The Path Toward Commercialization: How Research Can Generate Business Opportunities in Low- and Middle-Income Countries
The challenges of global energy access and climate change are closely intertwined, enormous in scale and complexity, and increasingly urgent. While there are many differing opinions and approaches as to how to tackle these issues, there is widespread agreement on one thing: Innovation is critical.
Research universities and labs around the world are important engines of innovation that play a vital role in business development: In the U.S. alone, they generated almost half a million inventions, launched over 15,000 startups, and contributed up to $1.7 trillion to gross industrial output from 1996 to 2017. Researchers, funders and other stakeholders naturally hope their research will have real-world impact, and commercialization is one path for doing so. Indeed, the successful commercialization of products or services is a convincing indicator that the research has an impact. Though the commercialization of research can lead to technology advancements and business model innovations across sectors, the energy sector presents unique opportunities, given the growing global focus on boosting renewable electricity access to address the climate crisis.
Supporting the Commercialization of Research for LMIC Business
At large institutions such as the University of Michigan, where our organization, the William Davidson Institute (WDI) is affiliated, there are many resources to support the commercialization of research. Examples include technology transfer offices to provide intellectual property expertise, mentors-in-residence to provide sector and business expertise, law school clinics to provide legal support to entrepreneurial ventures led by students and others, pitch competitions to provide training and visibility, grants and prizes to provide startup funding, lab space for prototyping, and more. Such resources are invaluable for pre- and early stage commercialization efforts, and many of them are available at no or low cost to researchers – often including both faculty and students.
Successful commercialization also benefits universities, in the form of revenue from licensing agreements, visibility, talent attraction and more. So it’s no surprise that the number of patents and startups spun out of universities and research institutions (including U-M) has increased. But there are limitations. In our experience at a U.S.-based institution, there is a gap in expertise and resources related to low- and middle-income country (LMIC) markets – and that is a role we aim to fill at WDI, as part of our work solving for business in LMICs.
One of the ways we do this is by supporting the commercialization of a small-scale biomass gasification technology that converts agricultural waste into electricity and biochar (a carbon-rich soil amendment). This circular solution, developed by U-M professor Jose Alfaro, can bring economic, environmental and social benefits to small farmers and others in the agricultural value chain in LMICs. It can also be connected to a mini-grid, which can reduce costs and help improve the reliability and resilience of the local electricity supply. Alfaro discusses the technology in the video below:
WDI has identified and analyzed promising markets for this product, conducted financial analyses and models, and connected with potential commercial partners and customers. Several of the resources mentioned above have come into play during the commercialization process, which has also been supported by a grant from the Michigan Translational Research and Commercialization (MTRAC) Innovation Hub for AgBio at Michigan State University. We are also launching a similar commercialization project with U-M faculty to develop a distributed fertilizer product, which is also carbon-neutral.
Four Key Lessons for Commercializing Research
Based on our experiences in these and other projects, we’d like to offer some lessons we have learned for others – both within or beyond the university setting – who are interested in commercializing research in LMIC markets:
- Develop a commercialization roadmap: It is important to embark on the commercialization journey with the right type of technology or innovation that addresses a real market need in LMICs. The key to identifying technologies with a high market potential in these countries is to ensure they take local needs, challenges and capabilities into account. For example, the gasification product we’re supporting has the ability to generate power using coffee or other agricultural waste as feedstock. This is a clear business play in several LMICs – particularly in African and Latin American countries that lack reliable grid power and have access to this feedstock. Identifying the intersection between a country or region’s market needs and technology capability is critical to driving the growth of the product. Additionally, the science behind the technology or innovation should be fairly well-established – i.e., the product should be based on proven scientific and technological principles – otherwise, the commercialization effort is unlikely to bear fruit. A combination of business and domain expertise and experience can help researchers assess these issues. To that end, we have found it helpful to develop a roadmap that articulates the entire commercialization process, determining when different types of expertise and effort are needed, when it is appropriate to move to the next phase, and when it makes sense to go back and iterate to make the best use of limited resources. The value of a roadmap is not limited to the commercialization process, but understanding the market needs in LMICs is key to defining the product specification that leads to successful commercialization.
- Seek out local partners: The importance of local partners is likely well-understood by the NextBillion audience, but its value to the commercialization of research cannot be overstated. This is especially true for researchers and entrepreneurs based in the U.S. or other non-LMIC settings and looking to commercialize in LMICs. The realities of doing business are, of course, very context-dependent, at the country, region or even community level. Local partners can play a key role in navigating regulatory issues, setting up supply chains, connecting with customers and adapting to cultural norms. It’s also important to cultivate partnerships that are long-standing, multifaceted and mutually beneficial. In this way, the commercial venture can be better poised for long-term success and greater real-world impact.
- Explore diverse funding mechanisms: One of the many challenges startups face is the “valley of death”: the precarious period between developing an early-stage concept and proving it enough to attract venture capital or other investment funding. Some of the research-oriented funding and resources mentioned above can help to bridge part of this valley. But in our experience, especially for technology innovations targeting LMICs, more and different resources are needed. Development finance and philanthropic capital can play an important role here, when the business concept is aligned with the impact priorities of the funder. Indeed, there is more and more of this type of funding available, especially in the energy sector, and it fills a critical gap by identifying those solutions that are viable and scalable. Additionally, traditional capital that is more focused on financial return is also growing in LMICs – e.g., venture capital funding for African startups was at an all-time high in 2021 and is expected to continue growing dramatically. Having a strong business model is crucial to attracting these resources.
- Establish rules of engagement: WDI’s approach to commercialization involves close collaboration with the faculty/researcher/technical team, in which we each bring our own expertise and engage in different types of activities at different points in the process. Aligning on goals and setting clear expectations on roles, responsibilities and levels of effort very early in the process is critical to success. While we follow a clearly-defined framework in this process, adjustments and adaptations are always necessary along the way – and these changes are much easier to navigate with a strong foundation for collaboration and a shared understanding of the big picture.
Are you involved in research with commercial potential – or are you working in an early-stage research-based venture – in the energy sector? If so, we welcome you to share your perspectives on these topics, either on social media or by contacting WDI’s energy sector team. You can learn more about our work and reach us here.
NOTE: This work is supported under the MTRAC Program by the State of Michigan 21st Century Jobs Fund received through the Michigan Strategic Fund and administered by the Michigan Economic Development Corporation. The William Davidson Institute is NextBillion’s parent organization.
Dana Gorodetsky is a Senior Project Manager with a dual role on the William Davidson Institute (WDI)’s Grants Management and Energy teams; Sachin Nijhawan is Managing Director and Partner at People Assetz and a WDI Research Fellow.
Photo courtesy of WDI.