How universities are rebuilding Chicago’s economy, one startup at a time.
Below is an edited transcript of John Flavin’s July 26, 2017, remarks to the City Club of Chicago.
There’s an exciting transformation occurring on the South Side today. At the Polsky Center, we’re launching new businesses at the University of Chicago and in the surrounding neighborhood. And we’re home to a thriving and very diverse entrepreneurial community.
But, Chicago and Illinois are still living in an economic crisis. Nearly a decade after the Great Recession, we are struggling to fund our pensions, stabilize our healthcare system, and agree on a budget.
At the root of these problems is a stagnating economic engine — an engine that must be rebuilt if we are to properly fund the social programs that result in greater income equality and improve the lives of the disenfranchised.
What is the University of Chicago’s role in all of this? This week, the Illinois Science and Technology Coalition will be releasing data showing that our universities and the two national labs that the University of Chicago manages — Argonne and Fermilab — are responsible for nearly a quarter of all research and development spending in this state. That’s more than $3.3 billion.
And unlike corporate investments in R&D, academic investments are gaining momentum, growing by 2.6 percent from 2014 to 2015 compared with 2.2 percent growth nationally. It’s the only area where Illinois growth is outpacing national growth.
That’s why we matter.
Through the Polsky Center, the university’s investments in research are laying the groundwork for new tools and new companies — an engine that increasingly will power the region forward for the next century.
My father was a product of the old, industrial engine. For 37 years he worked at the classic Chicago company, Inland Steel. But his work there was building what then defined the cutting edge: massive supercomputers, like the one you may have seen in the movie Hidden Figures.
So many aspects of his professional life are gone. Inland Steel, itself, is gone. And no one spends 40 years at the same company anymore. Meanwhile, I’m getting calls from friends along the lines of: “I’ve been laid off. What should I do? Maybe I should start a business? How do I get started?”
“For our next generation, entrepreneurship will become the Swiss Army Knives of their careers.”
My journey, for its era, was quite unusual. From the day I graduated from Marquette, I was a biotech entrepreneur, working with my brother, Michael, on a drug discovery company we founded, called Medichem Life Sciences. We took Medichem public in 2000 and sold it to Decode Genetics for $84 million in 2002. And we did it again. We IPO’d a second company, Advanced Life Sciences, in 2005.
At the time of the sale to Decode, there were fewer than 10 publicly traded biotech and pharma companies in Illinois.
That remains the case today, fifteen years later. And, frankly, it makes me angry.
While we no doubt experienced enormous success — there’s nothing like seeing your company’s name lit up in Times Square — we also rode out crisis after crisis alone.
For example, in our early days, our landlord evicted us due to the odors emanating from our lab. Then, a fire literally burned down our business. And later, we took a drug all the way to the FDA, only to be told that due to regulatory changes, we needed to do another round of clinical trials, a mandate that was insurmountable.
The University of Chicago has recognized that more and more of its students’ careers will look like mine, including periods in between companies. For our next generation, entrepreneurship will become the Swiss Army Knives of their careers.
That’s why — for the long-term prosperity of our community — the Polsky Center is driving the creation of new businesses at the university and on the South Side.
We are aggressively supporting the next generation of entrepreneurs. Last month, we announced a partnership with Wexford Science & Technology to build 270,000 square feet of lab and office space for startups in Hyde Park. And last year, we announced a $25 million commitment from our endowment to invest in our most successful companies.
When I arrived at the university in 2014 to open a coworking space for both community and student entrepreneurs alike, the University of Chicago already had a thriving entrepreneurship program inside its Booth School of Business.
In fact, the leading concentration at Chicago Booth today is NOT finance; it is entrepreneurship.
During the past 21 years, Professors Steve Kaplan and Ellen Rudnick built that program and its flagship course, the New Venture Challenge, from scratch. Today, the New Venture Challenge is the top-rated university startup accelerator in the country, recognized alongside other notable accelerators, such as YCombinator and Techstars.
Through the New Venture Challenge, the Polsky Center has spawned more than 160 active companies, including three national brands that are headquartered in Chicago: Grubhub, which went public; Braintree, which was sold to eBay for $800 million; and now Simple Mills. Startups in this program alone have returned more than $4 billion in value to their investors.
But here’s a fact few people know: the University of Chicago actually lays claim to more Nobel laureates in the sciences, notably chemistry and physics, than in economics.
And until recently, those two powerhouses — one of commerce and the other of science — rarely came into contact with each other.
If the university was ever to become an unequivocal leader in innovation, one that can remake the region’s economy, this had to change.
The university had to begin driving ideas to impact everywhere on campus, not only at the business school.
That’s why we have built an integrated, streamlined platform for any entrepreneur, whether you’re working on a new drug or a new app.
Michael Polsky made this possible by investing $50 million in the Polsky Center.
While our portfolio is diverse, I want to focus my remaining time on what we are doing to transform scientific discoveries into companies, such as ClostraBio. Its journey captures both our boldest ambitions as well as our most daunting challenges.
