In the last three years, only 16% of firms surveyed in the state have partnered with a university when upgrading or acquiring a new technology, a figure that is actually lower in Penang than the national average. The establishment of a commercial arm, Sanggar SAINS Sdn Bhd, with a commercialisation and enterprise development programme, and the creation of an on-campus innovations complex have produced some promising results: 26 projects have passed the proof of concept phase and 11 projects/products have been introduced to potential commercialisation partners. Long-term success will depend on the ability to attract high calibre organisations such as federal research laboratories that are able to generate new intellectual properties as well as investors (domestic and foreign) to support and grow start-up companies commercialising USM’s R&D and innovation outcomes.