Text by Paul Tumarkin, Tech Launch Arizona
Brown Foundations' $2.5 Million Challenge Kicks Off Catapult Corp
From laboratories to the marketplace, a new UA program will help companies find success.
Our modern world is changing faster than we can conceive and universities are at the forefront of progress. Often academic discoveries struggle to reach their intended markets, but a new and groundbreaking program launched at the University of Arizona will help ensure its best minds turn their original ideas into viable and profitable companies.
The Catapult Corporation – dubbed "Cat Corp" for short – is an initiative of Tech Launch Arizona established to provide early-stage capital to the most promising startup companies emerging from UA researchers and students. Tucson’s Thomas R. Brown Foundations have pledged to match up to $2.5 million raised to initiate the donor-funded venture capital non-for-profit organization. The eventual goal of the Cat Corp leadership is to grow a $10 million corpus of endowed funds. Cat Corp is designed to be a self-sustaining operation.
Finding innovative ways to bring research to market is a priority of the UA's leadership, as well as of UA community partners. It is also one of the tenants of UA President Ann Weaver Hart's Never Settle strategic academic and business plan.
"Our commitment to expanding the UA's reach means moving outward into our communities," Hart said. "Cat Corp will be a key way we achieve this goal as investing in startups can strengthen Arizona’s economic development for years to come."
But launching a new company takes more than a great idea, talent, and well-researched strategy. It takes money. Without funding to get startups up and running, researchers' years of hard work can remain unrealized. For example, ideas for new cancer drugs or next-generation solar panels might remain just that: ideas.
Enter Cat Corp.
Based on a financial commitment from a lead investor, Cat Corp will analyze the best ventures from university faculty and students each year. An experienced seven-member board of directors will carefully evaluate risk, assess market potential, and engage other potential investors.
"If it doesn't have high promise then we won't do it," said David N. Allen, vice president of Tech Launch Arizona. "This represents a more mature approach to technology commercialization, and it is a unique opportunity for donors to contribute to the commercialization of research and the success of the operation to benefit the university."
Many universities have funding for startups, but Cat Corp is progressive in that the financial proceeds from the sale of a successful startup come back to the UA. It works like this: Venture A is provided startup funds in part by Cat Corp. Venture A matures into a product sales company, is sold, and the proceeds of the sale, based on Cat Corp’s stock, are directed back to the UA Foundation. Based on the return on the original Cat Corp investment, the first $4 million is transferred to an evergreen pool for additional investments. Remaining returns, or anything upwards of $4 million, are then distributed: 15 percent is directed back to Tech Launch; 85 percent goes as philanthropic contributions to a campus college or unit as directed by the donor. Essentially, once the capital is raised from donors, all proceeds benefit university units.
Once funded by Cat Corp, these startups have the potential to grow into significant companies, transforming the local economy along the way. It's a targeted research-to-market strategy that's crucial in a time of exponentially growing technologies and economic competition.
"Some of those companies will be the backbone of Southern Arizona's new economy," Allen continued. "We have other examples of companies from university research that are at the cutting edge of their markets and are significant regional employers."
Sarah Smallhouse, President of the Thomas R. Brown Foundations, agrees. Her father, Thomas, founded Burr-Brown Corporation in 1956. Its legendary launch in a Tucson garage brought semiconductor transistors to the market by using them in their components. In 2000, Burr-Brown Corporation sold to Texas Instruments for $7.6 billion. Sarah believes her father’s legacy of innovation and entrepreneurship is alive at the UA, and that Cat Corp can help replicate his success for others.
"It takes a lot of things to get basic science to the point where somebody can effectively commercialize it," Smallhouse said. "I see Cat Corp as a critical link in the chain to turn a new invention into a business reality."
"For the faculty and students at the UA who have innovative ideas," she continued, "something like this is a huge help and, frankly, motivating. They know if they get their research to a certain point of development, the resources are there to make it a reality."
Cat Corp and initiatives like it are fundamental to both the University's Never Settle strategic plan and also its $1.5 billion comprehensive campaign, Arizona NOW. Both prioritize outreach and community impact. More information about Cat Corp is available online at techlauncharizona.edu. More information about Arizona NOW can be found at arizonanow.org.