Professors have academic teaching obligations that can distract them from leading a spinout, but their technical expertise is also often invaluable to its commercial success.

Professor and entrepreneur - who best to lead a spinout

Universities are under pressure to commercialise more of their academic research. But who should head these companies — the academics who lead the research or outside entrepreneurs?

Harvard Business School associate professor Maria Roche caused controversy last year when she published research showing companies founded by professors based on their academic research have a lower chance of raising large amounts of capital and also of going public.

Some observers say you shouldn’t write off an academic’s ability to lead a company tied to their research. There are examples of university professors who have successfully led companies.

But it can be challenging for professors to become founders while keeping their teaching jobs. Roche’s research found that the students of professors who start companies tend to suffer because their supervisors spend more time building a company than on teaching. Tenured professors are often reluctant to give up their day job to run a new business.



Postdoctoral researchers also have academic responsibilities as they become employees of the university, giving them less time to dedicate to leading a company.

But professors and postdocs often have deep technical knowledge that is critical to a spinout’s success. Keeping the academic connected to the company is often imperative to its commercialisation. Keong Chan, managing director of Out The Back Ventures, an Australia-based venture builder focused on creating companies from academic research, says professors generally don’t want to be involved in the day-to-day operations of a startup but are often happy to be still part of the team.    

“A scientific advisor would generally be the role that they would take, so that they can continue to be involved in the startup without being day-to- day,” says Chan.   

“Somewhere between 50% to 70% of the time academics want to be part of the founding team.”

Keong Chan, managing director of Out The Back Ventures

In more than half of the spinouts that Chan works on the academic will stay as the founder. “I would say it is somewhere between 50% to 70% of the time they would remain, or they would want to be part of the founding team,” he says.

Some say that PhD students are often the most ideal suited to run a spinout, at least in the early stage of company formation. Conception X, a UK deep tech venture programme, works specifically with PhD students to turn their research into commercial companies. Over the past seven years, its programme has resulted in 130 deep tech startups and two exits.     

Riam Kanso, founder and CEO of Conception X, says PhD students are well suited to starting a deep tech company.  “PhD students are really smart and investigative, and they have three to four years of funding to create something new. From a philosophical perspective, this is very similar to launching a deep tech startup,” says Kanso.

“There is a sufficient number of PhDs who have that inventor-type gene and they decided to do a PhD to create something new,” she says.  

When technical expertise matters

PhD students also have the deep tech expertise that is needed to explain the technology that a more commercial, non-expert may not be capable of. “It’s much easier to teach a PhD student the fundamentals of running a company and selling it, and core skills that can be taught, rather to teach someone with no science and technological background how to suddenly become proficient in complex subjects like quantum physics,” says Kanso.

The most successful PhD student-led companies have two student leaders rather than one.

Incidentally, Kanso has found that the most successful companies led by PhD researchers have two students leading the venture rather than one. “There is something about two PhDs who can problem solve together and hack things that makes it more likely for them to succeed,” says Kanso.

What most agree on is that startups that have diverse teams of technical and academic experts do well. In some cases, entrepreneurs have been invited to build a company from academic research with academic technical advisors remaining on the team.

One example is Salience Labs, a UK-based photonics chip company, headed by Vaysh Kewada, a former entrepreneur-in-residence at Oxford Science Enterprises, an investment fund and venture builder associated with the University of Oxford. The company went through the Deeptech Labs programme, an accelerator that works with UK universities to help commercialise spinouts.

Kewada formed the startup after finding academics and research to base the company on. She runs the business but works with academics who run the technology side. “She deeply understands the technology but presents it in a way that allows customers to rapidly see the value it can bring to them, and in this way she has built a great business,” says Miles Kirby, CEO of Deeptech Labs.

“Academics think they’ve got to do it all but they need to recognise where they have gaps and hire a team around them to fill these.”

Miles Kirby, CEO of Deeptech Labs

Ultimately, having a diverse team that can take on all aspects of running a business is key.  “Each team has got to be able to have the skills to sell to customers, the ability to determine how to turn technology into a product and a business, and they’ve got to be able to fundraise.,” says Kirby.

“What is missed sometimes is that academics think they’ve got to do it all but they need to recognise where they have gaps and hire a team around them to fill these gaps,” he says.

It’s a different story at later stages of fundraising

A big shift in team make-up comes when spinouts reach later stages of fundraising. This is when the skills needed to grow businesses changes and the dependence on the academic to focus on technology development is less needed.

PhD students can build a deep tech company for the first seven years or so. After that, different skills are needed

Kanso, of Conception X, says PhD students can be relied on to build a deep tech company in the first seven years or so to make sure the technology works and can scale. “Once you reach series D, the problems of the company become people problems rather than technical problems. And then other skills are needed.”     

Venture capital investors will also want to make sure that teams have the right mix of people at various stages of company development before they invest.

“VC investors are looking at whether there is the right team at each stage. This changes over time. There are different needs at each stage,” says Kirby.

 

Kim Moore

Kim Moore is the editor of Global University Venturing and deputy editor of Global Corporate Venturing and produces video for the website.