Entrepreneurship In and Around Universities - Mike Wright

Mike Wright, Imperial College Business School
© Imperial College Business School
Entrepreneurship In and Around Universities:
Myths and Challenges
1
Presentation at Vancouver, January 17, 2014

• Research on entrepreneurial mobility
– Between institutional contexts
• emerging markets, returnee entrepreneurs
– Between organizations
• serial entrepreneurs, management buyouts, university spin-offs
• Chair, Academy of Management Entrepreneurship Division
and Mentor Award winner
• Co-Editor, Strategic Entrepreneurship Journal
• Numerous books and articles
– “The world of research has gone berserk/too much paperwork”
– Some recent books…..
My Entrepreneurial Back Pages
Introduction
2

• What myths do we have about
entrepreneurship?
• What are the implications of
debunking these myths?
• Which are of resonance for
academic entrepreneurship?
• What are the lessons for universities
& (academic) entrepreneurs?
• “10” Myths based on my research
program over last 15 years
Myths and challenges
Introduction
4

Entrepreneurship is innovative, high growth start-ups
Myth 1
5
• Traditional policy and research focus, but too narrow
• Need to focus on growing existing firms not just starting

Myth 1
6
Aspall:
Family owned high end cider
manufacturer founded 1728
8th successor generation entered to
innovate and turnaround
Building on tradition of quality,
Developed new high end vinegars
and fruit juices.
Established Aspall as a “cool”
brand.
Top 25 US Beer in 2011

Myth 1
7
Seagate Technology:
Buyout of “Busted Tech” listed computer drive producer
in 2000
Enabled restructuring & innovation stymied when as listed
corporation forced to compete on cost efficiencies
Growth from innovating smaller, cheaper drives for video-
game consoles
Becomes #1 in innovation & enterprise in disc drives

Myth 1
8
Terracycle:
Social entrepreneurship venture founded by Princeton
student Tom Szaky, grew to 24 countries, 102 employees
Bootstrapping finance to collect organic waste from university
restaurants through network of student-volunteers.
Combines broader societal objective with entrepreneurial
ways to achieve these social goals

• Traditionally has been little focus on the context for
entrepreneurship in policy and research
• Where has been examined, rather narrow perspective of
the legal/institutional environment
• Growing recognition that context is more multi-faceted
and policy needs to take this into account……
Entrepreneurial context is about legal environment
Myth 2
9

Dimensions Description
Institutional Implications for development of
entrepreneurship in different legal and cultural
contexts
Spatial Geographic locus and mobility of stakeholders
Temporal Venture and stakeholder life-cycles
Social Variation in networks across sectors
Organization,
ownership &
governance
Different venture objectives & performance
Role of different stakeholders in ownership and
governance
Market context Complexity, newness, competition, volatility,
appropriability
Variety of Context

• Universities: spin-offs have contextual
issues related to:
• Lack of commercial orientation
• University ownership of IP
• Time from research to market
• Revenue generation to meet budget
constraints
• Potentially conflicting objectives and
ambidextrous organizations
• Differences between universities
regionally
• Links to varying local industry networks
Entrepreneurial context is about legal environment
Myth 2
11

• Traditional focus on hard
science with patents
• Or on high growth ICT
Academic Entrepreneurship is hard IP by faculty
Myth 3
12

• But Alumni increasingly
provide important academic
entrepreneurship, ICT
especially:
– Students
– Drop-outs
– Graduates
• Spin-offs from subsequent
employers by graduates
perform better than direct
spin-offs
• Financial & social ventures
Academic Entrepreneurship is hard IP by faculty
Myth 3
13

• Entrepreneurs as heroic
individuals with „special‟ expertise
• But most start-ups involve a team
– Need for complementary skills
– Team needs to evolve
• Entry and exit
• Academic start-ups lack skill &
cognitive diversity
– Similar people you know at start set
trajectory of shared understanding
– But need to evolve
– Build links with those they need to
help them
Entrepreneurs are heroic individuals
Myth 4
14

• Governance focuses on
accountability
– Role of independent directors
• Directors need skills & contacts to
help firms grow and survive
– Sector experience, Gender
diversity, successful prior
entrepreneurial experience, ….
• Spin-offs with academics & TTO
boards limited
– Need contacts to identify required
skills
Boards are there to monitor managers
Myth 5
15

• Entrepreneurs start one
successful business & stick
with it
– But up to ½ of businesses
started by serial entrepreneurs
– Learning depends on pattern of
previous success/failure
• Many academic scientists
are serial entrepreneurs &
can mentor colleagues
– Better than support agencies
Entrepreneurs are one shot wonders
Myth 6
16

