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Meeting Information


April 14, 2000

11:30 a.m. - 12:00 noon

East Oval Room, The Rotunda


A. University-Related Foundations - Spinner Technologies, Inc.
B. Fiscal Impact Statement (Mr. Sweeney to introduce Mr. Block; Mr. Gene D. Block to report)


A. Vice President's Remarks
1. Reunions
2. Public Relations Progress
B. Philanthropic Cash Flow
C. Campaign Progress

I. A. University-Related Foundations - Spinner Technologies, Inc.

Approves the entry by the University of Virginia Patent Foundation into a new business venture, through its ownership of a for-profit corporation, Spinner Technologies, Inc.

BACKGROUND: University faculty increasingly wants to form new companies to commercialize their inventions. They are encouraged by the availability of product development funds from the federal SBIR (Small Business Innovative Research) program, some of which can be subcontracted to the University of Virginia to support academic laboratories. Applications for such funds must come from the company. In order to position ourselves to allow the University of Virginia faculty to take advantage of federal funding, we need to find (a) a simple way for faculty to start companies that can serve as corporate partners for SBIR applications, and (b) lab space that faculty startups can use for product development research.

The University of Virginia Patent Foundation is enthusiastic about licensing its patents to faculty startups because they can focus on very early stage technology, can create local jobs, and may eventually populate the University of Virginia Research Parks. The Patent Foundation currently has an informal program for supporting faculty startups.

The Policy on University-Related Foundations requires that the Board of Visitors consider approval of any new business ventures.

DISCUSSION: The Patent Foundation is interested in forming Spinner Technologies, Inc. as a for-profit subsidiary. The Patent Foundation would provide Spinner Technologies with lab renovation funds (about $20,000), approximately $10,000 per year in operating funds, plus a modest amount of Patent Foundation staff time. Spinner Technologies would then (a) promote its willingness to spawn startups, (b) do the legal and business work needed to form startup companies as subsidiaries of Spinner Technologies, (c) retain five to ten percent equity in each, and transfer the other 90-95 percent to the founders and investors, (d) assist in preparing SBIR applications, (e) provide low-cost financial oversight and administrative support and (f) assist the startups in locating lab space.

Spinner Technologies, it is hoped, will form 30 to 60 companies over the first five years. These companies will sponsor research at the University, create the long-awaited high-tech corridor on West Main Street, expand into new facilities at the Fontaine and North Fork Research Parks and maintain intimate relationships with the University. These companies create potential job opportunities for spouses and University graduates, helping faculty retention and recruiting. Eventually, Spinner Technologies may sell some of its stock in successful startups and provide dividends to both the Patent Foundation and to the University. The Patent Foundation is hopeful that Spinner startups would also provide strong patent royalty returns.

ACTION REQUIRED: Approval by the External Affairs Committee and the Board of Visitors.


WHEREAS, the University Policy on University-Related Foundations requires that University-Related Foundations submit for Board of Visitors' approval any new business venture; and

WHEREAS, the Vice President for Research and Public Service recommends that the Board of Visitors approve the entry by the University of Virginia Patent Foundation into a new business venture, by forming a for-profit corporation, Spinner Technologies, Inc., to invest in and further develop startup companies and commercialize University inventions; and

WHEREAS, the University shall have no financial obligation to support Spinner Technologies, Inc.;

RESOLVED that the Board of Visitors approves the University of Virginia Patent Foundation undertaking Spinner Technologies, Inc.; and

RESOLVED FURTHER that the Executive Vice President and Chief Operating Officer is authorized, following consultation with the General Counsel, to execute such agreements as may be in the University's best interests, for provision of University facilities and services to Spinner Technologies, Inc. with appropriate compensation to the University.


PROJECT/PROPOSED BOARD OF VISITORS ACTION: The creation of a for-profit entity known as Spinner Technologies, Inc. to be jointly owned by the Patent Foundation and the University.

DESCRIPTION: The University of Virginia Patent Foundation has experienced strong growth in the number of inventions it handles, but many of these are too early in their development to license to existing companies. To improve the commercial viability of some of these inventions, the Patent Foundation has for some time been informally advising faculty in the formation of startup companies. In order to formalize this activity and to increase the likelihood of success, the Patent Foundation is seeking to establish a for-profit entity, Spinner Technologies, for the purpose of incubating and developing new companies, primarily in the biotech and medical sciences industries.

The University and the Patent Foundation will be the sole shareholders of Spinner Technologies. Spinner Technologies, in turn, will have an equity stake in the new startups it helps to develop of about five to ten percent (to be negotiated separately with each proposed venture). In lieu of cash or other financial consideration to garner this equity position, Spinner Technologies will provide initial management expertise and support (legal, administrative, marketing, etc.) as well as other pertinent assistance (e.g., location of lab space). The business founders and other investors will receive the remaining 90-95 percent of the equity. Once established, companies will then be eligible for additional funding through the federal SBIR program.

