The genetics of an academic startup

Bridging the Valley is a series recording a shared exploration of the potholes in the road of hardware technology development between lab research and implementation. These obstacles to development often prevent the productization of new technologies, causing a phenomenon called the “Valley of Death.” In this and future articles, the author will dive deeper into the causes of the Valley of Death that we hypothesized in the introduction to the series, and provide more information on various areas of the technology development ecosystem.

There appears to be a rift between academia and industry. Although there’s collaboration, the interaction and cross-pollination between these two worlds is limited. The result is a number of disadvantages for startups emerging from academia. These startups have deep technical expertise, paired with extreme dedication and emotional investment toward realizing their technology. There are, however, particular challenges. Let’s delve into the support an academic startup needs to succeed.  

There are many factors in founding a startup that determine how likely it is to succeed based on the genetics of a company. The exposure that many academics have to the tacit knowledge of the business world is restricted, as is the diversity of their network in industry.  Both of these factors have a measurable impact on the likelihood of an academic startup’s success. For example, this study shows that a university-based startup has a much lower likelihood of failing if the founders have existing connections to venture capitalists, and that the likelihood of the company reaching IPO is positively correlated to the founding members having industry experience. If the founders have limited diversity in their industry network, it’s more difficult to hire the right team, find the right industry partners, and raise capital. Without a trusted bridging connection vouching for them, they might not be able to establish legitimacy with potential investors, hires, or partners.

In order to help span this gap, university Technology Transfer Offices (TTOs) can introduce them to relevant business connections. The TTO’s goal is to transfer knowledge and intellectual property to industry, including emerging startups, and it’s often one of the key windows in the university to the commercial world. However, reliance on just one group (and a typically small one) to have many significant connections in a variety of industries also has limitations. Furthermore, many academic founders avoid their TTOs entirely because it would result in university ownership of key intellectual property. Naturally, it’s best for the startup to avoid paying the university royalties for all of their work product, if at all possible.

These issues can be broken down into two major areas to help make sure an academic-born startup is ready to launch.

Getting the right people involved

We need to start getting the right people in the room at the right times! One of the most effective ways to mitigate the majority of these problems is to increase both formal and informal interactions between academia and industry. Establishing programs that encourage these interactions with academics could have a huge impact on both the knowledge base and the networks of potential academic founders. There are many different ways to accomplish this, but here are a few possibilities:

1. Entrepreneurship centers with serial entrepreneur mentors. These individuals have a wealth of experience, knowledge, and relevant business networks that academic founders can benefit hugely from.
2. Encourage more industry professionals to enter academia, with technical PhD or Masters programs that target them specifically to seed the labs with individuals with diverse commercial backgrounds and networks.
3. Startup accelerators that work with lab groups even before they establish startups, like the Wyss Institute or The Engine Accelerator.  
4. Collaborations between various university TTOs might also help.  The resulting diversification into out-of-region commercial networks would be particularly useful for those startups whose category might not be a major focus locally.

Passing down knowledge

Many lessons in entrepreneurship have already been learned, and they need to be passed on to the new leaders. Education of prospective entrepreneurs who don’t have a business background is extremely effective. The NSF’s Innovation Corps program has been very successful in educating academic entrepreneurs in how to evaluate potential markets and derive product requirements from customer and user needs. Similar education into the many other areas of knowledge that an entrepreneur would benefit from could be provided by universities, either by somehow integrating them into PhD programs, or offered as a co-terminal degree.  Alternatively, this information could be provided by any accelerator programs, TTOs, entrepreneurship centers, or government-run entities.

These approaches can help improve successful commercialization, but I’m certain there are other solutions as well. I’m interested to hear your thoughts on how academic startups can be better set up for success, so make your opinion heard in our Discord!