The Role of University Startups for Universities

Abstract

In recent years, university startups play an important role as drivers of innovation. Although R&D in private sector has shifted significantly from large enterprises to startups, US universities have not shifted their research capabilities from basic research to applied research. Various reasons have been discussed for the decline in research capacity of Japanese universities, but the cause comes down to the weakness of universities' financial base. US university finances rely heavily on endowments mostly based on donations from entrepreneurs. An analysis of the sources of R&D expenditures at US universities reveals that, although the federal government continues to be the largest provider of research funds, income from industry-university collaborations is far too small for universities to rely on as a financial source, and that the economic returns for universities' contributions to the creation of new businesses are realized in the form of donations by successful entrepreneurs decades later.