Professor Cathy Nagler’s more than three decades of research in food allergies got ClostraBio to where it is today. The next step is to build the cure, a pill.
And until a few years ago, the university simply did not have the in-house talent to develop one. We would have had to turn to a drug company or license this discovery outright to a venture capital firm on the coast.
That’s because a seismic shift has happened at the university under President Bob Zimmer’s leadership. The university began investing in the applied sciences, beginning with the creation of its first engineering program, the Institute for Molecular Engineering, or IME, for short.
The scientists at the IME are builders. They’re building new drugs, new materials for solar panels and new chemicals for water treatment and beyond.
Jeff Hubbell of ClostraBio is one of them. The University recruited Jeff from Switzerland in 2014. Jeff holds 77 patents, and he is a four-time entrepreneur. He has a company devoted to wound-healing and another to bone-repair products.
Two of his companies are based in Cambridge, Massachusetts, because Cambridge has the infrastructure — the entrepreneurial support system, the ecosystem — to help it scale. It’s never easy, but it is easier for a biotech entrepreneur in Cambridge.
With the investments we’re making, his fifth company, ClostraBio, will grow and succeed here, in Chicago. From lab space to the quarter of a million dollars in cash the University has invested in ClostraBio, we are making it easier.
And not just for one company — but hundreds of them.
Because a trickle of innovation won’t suffice; we’ve got to get to critical mass. Our goal is to a create a rushing river of new ideas and businesses starting and growing on the South Side.
This is such a big task that the University of Chicago cannot do it alone. All of the state’s research universities are pushing in this direction with, believe it or not, a fair degree of collaboration.
Illinois university students and faculty produced a record 804 startups from 2012 to 2016, which is nearly a 100 percent increase from 2009 to 2013. And the capital raised by these startups has surged to $630 million from $345 million.
We also are partnering with scientists at Argonne National Lab and Fermilab to launch companies there. For those of you that don’t know, the Chevy Volt’s battery contains Argonne technology, making it safer, longer-lasting and more powerful.
Our partnership with these labs is focused on developing and commercializing groundbreaking technology in the areas of advanced analytics and materials, such as the cathode materials that determine how much power the Volt’s battery can hold.
In the coming weeks, if not days, I look forward to announcing more details about how our partnership with Argonne, Fermi and other universities will impact faculty, students and Chicago’s larger tech community.
And thanks to a gift from the Duchossois Family, we are investing $100 million in a new kind of biomedical science that could lead to new cures and companies.
We also are designing new university policies that are innovation-friendly. Policies that will encourage more faculty and researchers to collaborate with peers in applied disciplines, such as engineering, computer science and business.
We’re making it easier to start and build a business here.
But I want to leave you with today is a far bolder vision for what’s possible in Chicago.
I believe Chicago will lead the cure for cancer.
It’s personal for me. Just two years ago, at age 15, my son, Tim, was diagnosed with a rare sarcoma. Thanks to chemotherapy drugs and surgery at Lurie, Tim is a survivor and in the audience today.
The University of Chicago is currently investing hundreds of millions of dollars in the next generation of cancer treatments.
“That is the Polsky Center’s mission: To go from idea to impact.”
One of the biggest challenges in fighting cancer has been that cancer cells find ways of becoming invisible to the body’s defenses. And the immune system can’t kill what it can’t see.
So researchers at the University of Chicago are doing two things. First, using supercomputers far more advanced than the ones that my father built, they are identifying which kinds of cells our immune systems need to kill. And through the use new drugs, they’re working to stimulate our immune systems to spot them and attack.
And that attack must occur at the molecular level.
Which should send you right back to the Institute for Molecular Engineering and the work the Polsky Center is doing to get cures to market.
I started this speech by saying that the work being done at the Polsky Center is critical to transforming our regional economy.
I’m closing by saying that over the next two decades, the work we’re doing will be critical to transforming and even saving lives. That is the Polsky Center’s mission: To go from idea to impact.
And we’re betting long on the idea that entrepreneurship is the way to get to our desired impact — rebuilding the engine of Chicago’s economy.
John Flavin is the Associate Vice President of Entrepreneurship and Innovation at the University of Chicago. He leads the Polsky Center for Entrepreneurship and Innovation, which brings together the University’s nationally recognized programs in venture creation, education, technology commercialization, and business incubation, streamlining access to resources for its many constituents.
An entrepreneur with over 20 years of experience in the life sciences field focused on finance and operations, Flavin has co-founded and built several companies, raised over $220 million in private and public capital, and led two successful NASDAQ IPOs. He is Managing Director at Flavin Ventures, LLC, a venture creation and management firm, Entrepreneurial Advisor at Argonne National Laboratory, a board member at the Illinois Science and Technology Coalition, and he sits on Governor Bruce Rauner’s Illinois Innovation Council, Mayor Rahm Emanuel’s ChicagoNEXT technology council, and the City of Chicago’s Small Business Advisory Committee.
Flavin earned a BA in finance from Marquette University and an MBA from Lewis University.