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The Black Hole

The challenges of crowdfunding academics

Kevin Leland created Halo, a curated fundraising platform for medical research, so that promising discoveries had a fighting chance to make it across the valley.


From Jonathan: Earlier in the year I wrote about needing to fix tech transfer at universities. This post generated a lot of incoming texts, mail, and calls from like-minded persons with similar experiences to mine. Among the more interesting stories shared was one from Kevin Leland, the CEO and founder of Halo, a crowdfunding platform for early-stage research, who has volunteered a post this week. Below is his story:

As a non-academic who reads the news, I was generally familiar with how expensive and time-consuming it was to bring a new drug to market, but what I didn’t know was that the vast majority of these costs don’t come until late-stage clinical trials. Meanwhile, there were hundreds, perhaps thousands, of promising discoveries in a state of limbo – too advanced to be developed at the university but not advanced enough for a pharmaceutical company to shepherd forward. This funding gap in “translational research” is what researchers refer to as the valley of death in drug development. While its causes are complex, one indisputable culprit is a dearth of funding.

I created Halo to raise money for translational research so these promising discoveries had a fighting chance to make it across the valley. To identify these assets, I began building relationships with the office of tech transfer (OTT) at universities, the department responsible for commercializing discoveries made by its faculty. Our pitch was simple – we’ll fund a translational research project that if successful could increase the value of the intellectual property (IP) prior to licensing. That means not only more licensing deals, but licensing deals with better terms, larger upfront payments and higher royalty percentages. That’s what the OTT cares about and how it’s performance is measured.

What I learned was that while universities are home to many brilliant, innovative thinkers, bureaucracy within universities can prevent their innovations from being realized.

The first lesson came while working with a top university to fund a translational research project on multiple sclerosis. The OTT and principal investigator had submitted their application to Halo for a fundraising campaign and our internal evaluation process had begun. During our evaluation of the research project we learned that alumni relations & development (ARD), the corpus in charge of fundraising at universities, would need to be looped in to the fundraising campaign. We saw that as a good thing, but that’s not how they saw us.

Instead, ARD saw Halo and the idea of raising money for OTT research, as cannibalistic to its own fundraising efforts. What if, for example, alumni donated to OTT research instead of the annual giving campaign? Based on this rationale, fundraising is a zero-sum game. Since ARD wields more influence within universities than OTT, our campaign came to a screeching halt.

This was one of several conflicts that arose between OTT, which was trying to fund translational research projects, and ARD, which didn’t see that as part of its own global fundraising mandate. This mindset, however, is not only short-sighted, it’s self-defeating. There is tremendous value and social good that can come from ARD and OTT working together toward mutually-shared goals that further a university’s mission and society at large.

While OTT judges success primarily by licensing revenue generated, the barometer for ARD is endowment size, which is driven in part by its annual giving campaigns targeting alumni. ARD also cares about alumni participation rates – the percent of alumni that donate – since it factors into the all-important U.S. News & World Report College Rankings. Raising money for OTT research, however, does not run counter to these priorities. Rather, quite the opposite.

First, raising money for university research that can improve human health and cure disease can improve alumni participation rates. Even among the most elite universities, less than half of their alumni donate each year. In 2017, the American college with the highest alumni participation rate was Wellesley College at 49 percent. My alma mater, University of Pennsylvania, didn’t even break the top 10. Across all universities, alumni participation is just 10 percent and has been declining over the last decade. At the same time, annual charitable giving has continued to increase and now stands at a staggering $390 billion in the U.S. alone. So what are universities doing wrong?

They’re forgetting a key reason why people donate in the first place – to make a meaningful impact – and donating to your alma mater so it can beat last year’s fundraising goal doesn’t sound very meaningful. Different messages appeal to different audiences, and right now, less than half of alumni find this message compelling enough to open their wallets. Instead, ARD should present alumni with the opportunity to support promising research by its own faculty. If this led to even a small uptick in alumni participation rates, it could have a demonstrable impact on fundraising numbers while also helping OTT fund important research.

Second, by making the cause about improving health and curing specific diseases, ARD can expand its donor base beyond just alumni to include patient advocates and disease populations.

Third, it can grow the endowment. Since universities retain at least partial ownership of IP created by their faculty, downstream revenue from a licensing deal makes its way back into the endowment. The drug Lyrica, developed from a licensing deal with Northwestern, now accounts for nearly 20 percent of the school’s endowment and paid for more than $160 million in financial aid last year. While an exceptional case, university IP is big business. According to the Association of University Technology Managers, university patents have generated more than $30 billion in licensing revenue in the past 10 years and contributed over $500 billion to the U.S. gross domestic product.

Lastly, and perhaps most important, this research can potentially save lives and make the world a healthier place. According to the New England Journal of Medicine, universities and other public service research institutions “tend to discover drugs that have a disproportionately important clinical effect” and are responsible for “virtually all of the important, innovative vaccines that have been introduced during the past 25 years.” Depending on your source, anywhere from 25 to 50 percent of all drugs on the market today can be attributed to university research.

It is the responsibility of senior administrators at universities to help ARD and OTT see this common ground. If universities believe that institutions of higher learning serve a higher purpose, if they believe in introducing more new ideas to the world, if they believe in translating discoveries into impactful patient treatments and not just published journal articles, they need to do a better job of aligning incentives and fostering collaborations between ARD and OTT.

Kevin Leland is CEO and founder of Halo, a curated fundraising platform for promising medical research. Prior to starting Halo, Kevin spent more than 15 years in marketing and business development roles at venture-backed startups and global brands, including IDEO, Edelman, Chicago Tribune and The Wall Street Journal. He has been published or quoted in The New York Times, Forbes, Fast Company, AllThingD, NBC and The Boston Globe. Kevin holds a BA in psychology from the University of Pennsylvania, an MS in journalism from the Medill School of Journalism and an MBA from the Kellogg School of Management.

Jonathan Thon
Jonathan Thon is a serial entrepreneur and founding CEO of STRM.BIO. Before STRM.BIO Dr. Thon founded Stellular Bio where he served as CEO and chief scientific officer. Before Stellular Bio, Dr. Thon was an assistant professor at Harvard Medical School.
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