It is envisioned that Spinner Technologies will help form 30 to 60 companies within the first five years. These companies will sponsor research at the University, create the long-awaited high-tech corridor on West Main Street, expand into new facilities at the Fontaine and North Fork Research Parks and maintain intimate relationships with the University.

STRATEGIC IMPACT: The plan for Spinner Technologies directly supports the University's goal of achieving excellence in the field of science and technology, one of the four Virginia 2020 initiatives.

FISCAL IMPACT: This project is experimental. Because the value of Spinner's retained equity in the faculty start-ups is unpredictable, no projections can be made regarding returns on investment; however, the potential benefits arising from this proposal will accrue to the University in several ways:

Equity investment in new business ventures. The value of such a position could be significant depending on market acceptance of the product(s) developed by a firm.

Royalty returns on patents. The Patent Foundation will still maintain the intellectual property rights on inventions and discoveries initiated at the University.

Rental income at facilities owned by the University or its Real Estate Foundation. The business model assumes that as companies grow and develop they would occupy space at one of the research parks.

Economic development of the surrounding community. A hoped-for indirect effect, as companies developed by Spinner Technologies prosper they will create numerous job opportunities.

Conversely, any potential negative financial exposure appears minimal. The Patent Foundation will provide $20,000 in renovation funds for lab space as well as $10,000 per year in operating funds. Staff time from employees of the Patent Foundation represent the only other contribution to Spinner Technologies.

CONCLUSION: The Patent Foundation and the University should receive approval to establish the for-profit entity, Spinner Technologies, Inc. The upside potential is significant and the downside risk is minimal. Moreover, this endeavor directly supports a key University initiative.


Leonard W. Sandridge

April 15, 2000

II.A.1. Reunions

BACKGROUND: The 2000 Reunions Weekend will be held June 2-4. Classes from every fifth year - 1955 - 1995, 9 classes in all - will be meeting. In addition, the Thomas Jefferson Society will welcome the class of 1950 on May 16-17. The Reunion classes have already responded generously to requests for reunion giving.

DISCUSSION: The attendance target for this year is 24%, or a 2% increase in participation from last year. Actual attendance should total 5,500 - 6,000, as compared with 5,000 last year. The increase is due to the larger size of more recent classes as well as strong response from the 25th and 15th reunions.

Besides the usual open houses and class receptions, Reunion programming is greatly expanded from last year. Highlights of this year's programming include a presentation on the 2000 Presidential Campaign with Larry Sabato, Brit Hume, Mark Stencel (the political writer for and others; Bringing a Movie from Script to Screen lead by Glenn Williamson ('85 Coll) from Dreamworks studio; a discussion of advances in crime analysis in Virginia; and many others. In addition, there are a variety of children's events, including the Academical Village Mental Olympics, art classes, and a workshop on robots.

As of January 31, 2000, reunion classes had raised nearly $3.5 million, with average participation rates at 21%. These totals and participation rates are a substantial increase over reunion class giving for the same time last year, with only $2.6 million and 17% participation in 1999. It is likely that last year's $4 million raised from the classes now in their reunion years will be easily surpassed. To date, the highest participation rate has been reached by the class of 1955, at 25%, and the greatest dollar amount by the class of 1985, at nearly $1.2 million.


II.A.2. Public Relations Progress

BACKGROUND: Since assuming authority over public affairs operations as of January 1, 2000, the Vice President for Development has begun the process of meeting with communication professionals at the University and has identified several approaches for immediate planning and implementation in our public affairs operations.

DISCUSSION: The University already has several strong public relations initiatives that could be built upon for greater impact and visibility. HeadlineNews, an e-mail message broadcast daily to selected University faculty, staff and alumni, offers excerpts of daily news stories featuring the University or higher education issues; one idea being explored to expand the outreach of HeadlineNews is to create an e-magazine which would be sent over e-mail and include direct links to University and school or unit publications via the Internet. In the same way, the University's TV News operations is discussing the best way to maximize use of TV footage of University events, through partnerships with public television, as in the Newsmakers series. The Vice President for Development will report briefly on several other promising public relations initiatives.


II.B. Philanthropic Cash Flow

BACKGROUND: A statistical review of fundraising cash gifts received for the period July 1, 1999 - February 29, 2000. Emphasis will be placed on measuring performance compared to Fiscal Year 1999 and the previous three Fiscal Years.

DISCUSSION: The most recent audited numbers are through February 29, 2000 and show that $151.6 million already has been raised, a 71% increase over our position at the same time last year. In fact, this total surpasses all year-end cash totals in previous years.


II.C. Campaign Progress

BACKGROUND: The Capital Campaign remains the top priority for University of Virginia fundraising. Progress will be reported through February 2000.

DISCUSSION: As of February 29, 2000, Campaign progress stood at $1.103 billion ($978 million in gifts and pledges, and $125 million in future support). While the overall billion-dollar Campaign goal has been met, Development is pursuing the goal of raising $1 billion in outright gifts and pledges alone.