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Picture a breakthrough in a Cleveland research lab — say, a new polymer coating that could make factory equipment last twice as long. The scientist files an invention disclosure to university administrators. Then comes a decision most people never see. 

It forks two ways. The university can license the patent to an established company: a Sherwin-Williams or an Avery Dennison, both headquartered in the region, both already selling coatings at global scale. Or it can spin the discovery into a brand new startup that exists for no reason other than to develop this one idea.

The choice is rarely ideological, and the honest question underneath it is stranger: Does it actually matter which way it goes?

Northeast Ohio was named this week the site of a new National Science Foundation Regional Innovation Engine. Dubbed NEO-SMART, it’s being led by Case Western Reserve University, and will be able to access up to $160 million in federal funding over 10 years. It has more than $120 million already committed by over 70 regional partners. It’s one of a dozen newly named NSF Engines, joining an existing cohort.

The Ohio coalition’s stated goals are telling: create or retain 20,000 jobs and lift corporate R&D by half, and also support 1,000 ventures and back 250-plus startups with seed money.

So which is it — is the $160 million in advanced science investment meant to grow new companies, or make old ones stronger? As Technical.ly has followed the federal dollars spread across dozens of “Tech Hubs” and “NSF Engines,” the question has felt increasingly pressing. 

Yet for local residents and American taxpayers, does the answer change anything?

I put versions of that to Baiju Shah, president and CEO of the Greater Cleveland Partnership, when we spoke on Builders Live. Shah, a former biotech founder who now runs what he calls the country’s largest metro chamber, sits on the newly funded NEO-SMART coalition governing board.

Our conversation was scheduled to be about his “All-In” regional strategy — the unglamorous, yearslong coalition work that made the award possible. Then the award landed the same week.

The startup isn’t necessarily the magic

When federally funded research becomes a product, a startup is one option, not the destination.

Since the Bayh-Dole Act of 1980 let universities patent and license inventions made with federal money, the machinery has been the same: a scientist discloses and a tech-transfer office decides who can realistically carry the idea into the world. Sometimes, that’s an incumbent. The first FDA-approved CAR-T cancer therapy came out of the University of Pennsylvania — but through an alliance with Novartis, which already had the manufacturing and trial muscle to turn it into a regulated product. No spinout required (though others did follow).

Sometimes, it’s a startup, because nobody else is organized to try. When researchers delivered CRISPR gene editing by the 2010s, no company had a division for it, so competitive ventures like Editas and Intellia formed to answer a single question: Can this become something? When mRNA looked impractical, big pharma passed and Moderna and BioNTech grew up around the platform instead. They became household names during the COVID-19 pandemic.

Meaningful university intellectual property goes one of those three ways: Licensed to an existing firm, embedded in a new startup (especially if the inventor wants to lead), or held for the future.

The pattern isn’t startup versus corporation. It’s general-purpose institutions versus mission-specific ones. A university is built to discover. A large firm operates at large scale.

Startups efficiently organize capital to bet everything on one uncertain idea — driving outsized gains for those around them. The new company appears when no existing institution is configured to carry that particular science across what investors call the “valley of death.”

Shah speaks candidly that his field has moved past its old fantasies. In the early 2000s, he told me, economic developers chased corporate relocations or tried to become the next Silicon Valley — both “low probability” plays. What they missed was the organic growth of firms already there.

His engine reflects that. A few years ago, Greater Cleveland Partnership mapped where research actually happens in the region and found more than two-thirds of it sits inside corporations, not universities. NEO-SMART is largely a machine for connecting those incumbents — metals, polymers, chemicals, coatings — and speeding up what they already do. The 20,000 jobs are mostly retained and trained, not founded. (Skeptics may rightly point out that what counts as a “retained” job is debatable.)

Shah still describes this as the kind of “ecosystem approach” that is shaping economic development nationwide. For readers who follow my argument that new businesses, not big or small ones, drive net job creation, it’s worth saying plainly: a $160 million science bet can center entrepreneurial ecosystem building while incorporating research institutions and corporate scale.

Like federally funded economic development strategies nationwide, we’ll see which ones are serious about developing new starts while harvesting incumbents.

The servant and the master

Which returns me to whether the “startup or license” question matters at all.

As Georgia economic developer Jonathan Chambers recently reminded me: “Entrepreneurship is an incredible servant but a poor master.” Science, startups, economic development — these are the means. Montana’s Headwaters Tech Hub chief Tim VanReken tells me this, too: The ends are quality of life, health, happiness and meaning for more of us.

A cancer therapy that reaches patients did its job whether Novartis or a spinout delivered it. A coating that keeps a factory (and its payroll) in Ohio serves the community regardless of which entity holds the patent. New firms have more economic benefits, but only if they have a chance to succeed.

Shah, for all his growth-and-prosperity language, landed in the same place when I asked what I should check on in two years. Not startup counts. Whether the region’s population is still turning around, whether its working-age numbers keep climbing, whether people want to live there. Investment in neighborhoods, parks and culture, Shah said, “isn’t just about having shiny objects.” The science is a shiny object, too, if it gets mistaken for the point.

Back to that coating in the Cleveland lab. The sharp question isn’t whether it becomes a startup or a license. It’s whether $160 million in public and regional money organizes the long passage from public knowledge to shared livelihood — and who captures the upside when it does.