Business Management Skills within University Commercialisation
Summarised from:
A report for the department for business, energy, and industrial strategy (BEIS) prepared by RSM PACEC: “Research into issues around the commercialisation of university IP” (February 2018).
At the core of the business management challenges within university commercialisation, is not only the search for potential investors and licensees, but the identification and development of key entrepreneurial capabilities in those involved in the go-to-market effort.
From the perspective of raising capital, there is often an exhaustive search needed to identify potential partners and investors to take IP forward in the direction of commercial application (Shane 2004; UNICO 2006a). This process can be challenging; at this point, most university inventions are not yet far enough along their journey to be of any real interest to industry.
The technologies are often embryonic, not having reached the prototype stage and therefore lacking in evidence of manufacturability and market fit. This means that, for several reasons, they are seen as high-risk investments. (Pressman et al. 1995; Shane 2004).
To get University technology to the point where it can be licensed by an external company or used to form a spin-out, significant technological and product development challenges will often have to be overcome if it is to become a commercially viable product. The scope of this work and the ability of the management team and founders to successfully deliver it, are often central to an investor’s decision on whether to invest or not. This means that having specific management and commercialisation aptitude in the spinout’s team is vital.
Without a doubt, the committed involvement of an academic in the licensing process has been shown to result in an acceleration of the commercialisation process, and even the return of better royalties in the long term (Markman et al. 2005; Shane 2004). The academic holds significant know-how on the benefits and applications of what they have created, so a close relationship and communication between the academic, Technology Transfer Officers and potential investors are key.
Beyond this, external management and commercial strategy support is also required to increase commercialisation success. In this report created for The BEIS, Technology Transfer Offices describe difficulties in building management teams for spin-outs, both in developing skills internally and recruiting employees externally. Of the investors surveyed for this report, over half confirmed the importance of having a management team in place prior to them investing. Mentoring by key members of this management team was also identified as a key benefit for entrepreneurial academics. (RSM Pacec Ltd, 2018, p39)
The report also states that the main cause of business development difficulties in the establishment of a spin-out was around the appointment of a capable management team.
“Aside from raising investment, the most frequently reported issue by
spin-outs at the post-transaction management stage was recruitment”
A large number said that recruitment had been a particularly difficult issue when growing their business, on a par with both technology and product development factors and access to premises.
Ensuring the capability of the business management team is always a key factor for investors to consider pre-investment. Without a solid management base, investors will often plug gaps themselves by providing mentoring to the academic founders and give access to their own networks for mentors or potential future staff. However, it is vital that the management team selected have the requisite industry and commercial background in order to drive company performance and investors do not always have a suitable network specific to the market and technology itself. Identifying these individuals requires both experience and a network of potential partners. For more commercially experienced universities, this is alleviated somewhat depending on cohorts they are in and if they are located alongside a core cluster of key investors (for example, the “Golden Triangle”)
Furthermore, beyond issues concerning the recruitment of specific individuals for specific business tasks, there is a notable challenge in finding individuals with the right interpersonal relationships, communication style and networks. (RSM Pacec Ltd, 2018, p41). To ensure a strong personal and culture fit within newly formed teams, universities should strive to look beyond their own personal networks or that of an interested investor.
Overall, the report found in their qualitative survey of universities, that it is widely thought to be challenging to find and maintain IP, business development, research and innovation teams all with the necessary skills and experience to drive commercialisation activity forward. There are some large and well-resourced universities with easier access to local business activity, investment and business mentors to assist in assembling strong management teams. However, there are many institutions that don’t. This means that there needs to be a focused effort on solving this problem and providing access to the right people to ensure commercialisation success: a cohort of world-class technology entrepreneurs and serial CEOs who can drive spin-out efforts. (RSM Pacec Ltd, 2018, p77-78)
CRSI is proud to work in in partnership with universities throughout the UK, and has helped to accelerate the growth of over 50 spinout companies by helping them to find and retain people with the right business management skills and specific market knowledge.
To find out more about our work in this space, contact Samantha Clarke - samantha.clarke@crsi.team or visit our University Partnerships page.
Source:
RSM PACEC LTD, (February 2018), “Research into issues around the commercialisation of university IP”, Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/699441/university-ip-commercialisation-research.pdf