Nurturing the next wave of start-ups is a complicated task, especially when they come from research-intensive sectors of the economy. But as a wave of corporations look at ever-earlier stages of development in the entrepreneurial ecosystem this is bringing a new source of optimism that universities can commercialise the intellectual property developed by their students and faculty.
This, at least, seemed to be one conclusion from US-based trade body National Venture Capital Association’s (NVCA) corporate venturing group’s annual meeting last week.
Tony Stanco, chief executive of the National Council of Entrepreneurial Tech Transfer (NCET2) said on a panel on nurturing start-ups that research-intensive companies were eight-times as likely to float on a stock exchange – have an initial public offering (IPO), which encouraged venture investors to look at sources for these businesses, ie universities, which are his main clients. He added that while universities were often a source of “cutting-edge” technology the researchers often faced difficulties in commercializing their ideas without an incumbent business taking it on.
This difficulty in standing alone was because of the challenges in funding a new factory or production line, which can run into billions of dollars, to develop the idea. As a result, Stanco said these types of entrepreneurial students or business often looked to the global 1000 largest companies for funding or acquisitions rather than venture capital firms.
He said the problem universities faced at the earliest stage of their research was in deciding which ideas might lead to which outcomes: an IPO or trade sale/license.
NCET2’s virtual showcase of university start-ups, therefore, only required the idea to be nominated by somebody rather than needing extensive vetting to decide it might be suitable.
And while universities themselves have been setting up venturing funds to help provide money and support to their students and faculties’ business ideas, other accelerators and incubators have been reaching out to support them.
Jamie McGurk, partner at venture capital firm Andreessen Horowitz, at the NVCA event said he had seen corporations invest at earlier stages, confirmed by research by Global Corporate Venturing, sister title to Global University Venturing, for the first three months of the year.
(The April issue of Global Corporate Venturing out this week will have an extended analysis and comparison of the first quarter data from the US and worldwide – for a sneak preview please listen to our webinar recorded on 2 April here – which shows US dominance as overseas groups come to the world’s largest economy to invest and also increasingly look at earlier-stage deals beyond the core sectors.)
The accelerators now trying to help start-ups from universities and elsewhere are increasingly moving beyond previous models – when incubators had a bad name for “incinerating” people’s careers, cash and ideas.
The NVCA event talked about how accelerators were often now set up by entrepreneurs for entrepreneurs with highly-aligned interests and offering help on strategy and finding customers rather than operational issues, such as human resources and accounting or a real estate play to reduce the start-ups initial expenses.
But the attention risks overloading entrepreneurs with options. Research by Global Corporate Venturing last year had identified about 150 corporate-backed accelerators, with more sponsored by universities and states eager to boost innovation.
But for those looking to see the long years of study lead to an improved world, pluarality of choice is a nice problem to have.
