AZ Furnace Program

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Statewide business accelerator AZ Furnace is offering economic and various other incentives to encourage entrepreneurs to commercialize innovative technologies developed within Arizona’s universities and research institutions. Learn more about the program from Gordon McConnell, Vice President for Entrepreneurship and Innovation at ASU and Brian Sherman, Vice President of Business Development for the Arizona Commerce Authority.

Ted Simons: "Arizona furnace" is the name of a business accelerator that helps entrepreneurs launch new companies that are built around technologies created by the state's universities and premiere research institutions. Here to tell us more about "Arizona furnace" is Gordon McConnell, vice president for entrepreneurship and innovation at ASU. And Brian Sherman, vice president of business Development for the Arizona commerce authority. Give me a better definition.

Gordon McConnell: The joke is that that's the way I feel in Arizona all the time because of the heat. But in reality, we are really use the analogy of a furnace so all the Universities in America, including the ones in Arizona, produce technologies. They patent them and protect them and a lot of them don't get used. So what we are trying to dies the analogy the block of melted at 9 beginnings of a furnace is the patent. Huge potential, not usable in its current stage. We want to put it through a furnace process and at the other end have something that's useful. Ideally, when a startup company, creating jobs and wealth and activity, that's really the idea behind furnace.

Ted Simons: Why is the Arizona commerce authority involved?

Brian Sherman: We spend a lot of time helping technology companies get started at Arizona commerce authority. And this is an opportunity to unlock the latent potential of intellectual property that lives in the state of Arizona, that is in some cases already a state asset. So this is a really important program for us to fund and then wrap as many services around it as we can.

Ted Simons: 400 some odd thousand in seed money?

Brian Sherman: Up to.

Ted Simons: Up to. As far as, I understand there's a competition of some kind.

Brian Sherman: Yes.

Ted Simons: Going on here. Talk to us about that. What is being used in the competition? What's being looked for as far as who wins and losses? What's going on here?

Gordon McConnell: It's open to practical anybody in America. You have to come to Arizona because the winners get six months of activity. We are one of the partners and we have a multitude of partners and Northern Arizona University, our members, dignity health Arizona which includes Phoenix children's hospital, thunderbird, one of the top graduate schools, are members as well. And what we are looking for are teams are entrepreneurs preferably mixed disciplinary, engineering, whatever it is. And they can apply based on one of the up to 200 different technologies that we have on the website. We have taken everything from 3D facial recognition to a potential solution to the west Nile virus. These are all technologies produced in labs by researchers in the state of Arizona, and most of them are actually owned by you, the people, the citizens of Arizona, through the Arizona board of regents and the Universities manage those assets. We are saying, he's all these assets. Here's all these potential entrepreneurs. Let's bring these two together in a unique way that nobody has ever tried to do before.

Ted Simons: It sounds like it's a database of information and research material and studies and such and you have teams looking at what the database and deciding what they can build with it? Correct?

Brian Sherman: That's right. One of the important things that Gordon's team has taken a lead on is looking within that database and taking that intellectual property that is offer described like a scientific abstract, and rewriting that in such a way that it represents business opportunities so help entrepreneurial teams understand the business opportunity and put together a proposal.

Ted Simons: If you put together a proposal, you want to get to how you win and the criteria let's say you won and you get all the goodies there for your team. What's to keep you from saying, I want wait to go to Austin or move my little company over to California? What keeps you here?

Brian Sherman: That's where it's important for us to get involved, all of us, the entire team and bring all the assets we have to bear in Arizona and help those companies commercialize and grow in scale here and it would be crazy to go elsewhere. That's where the entire community is important.

Ted Simons: Do we have a ways to ongoing on that?

Brian Sherman: I think we are there. We have tremendous assets.

Ted Simons: Do we have enough to keep these companies here when they win your contest?

Gordon McConnell: 30% cheaper than California. None of the bureaucracy. You can buy a house. You can find a tech team. Choose resources in the state we never really brought the state together and very much this is about Arizona coming together as an entity and saying we have all these resources. Let's help the entrepreneurial community that we know is here. Let's bring in loads of different partners and that's really drive the whole range of new startup companies.

Ted Simons: How do you pair down the teams? How do you eventually get a winner out of all of this?
Gordon McConnell: There will be multiple winners.

Ted Simons: OK.

Gordon McConnell: We can take probably up to anywhere up to 20 companies potentially. So how many will get first time around? This is an experiment. Hard to know but I would say 10 to 15. And new companies all based on one or more patents. You can pick more than one. There's a menu. There's a lot of complementary technologies, one from NAU, one from ASU or a mixture of the above. Teams of two, three, four, as many people as you want. We have had interest from teams outside the state who are willing to move here for the six months acceleration that's part of the package. But we already know there's interest from outside of the state but we also want people in Arizona whether they are alumni of those institutions, whether it's a clinician in Phoenix children's hot or researcher in ASU's lab or a student in Northern Arizona University, we want them and their connections to form teams, the application process is relatively simple. You don't even need a business plan.

Ted Simons: And I guess conceptually, even if you don't win, quote-unquote, or you don't go too far or if things fall apart, you still got something started here. You still got something going, don't you?

Brian Sherman: We see entrepreneurial teams come together, we see spinoffs of spinouts. That's not uncommon.

Ted Simons: OK. So what kind of timetable we looking at here as far as this particular process?

Gordon McConnell: The competition is open at moment. It's open until the 30th of September. We have had a couple of information sessions and in scale and all of them have had 70 to 100 people turn up, a lot whom we never met before. That's good sign. The last one is on the 19th at 6:00 p.m. Open to anybody who is interested in finding more information. There's also a ton of information on the website we are running on behalf of the state off the ASU.
Ted Simons: Last question. Why hasn't intellectual property, all this opportunity from the Universities and other research institutions, why hasn't this been looked like in a more commercial mind-set in the past? Why?

Brian Sherman: Well, a number of reasons but I think one of them that is definitely being addressed here is that your entrepreneurial teams may not be -- may read the scientific abstract and not see the business opportunity. That's part of it. This is definitely an effort to change the way that technology is licensed and so the transaction is an important part of it, too. This is a game changer.

Ted Simons: That's how you see it as well?

Gordon McConnell: Absolutely. The Universities here spin out 20 to 25 companies a year between the three of them. What we are hoping to do is exponentially increase that number by promoting an active engagement with the entrepreneurial community rather than waiting for a faculty member to say, hey, I think I'm going to take this technology myself that I have developed and run with it. We are trying to change the game. And the other interesting point I think is that we are offering this to the other 49 states. We are as far as we are concerned this is an experiment. So far it looks like it's going to succeed. We will see what happens in a couple of months. We want furnace Colorado, furnace Alaska. Might have to change the name. But we want other people to copy the model and we are open to hearing from other people.

Ted Simons: It certainly sounds encouraging. Thank you so much for joining us. Appreciate it.

Brian Sherman: Thank you.

Gordon McConnell:Vice President, Entrepreneurship and Innovation at ASU; Brian Sherman:Vice President of Business Development; Arizona Commerce Authority;

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