Unleashing the full potential of startups based on university research is increasingly important to the creation of new industries and sustainable jobs. According to a 2010 Kauffman Foundation study, without startups there would be no net job growth in the United States. While existing firms on average shrink their payrolls every year, new businesses add an average of 3 million new jobs annually.
Not all startups are created equal. Those resulting from university research are particularly high growth. In his 2004 book Academic Entrepreneurship: University Spinoffs and Wealth Creation, Scott Shane concluded that university startups are over 100 times more likely to go public than an average startup. It should follow that high growth university startups can attract robust financing.
At the University of Southern California, this seems true. A survey of 39 USC startups showed they raised more than $800 million in the past fifteen years—and more than $380 million of that since 2008 alone. While two companies have contributed over $100 million each to the total over the last 15 years, 18 other companies have raised more than $5 million each.
The funding raised by these startups is being invested both directly and indirectly in high-quality jobs today, and in product development, marketing, and sales that support sustainable job creation tomorrow. Different sources of funding have different motivations, investment requirements, and needs. We believe that better understanding the funding sources of our startups will help us boost startup creation and growth and realize even greater potential to stimulate economic growth.