SDSU researchers find valuable partner in venture capital firm
Most new small new business owners will no longer have their business after four years.
A recent invention by College of Pharmacy Associate Professor Omathanu Perumal, right, shown here in his lab with his graduate student, Satheesh Podaralla, who is one of the lead researchers on this project. It has developed into the start-up company Tranzderm Solutions, which is identifying new markets for nanoparticles that are derived from zein, a protein in corn. The company is among several in the South Dakota Innovations portfolio.
Research from the U.S. Bureau of Labor Statistics found that only 44 percent of new businesses were still in existence after four years. The reasons are as varied as the businesses themselves—under capitalized, poor planning, and lack of guidance.
However, university-based start-up companies have a 68 percent ten-year survival rate, and a number of SDSU researchers and students have discovered a way to connect their work to the marketplace, and even have capital, but they are in search of a different type of support.
“One area that they are short on is human capital—experienced industry professionals to serve on a company’s board of advisors or even as simple as opening up networks for these companies,†says Mark Luecke, chief executive officer of South Dakota Innovation Partners.
The early-stage venture capital firm focuses on research commercialization at SDSU and other research institutions in the area.
The limited liability corporation has offices in Brookings and Sioux Falls. Its board of managers includes Van Fishback, vice chairman of Fishback Financial Corporation; Aelred Kurtenbach, Daktronics board chairman; and SDSU President David Chicoine.
“We are providing investment capital and business-development support on a milestone basis to reduce risk for our researchers and later-stage investors,†Luecke says.
Among the companies within the South Dakota Innovation portfolio is Tranzderm Solutions, which focuses on enhancing the delivery of cosmetics and pharmaceuticals into the skin for the treatment of dermatological diseases and other conditions.
Tranzderm has been working with South Dakota Innovation Partners since 2010.
Two years earlier the University filed for a patent on behalf of the work of Omathanu Perumal, an associate professor in the Department of Pharmaceutical Sciences. That alerted Luecke to the commercial possibilities from Perumal’s research.
Through funding from South Dakota Innovation Partners, Tranzderm has been able to hire a postdoctoral researcher and an undergraduate research assistant to aid Perumal in his work with forming nanoparticles from a protein found in corn.
In addition, advice from independent consultants in the pharmaceutical and cosmetic industry, who were assembled with the help of South Dakota Innovation Partners, have helped shape the research for developing products.
“Academic and industry goals are very different,†says Perumal, who serves as chief scientific officer for Tranzderm. “Academic is looking for basic research. Industry is looking for evidence that this idea can be brought to commercialization.â€
He credits South Dakota Innovation Partners for speeding up what might otherwise have been a lifetime process.
“Most of the research in a university never sees the light of day. Because of South Dakota Innovation Partners, it happened in a very short time because they saw the potential there,†says Perumal, who notes the next step is to partner with an existing company for further product development and commercialization.
He adds, “Already Tranzderm has initiated discussion on licensing agreements with cosmetic and biotech companies.â€
That could lead to contract work for the firm and allow Tranzderm to move operations out of Perumal’s SDSU lab, and establish an independent facility for the company as well as hiring more scientists, which grows economic development in Brookings.
Other companies working with South Dakota Innovation Partners are Medgene Labs, Cyanosun Energy, Prairie AquaTech, YouRx, Integrid Technologies, Line Worker Safety Products, Innovative Wheat Genetics, and NISM.
A majority of the firms tie directly back to research being conducted at South Dakota State University.
Luecke believes that there are alums that would be willing to invest a small amount of time in making these ventures successful.
He cites the work of the Venture Mentoring Service at Massachusetts Institute of Technology. It supports innovation and entrepreneurial activity throughout the MIT community by matching prospective entrepreneurs with skilled volunteer mentors. Groups of three or four mentors sit with a fledgling entrepreneur in sessions that provide practical, day-to-day professional advice and coaching.
The mentors are selected for their experience in areas relevant to the needs of new entrepreneurs and for their enthusiasm for the program.
While the researchers that South Dakota Innovation Partners work with are in South Dakota, that is not a requirement for teaming up with one of their companies.
What is needed is expertise in the firm’s specific disciplines and industry connections that can be made, Luecke says. “We have commercialization projects across the colleges, including agriculture and biosciences, engineering, and pharmaceutical sciences,†Luecke says.
In the real-world classroom of business development, the test can’t be retaken.
“Therefore, companies cannot be slow to move to the next stage of their business plan. An infusion of talented and experienced business professionals or a new connection in the industry could let these companies roll a little faster.
“With the right advisory team in place, these companies will become strategic players in their respective fields,†Luecke says.
Dave Graves
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