What are academic spin-offs lacking?

INESC TEC has recently concluded a project that focused on different companies born in universities and polytechnic institutes from Portugal, The Netherlands, Poland and Finland. According to the study, spin-offs find it difficult to obtain funding and to successfully enter foreign markets. The sales areas, undervalued by academic entrepreneurs, is one of the main constraints for the growth of academic spin-offs. The study was conducted for the European Commission and presented at the 8th Conference on Innovation and Entrepreneurship, in Brussels. 

     
Contrary to what might be expected, companies based on the know-how of higher education institutions (companies launched by professors or students who wanted to implement their final project – transferring higher education knowledge to the business world) see little growth. In the Spin-Up sample, the average growth per company was 1.6 human resources working full-time per year.

What skills are academic entrepreneurs lacking, and how can we counter this trend?

Difficulties managing human resources and sales, as well as the lack of economic concepts and financial literacy, are some of the main factors outlined in the study “Spin-up: A comprehensive program Aimed to Accelerate University Spin-Off Growth”, causing a slow growth in academic spin-offs.

      
Academic spin-offs have a very technical vision of business and they often disregard the commercial component, which affects their growth. “Having a good product is not enough if no one will buy it,” states Manuel Au-Yong Oliveira, researcher at INESC TEC’s Centre for Innovation, Technology and Entrepreneurship (CITE), who was part of the Portuguese team involved in the study, together with Alexandra Xavier and João José Pinto Ferreira (INESC TEC).
“We found that the sales area has a negative connotation. Academic entrepreneurs often hope the product will sell itself and so they don’t invest, especially from the beginning, in professionals specialised in the area, or people who have studied how products and services are received by the market, and the prices,” the researcher adds. Knowing how to sell is, therefore, essential to develop brands and people capable of applying scientific sales principles, and oftentimes promoters disregard that component.

       
It is necessary to know how to sell the product

Another obstacle to growth identified in the study is raising capital. In a way, the international financial crisis has been hindering new companies, because it made investors retract. Companies that depend on the internal market are some of the most affected by this negative economic ‘ecosystem’ and the national spin-offs are no exception: “Portugal has serious scale issues. We are 10 million and the company is facing great economic difficulties,” explains Manuel Au-Yong Oliveira.
In that sense, the study has allowed the researcher to find different similarities between the different countries analysed. Portugal, Poland, Finland and The Netherlands “have similar leadership skills, including the decentralisation of decisions, long term vision, wanting the whole venture to succeed, encouraging people, providing information and learning,” he concludes.

The study was conducted for the European Commission and presented at the 8th Conference on Innovation and Entrepreneurship, in Brussels. The sample of respondents and/or interviewees included 99 CEOs of academic spin-offs from the four countries mentioned above: Portugal, The Netherlands, Poland and Finland. Other than INESC TEC, other Portuguese companies involved included Advancis Business, a consulting company that specialises in human resources management and advanced training. The international partners were Leaders2Be and Delft University of Technology (both from the Netherlands), and Lappeenranta University of Technology (Finland). The Spin-Up project was financed by the European Commission as part of the Erasmus Programme (cooperation between Companies and Universities).

Cycle of Spin-UP workshops
Also as part of the European project Spin-Up, INESC TEC organised a cycle of workshops, which was concluded in September, on the problem of academic spin-off growth and development. The goal with this cycle was to give participants key business skills which are essential to launch and develop academic spin-offs.

      
“Innovation, Marketing and Sales,” “Strategy,” “Financial Planning,” “Internationalisation” and “Human Resources Management and Leadership” were the themes of the sessions. With this initiative, CITE aimed at “encouraging entrepreneurs, Portuguese and others, and help them go further,” Manuel Au-Yong Oliveira explains. New similar training sessions are already being planned for 2014.

More information: http://www.spin-up.eu/