University research represents a huge opportunity for investment and start-up company creation. The basic research (often government funded) these institutions conduct is the groundwork innovation that will shape our future. However, universities do not have a reputation among investors as sources quality deal flow due to significant differences in unstated assumptions between university entrepreneurs and investors.
For a Commercialization Engine to function well, it is important to familiarize entrepreneurs, investors and the community at large about different views about successful start up creation. Every venture will be different and but common threads arise that need to be addressed.
Below we take a look at some different views held by university professors starting a company and venture capital investors.
Selective learning isolates groups and makes it harder to have difficult conversations.
1. This is a great idea. Once I work out the science it will start flying off the shelf.
2. I can keep doing what I have been doing in my research but make more money.
3. Loading up on scientific expertise will speed along the company’s research.
4. Grants are free capital, which allow me to keep 100% ownership and pursue the research I believe is best.
5. I can apply for SBIR grants that will increase the value of my company by the size of the grant.
6. My university has extensive resources to help with my start up. No need to look elsewhere for help.
7. My university can connect me with free advisors to help raise capital and they are the smartest people to listen to.
8. Once I find out about this grant cycle in 6 months, I can then find a very affordable grad student to put on this project part time.
9. University alumni can fund my research as angel investors.
1. This is a great idea. Once they work out the science, how will we manufacture, market and distribute this?
2. The founders need to commit to a lot of hours on just this and we will need more operating personnel before we can make money.
3. Operations, marketing and finance people are all long-term essentials. How can we develop the company to bring them on efficiently?
4. Grants are great leverage for my investment as long as we build a product the market wants in a timely manner.
5. I can deploy venture capital tomorrow but SBIR grants will take months and have a modest probability of success.
6. Universities programs are good at high level, general strategies but don’t provide the down in the dirt work expertise the professor or start up entrepreneur needs.
7. I back up my advice with a capital investment.
8. Initial market research, including evaluation of other past and current research, suggests that the competition may be 6 months ahead and has already locked down funding for the next 2 years. How will we catch up?
9. University alumni have tremendous expertise to compliment my investment.