By Scott Meacham
Copyright © 2019, The Oklahoman
In today’s world, a state’s economic growth demands investment in innovation and high-tech industries — especially for a natural resource-rich state like ours that must leverage our existing resource base to diversify our economy for the future.
It’s a straightforward proposition. If we believe that more and better jobs — opportunities with wages that are more than 70 percent higher than Oklahoma’s average — are desirable, required and achievable, we need to double down on the things that we are doing well and step up our commitment in the areas where we aren’t so strong.
So where is Oklahoma doing well, and where do we need to improve?
Commercializing new technologies into businesses is a three-step process: (1) innovation, (2) proof-of-concept and (3) scaling. Let me start in the middle.
Compared to peer states, Oklahoma has top-tier resources to validate concepts and provide funding and resources for proof-of-concept stage opportunities. Our TBFP Concept Fund has made 142 awards ($12.22 million) to 126 companies, including companies like Selexys Pharmaceuticals, which was acquired by Novartis for up to $665 million, and Novazyme Pharmaceuticals (TBFP was the first investor), the source for a ground-breaking FDA-approved treatment for Pompe Disease.
With TBFP, Oklahoma is more than on the right track; however, to borrow from that great Oklahoman, Will Rogers, “Even if you’re on the right track you will get run over if you just sit there.”
For the past seven years, TBFP has been self-sustaining, but that money is finally running out. This past legislative session, the state reinvested in the TBFP jobs-engine that we know works which should carry the TBFP forward as a resource for our state another three to five years.
However, when it comes to the first and third steps of the commercialization process — innovation and scaling, Oklahoma falls well below our peers.
In a recent “Heartland Study,” published by the Brookings Institute and the Walton Family Foundation, Oklahoma is ranked fourth from the bottom in research and development spending among “heartland states.”
The Governor’s Science & Technology Council’s “OneOklahoma Strategic Plan for Science and Technology 2016” reports that Oklahoma ranks 33rd in granted patents, 36th in R&D expenditures, and 48th overall, in spite of high scores in being pro-business.
Perhaps the toughest Oklahoma statistic is that in the latest round of research funding announced last week by OCAST (Oklahoma Center for Advancement of Science and Technology), only 29 of 155 peer reviewed and approved research applications were funded. We leave future jobs and revenue opportunities on the table when we can only fund 19 percent of research applications that have been validated and approved by third party experts.
When innovation does occur and existing resources are applied to advance technology through proof-of-concept, scaling capital becomes the next impediment.
Referring again to the Brookings/Walton Foundation “Heartland” study, only 5.2 percent of our nation’s venture capital is deployed in the “heartland” and half of that goes to Illinois. Low rates of venture capital, lead to low rates of scaling, which leads to low rates of innovation and venture capital. It is the venture capital “circle of life.”
We have the pipeline of vetted research and validated proof-of-concept deals. We need to expand our R&D funding on the front-end of the commercialization process and find a home-grown solution for later stage capital to scale Oklahoma-grown startups here rather than in some other state. To help solve this later problem, i2E is launching Plains Venture Partners I, a new $25 to 50 million growth equity fund designed to help scale companies that have proven their concept in the marketplace and need capital to grow their proven business model.
As Will Rogers might say if he were here, let’s get off the tracks and get on the train.
Scott Meacham is president and CEO of i2E Inc., a nonprofit corporation that mentors many of the state’s technology-based startup companies. i2E receives state appropriations from the Oklahoma Center for the Advancement of Science and Technology. Contact Meacham at i2E_Comments@i2E.org