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From Site Selection magazine, November 2016

Direct Connections:
The R&D Pipeline from Higher Education to the Corporate World

UC-Berkeley is a flagship campus of the unrivaled University of California system.
Photo courtesy of Visit California


In an October 2016 commentary published by Medium, University of California President Janet Napolitano notes, “At the University of California alone, research has led to roughly 1,300 startups since 1968, three quarters of which were launched since 2000, according to a new Bay Area Council Economic Institute report. In 2015, our research spawned 85 new startups and 1,756 new inventions. That’s nearly five inventions a day.”

Research, in other words, is at the heart of business R&D, which in turn is at the heart of the economy. Those statements are backed by evidence from the National Center for Science and Engineering Statistics (NCSES), National Science Foundation (NSF).

“Five states accounted for just over half of the $255 billion of research and development (R&D) companies paid for and performed in the United States in 2013,” the NCSES reported in October. “California alone accounted for $77 billion, or 30 percent, of self-funded business R&D — up from 25 percent five years ago. Between 2008 and 2013, California’s R&D performance grew at a faster pace than its economy as a whole, resulting in its R&D intensity — its ratio of business R&D to GDP — increasing from 2.8 percent to 3.5 percent.”

The top 10 states for R&D paid for and performed by U.S. companies are:

  • California: $77 billion
  • Massachusetts: $14 billion
  • Michigan: $14 billion
  • Washington: $14 billion
  • Texas: $13 billion
  • Illinois: $12 billion
  • New Jersey: $12 billion
  • Pennsylvania: $10 billion
  • New York: $9 billion
  • Minnesota: $6 billion

The report also contained data on geographic areas with the largest dollar amount of self-funded business R&D performance. The top three areas are San Jose-San Francisco-Oakland, California; Los Angeles-Long Beach, California; and Seattle-Tacoma-Olympia, Washington.

New data from the NCSES in September showed that R&D performed in the United States totaled $477.7 billion in 2014. The estimated total for 2015, based on performer-reported projections, is $499.3 billion. “The business sector is by far the largest performer of US R&D,” the report stated, accounting for $340.7 billion, or 71 percent of the total. But higher education — a strong component in all the states above and an essential component of the nation’s R&D ecosystem — is second, with $64.7 billion, or 14 percent of US R&D in 2014.

The Ultimate Fundraisers

How strong is the correlation between self-funded business R&D and university R&D? NSF’s top 30 universities by 2014 R&D spend — led by Johns Hopkins in Maryland; the University of Michigan and the University of Washington — include seven institutions from No. 1 company-funded R&D state California, led by No. 5 UC-San Francisco and No. 6 UC-San Diego.

UC graduate students found a new startup every two weeks. UC-affiliated companies employ more than 38,000 workers across a wide range of industries, generating more than $20 billion in economic activity for California.

Massachusetts, Michigan and Washington, tied in the list above, can claim two of the top three R&D universities by spend, and four of the top 12. In all, 22 of the 30 top universities for R&D expenditure are in one of those top 10 states for company self-funded R&D.

If you’re a corporate leader, that sort of math is worth doing. So is reaching out and making that university research connection. You never know what might develop.

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