1. 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

2. 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 © Imperial College Business School Introduction 2

4. 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 © Imperial College Business School Introduction 4

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

6. Entrepreneurship is innovative, high growth start-ups © Imperial College Business School Myth 1 6 Aspall: Family owned high end cider manufacturer founded 1728 8 th 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

7. Entrepreneurship is innovative, high growth start-ups © Imperial College Business School 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

8. Entrepreneurship is innovative, high growth start-ups © Imperial College Business School 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

9. 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 © Imperial College Business School Myth 2 9

10. DimensionsDescription Institutional Implications for development of entrepreneurship in different legal and cultural contexts SpatialGeographic locus and mobility of stakeholders TemporalVenture and stakeholder life-cycles SocialVariation in networks across sectors Organization, ownership & governance Different venture objectives & performance Role of different stakeholders in ownership and governance Market contextComplexity, newness, competition, volatility, appropriability Variety of Context

11. 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 © Imperial College Business School Myth 2 11

12. Traditional focus on hard science with patents Or on high growth ICT © Imperial College Business School Academic Entrepreneurship is hard IP by faculty Myth 3 12

13. 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 © Imperial College Business School Academic Entrepreneurship is hard IP by faculty Myth 3 13

14. 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 © Imperial College Business School Entrepreneurs are heroic individuals Myth 4 14

15. 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 © Imperial College Business School Boards are there to monitor managers Myth 5 15

16. 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 © Imperial College Business School Entrepreneurs are one shot wonders Myth 6 16

17. 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 © Imperial College Business School Myth 7 17

18. 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 © Imperial College Business School Myth 8 18

19. 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?

20. 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 © Imperial College Business School Myth 9 20

21. Renovo Spin-off – Scar Prevention Drugs Never generated product revenue £8m VC funding in 2000; £23m 2 nd 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

22. 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 © Imperial College Business School Myth 9 22

23. 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 Same beneficiaries as customers Beneficiaries and customers not same target Orientation

24. 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 © Imperial College Business School Myth 10 24

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

26. 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? © Imperial College Business School Universities align strategies & support for academic entrepreneurship Myth 10 +1 26

27. Mismatched Support Models for University Spin-Offs RESOURCES ACTIVITIES Resource deficient 41.8% Competence deficient 13.9% Low selective 23.3% Supportive 16.3% Incubator 4.7% Low High Low High

28. 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 © Imperial College Business School Some Suggestions Implications for (Academic) Entrepreneurs 28

29. 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 © Imperial College Business School Rethink Academic Entrepreneurship Implications for Universities 29

30. Thank You! Questions?