Starting a company from scratch is not easy, especially a university startup. I have had hundreds, if not thousands, of conversations with people who have interest in university spinouts and they all point to the many difficulties that they have had to face. The risks stack up high in the face of success: technology is often pre-maturely spun out, translational research, engineering, productization often needs to happen on a startup’s lean budget, and manufacturability and costs are often not even close to thought through when the inventions are typically made and disclosed. Then you layer on top complications of dealing with IP licensing offices, finding early customers, hiring great talent when you have nothing but a professor, passion and some pieces of paper to show for yourself, and then there is the sometimes terrible task of fundraising.
However, there are entrepreneurs, and investors, who just cannot resist the charm of building companies based on university IP. I think I am one of them as well. I believe in the value of university spinouts and that is why I have chosen to co-organize University Research and Entrepreneurship Symposium (URES) every year. At URES we bring together university technologies & technologists, technology licensing officers, angel/VC and strategic investors AND successful entrepreneurs who are likely looking for the next big thing. WHen these circles overlap, and discussions take place in a frank open manner, good things can happen.
At GC, we continue to believe in university startups for many reasons: its where some of the most amazing innovation happens, usually serendipitously. Our society is built on technological progress that is often initiated by the great thinkers at our leading research universities, and whose work has been partly supported by us, i.e. government. If we believe in taking not just incremental, but quantum steps forward in how we think about and solve human problems, then bringing university research to real world is an honorable and valuable challenge. And financial rewards are plenty for those who are able to succeed, be in IT, Health Sciences, Energy or other areas.
I belong to the camp that believes that while the probability is high that any single university spinout may not make for a dramatic commercial success, it is also not a total hit or miss game. There are general learnings that have emerged over the many decades of entrepreneurs and investors commercializing university research, and if due/disciplined attention is paid to them chances of success improve significantly.
There is considerable debate in entrepreneurship circles that the university startup creation process is a bit broken (i.e. startups built around core and deep technologies developed through research at universities). For example we often notice:
- technologies that are incremental in nature getting spun out as companies when they really should be licensed to existing companies.
- wrong mix of technologists, entrepreneurs and investors in earliest days of a company. A giant messed up soup of skills/needs match.
- mind-numbing slow process of getting some faculty members to understand that invention is an important, but only a first step in what it takes reach even moderate commercial success.
- lack of technologist joining startup as inception who can carry with him/her the entire breadth and depth of knowledge around the topic.
- difficulties in navigating the IP licensing process, esp if Tech Licensing Offices are inexperienced, not motivated to license to startups, and otherwise constrained by regulations or laws.
Every time I think of all the difficulties that most university spinouts face, and then I look at those startups that have succeeded, one thing almost always stands out as stark difference. And that is the nature and quality of the entrepreneurs behind the effort. Successful startups almost always tend to have resourceful, brilliant, creative entrepreneurs. Investors often say that it is the team that is the most important variable in a successful startup, and I agree that its a true statement. But it is nowhere more true than in the case of university research spinouts. At URES, perhaps the most important conversation we can have is around this topic. At this invite only event we invite researchers from across the east coast universities to present technologies that they are most excited about for their commercial potential. And we invite investors to hear those pitches and ideas and build networks…but perhaps an extremely important category of people we invite to this event are the entrepreneurs who have successfully built companies before and are either looking for the next big thing, or are invested enough in the startup ecosystem to provide advice, support and guidance to startups even before incorporation. They bring a tremendous amount of practical wisdom and experience to the table.
I have written some of my thoughts on commercializing university technologies in a blog post elsewhere. But at this year’s URES on April 18, 2012 I will be leading a lunch discussion titled “What are Resourceful Entrepreneurs?”. We will talk about some of the topics I mention above. If you are interested in joining, drop me a note (bz at gcvp.com) and we will try our best to get you an invite. I won’t be doing all the telling. All of you will be. And hopefully we will all come out wiser.