mike wright vancouver presentation (jan 2014)

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Mike Wright, Imperial College Business School

© Imperial College Business School

Entrepreneurship In and Around Universities:Myths and Challenges

Presentation at Vancouver, January 17, 2014

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• 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

http://www.amazon.com/gp/product/images/0273726137/ref=dp_image_0?ie=UTF8&n=283155&s=books

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• 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

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Entrepreneurship is innovative, high growth start-ups


Myth 1

• Traditional policy and research focus, but too narrow• Need to focus on growing existing firms not just starting

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Myth 1

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

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Myth 1

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

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Myth 1

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

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• 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

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 & performanceRole of different stakeholders in ownership and governance

Market context Complexity, newness, competition, volatility, appropriability

Variety of Context

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• 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

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• Traditional focus on hard science with patents

• Or on high growth ICT


Academic Entrepreneurship is hard IP by faculty

Myth 3

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• 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

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• 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

• 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

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• 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

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• 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

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• 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

Research

Pre-organization

Re-orientation

Sustainability

Opportunity

A: Opportunityrecognition

B: Entrepreneurialcommitment

C: Thresholdof credibility

D: Thresholdof sustainability

Spin-offs need to traverse critical junctures

Development

HOW are these transitions achieved?

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• 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

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

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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 activitiesHybrid processes

Quadrant 3: Social producer intermediaries

Compromise balance between social and economic process

Economic leverage Social leverage

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• 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

“Valley of Death” and multiple finance gaps in university spin-offs

Finance needed to meet gaps over time

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• 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

Mismatched Support Modelsfor University Spin-Offs

RESOURCES

ACTIVITIES

Resource

deficie

nt 41.8%

Competence

deficie

nt 13.9%

Low selective 23.3%

Supportive 16.3%

Incubator 4.7%

Low High

Low

High

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• 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

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• 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

Thank You!

Questions?