Business Plan competition in the Business School.”

The foundation now has close to $50 million in capital, but its investments are all coming out of current income, chiefly from licensing agreements that began more than 15 years ago. Howell and the WRF directors want the foundation to grow to $100 million in investable assets over the next eight years.

That goal will assure Washington Research Foundation of it’s future and give it the size to get into more deals, but most importantly, WRF will make multi-million dollar annual gifts supporting a wide number of research projects, graduate fellowships, and endowed professorships chairs.

For more information, visit http://www.wrfseattle.org, and http://www.wrfcapital.com.

Editor’s note: This is the first article in a series of four about technology initiatives at the University.