• Provide access to customers, alliances,
suppliers, acquirors, etc.
– But embeddedness paradoxical
• Academics embedded in networks with
other scientists for grants & publications
– Need to access networks with
commercial actors
– AND to know how to recruit the people
who can give them that access
Entrepreneurs’ networks are always a good thing
Myth 7
17

• Considerable debate about discovery or
creation
• Implications for uncertainty and risk
• Framing opportunities may especially
be problem in university context as:
– Distance from market readiness
– Uncertainty of new markets
• Poses challenges in how opportunities
exploited
• Critical junctures and how they are
overcome….
Opportunities lie waiting to be
discovered and the route to market is clear
Myth 8
18

Research
Pre-
organization
Re-
orientation
Sustainability
Opportunity
A: Opportunity
recognition
B: Entrepreneurial
commitment
C: Threshold
of credibility
D: Threshold
of sustainability
Spin-offs need to traverse critical junctures
Development
HOW are these transitions achieved?

• Market for products vs market for technology
– Formal IP spin-offs take years to generate product revenue
– During this period value of technology may rise
– Implications for financing, skills development, etc
• License the technology, sell patents [technology market]
• Sell or IPO the company [financial market]
– Value from expected future returns
– Valuation uncertain and can be volatile
• Especially if regulatory hurdle not overcome
Opportunities only have value in the product market
Myth 9
20

Renovo Spin-off – Scar Prevention Drugs
Never generated product revenue
£8m VC funding in 2000; £23m 2nd round VC in 2003
IPO
Positive
news about
drug trials
$12bn
market
Failure
of trials
Better trial
news;
licensing;
market cap
£138m
Failed
Phase III;
founder
resigns
2yr
launch
delay

• Value depends on economic and social value
– Relative importance of each
• How to create and capture value?
• Implications for:
– Hybrid ventures and organization
Opportunities only have value in the product market
Myth 9
22

Social Venture Types
Quadrant 1: Commercial
Social Producers
Strong corporate hybrid
identity within single
organization
Quadrant 2: Community
Social Producers
Dual objectives through
hybrid structure (profit vs
non-profit part)
Quadrant 4: Commercial
social donators
Decouple economic from
social activities
Hybrid processes
Quadrant 3: Social producer
intermediaries
Compromise balance
between social and
economic process
Economic leverage Social leverage
Samebeneficiariesas
customers
Beneficiariesand
customersnotsame
target
Orientation

• Much funding focuses on the beginning of start-up
– Grants, accelerator programs
• …..But start-up is a process
• …many funding rounds before viability
• Especially an issue with innovations generated from
universities
– Far from market
– Long timescales: Biotech/health vs ICT
• Challenge to make investor-ready at a value acceptable
to the university and the VC
Entrepreneurial finance gap is at the start
Myth 10
24

“Valley of Death” and multiple
finance gaps in university spin-offs
Finance
needed to
meet gaps
over time

• Disconnect between
strategy, science
base, resource & capabilities
– Quality & scope of research &
faculty base
– Expertise of TTO
– Culture of Departments and
academic tribes
• Supportive of
commercialization?
– Objectives, risks and returns
unclear/unrealistic
– Which kinds of spin-offs are they
supporting?
Universities align strategies & support for
academic entrepreneurship
Myth 10 +1
26

Mismatched Support Models
for University Spin-Offs
RESOURCES
ACTIVITIES
Low selective 23.3%
Supportive 16.3%
Incubator 4.7%
Low High
Low
High

• Select teams not just from close friends but what you need
– Colleagues in engineering, science, arts, business….
• Evolve boards with the right balance of skills and contacts
• Seek mentors from experienced entrepreneurs who may be
colleagues
• Build wider networks with commercial contacts
• Be prepared to adapt your original opportunity and trajectory
• Be aware of the need for different rounds of funding from
different sources over time
• Be clear where the value is: product, technology, social…..
– Implications for above + structures and processes
Some Suggestions
Implications for (Academic)
Entrepreneurs
28

• Direct academic entrepreneurship
– Novel research to create innovations leading to spin-offs by academic
scientists and students
• Indirect academic entrepreneurship
– Education & research experience lead indirectly to entrepreneurial
graduate actions via Corporate Spin-offs & alumni start-ups
• Redesign TTO & courses to support student & alumn start-ups
– Start-up “garages” for students and alumns
– Cross-disciplinary student /faculty projects
– Develop different types of industry reach-out/reach-in
Rethink Academic Entrepreneurship
Implications for Universities
29

Entrepreneurship In and Around Universities - Mike Wright

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Similar to Entrepreneurship In and Around Universities - Mike Wright

Similar to Entrepreneurship In and Around Universities - Mike Wright (20)

More from enterpriseresearchcentre

More from enterpriseresearchcentre (20)

Recently uploaded

Recently uploaded (20)

Entrepreneurship In and Around Universities - Mike Wright