Flintbox becomes US-owned subsidiary with sale to Wellspring Worldwide
November 23, 2009
An emerging global tech transfer model
Canada's Flintbox Innovation Network has been sold to Pittsburgh-based Wellspring Worldwide LLC, creating one of the world's largest companies devoted to online intellectual property (IP) exchange and associated services. The sale of Flintbox ends its status as a Canadian operation although Wellspring has committed to maintain and expand its operations in Vancouver. Details of the transaction were not disclosed.
Designed to provide technology transfer offices with tools to promote knowledge dissemination, Flintbox is the only innovation database in Canada offering online licensing, early stage research results and patents for licences on a single platform. Earlier this month, it completed its 10,000th licence transaction on its system. Established in 2003 as a spin-off of the Univ of British Columbia, Flintbox is owned by UBC Research Enterprises, a wholly owned, not-for-profit subsidiary of UBC.
Since its inception, Flintbox has been supported by several public funding bodies, including an early financial infusion of $250,000 from CANARIE through its now defunct E-business program. Other supporters have included Industry Canada, Western Economic Diversification, Univalor, Life Sciences British Columbia, Business Development Corporation of Canada, Federal Partners in Technology Transfer and the Natural Sciences and Engineering Research Council. In the past year, however, those public sources have largely run dry with no apparent prospects of continuing support.
"Last year we struggled to find a public agency to take Flintbox on. We ran out of public funding and we needed a sustainable business model, scale and complementary services," says Flintbox president Stephen Smith. "We also needed integration with IP management software tools and consulting services. Then Wellspring came along. It's a perfect complement. They are scientists and they work with 80 universities that don't work with Flintbox and they have an open innovation agenda."
Wellspring initially expressed interest in acquiring Flintbox three years ago and while brief discussions took place at that time, Flintbox expressed little interest in selling. With the collapse of its funding model, however, Flintbox reached out to several organizations that might be interested in taking ownership and Wellspring was the successful bidder.
"Our plan is to maintain Flintbox as a Canadian company that is a subsidiary of a US company. This is a global marketplace. We see this as only a benefit to Canadian universities and Canadian partners," says Wellspring CEO Dr Robert Lowe. "The IP and data will never leave Canada. We will be providing additional customer support and engineering power and will actually greatly expand Flintbox in Vancouver."
The combined Flintbox-Wellspring operation lists tech transfer opportunities from nearly 160 institutions throughout Canada and the US as well as Europe, Australia and Asia.
"Wellspring has an open innovation agenda. They want Flintbox to be free to all academic institutions," says Smith. "It's quite dramatic and an accelerator for what Flintbox wanted to accomplish."
Like Flintbox, Wellspring also has academic roots, emerging from Carnegie Mellon Univ (CMU). Lowe was the founding director of enterprise creation at CMU and taught courses in entrepreneurship and commercialization. Wellspring will use Flintbox to help it realize its objective of becoming the global leader in technology commercialization with a suite of products ranging from training programs and economic research and analysis to business and technology assessment and targeted surveys.
"The two companies have a really good balance of products. We sell the data management system to manage the commercialization of university IP and we also operate our own version of Flintbox called Wellspring Gateway. We service the back end and they service the front end," says Lowe. "The client bases are also totally non-overlapping. Wellspring is strong in the US and Europe and now we're moving into Australia. Flintbox is almost 100% Canadian so we'll be able to form a network across continents and create a global network of universities.
While Flintbox was unsuccessful in finding a domestic buyer, Smith says it will continue to have an enduring and growing role in Canadian technology transfer activities.
"Flintbox will likely go on and thrive as a tool for open innovation for years to come. Unfortunately we could not keep it Canadian. It's not within the mandate of (Flintbox's funding supporters) to run organizations like Flintbox," says Smith. "It's an example of a very innovative organization being bought by a US group to enable it to reach its potential … Open innovation was always Flintbox's objective. A community interest model developed but could not find a receptor for it … It's definitely a win for the Canadian Flintbox community."
While financial terms of the acquisition were not disclosed, Smith says UBC Research Enterprises stands to profit through royalties based on revenues.
wellspring to maintain, expand flintbox in canada
Lowe acknowledges that the sale of a Canadian asset like Flintbox to a foreign entity is always a concern. But the realities of the global marketplace and the emergence of social networking and online platform tools make the combination of the two firms a logical evolution that can produce significant benefits to all those engaged in technology transfer. By combining the services of both firms under an open innovation platform, clients can use a seamless on-line system regardless of location.
"It's a single system that's a combination of a number of sub-systems. All people in the value chain can exchange information on the same system," says Lowe. "Flintbox is a global success story and seven years ago it was unbelievably innovative. There have been a considerable number of technical and social networking developments since then, and we're now ready to develop Flintbox 2.0."
With a staff of 26 (compared to 10 for Flintbox), Wellspring has been profitable for the past five years.