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Academic Spin-offs and Venture Capital-Backed Start-ups: Realities and Trends

Explore the realities and trends of academic spin-offs and venture capital-backed start-ups, including industry distribution, the origin of entrepreneurs, challenges, and the correlation between research and innovation.

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Academic Spin-offs and Venture Capital-Backed Start-ups: Realities and Trends

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  1. Quelques Réalités des Start-ups (académiques) ventureideas @ EPFL 24 novembre 2005 Hervé Lebret

  2. EPFL spin-offs

  3. US University VC backed spin-offs • Range: 1992-2001 • These are VC backed startups • EPFL is in the 6-10 range • - Snaketech • - Cytion • - Endoart • - IR Microsystems • - Dartfish • - BeamExpress • - Covalys • - Innovative SIlicon Source: " A STUDY OF ACADEMIC ENTREPRENEURS USING VENTURE CAPITAL DATA“ Junfu Zhang, PUBLIC POLICY INSTITUTE OF CALIFORNIA (2005)

  4. What is an academic spin-off? “an academic spin-off is a new firm created to exploit commercially some knowledge, technology or research results developed within a university” from “Toward a Typology of University Spin-offs” Pinay and al. Small Business Economics, 2003 e.g. Google is a Stanford spin-off, - basic patent belongs to Stanford - technology developed by founders during their work Yahoo is not a Stanford spin-off: - no IP generated - founders developed it on their spare time

  5. Typologies of academic spin-offs Source: “Toward a Typology of University Spin-offs” Pinay and al. Small Business Economics, 2003

  6. Typologies of academic spin-off Source; “Toward a Typology of University Spin-offs” Pinay and al. Small Business Economics, 2003

  7. Industry distribution of start-ups Source: " A STUDY OF ACADEMIC ENTREPRENEURS USING VENTURE CAPITAL DATA“ Junfu Zhang, PUBLIC POLICY INSTITUTE OF CALIFORNIA (2005)

  8. USA vs. Europe - Hi-tech Source: Personal Compilation from Yahoo data, sept05

  9. USA vs. Europe - Biotech Source: Personal Compilation from Yahoo data, sept05

  10. Where do entrepreneurs come from ? In hi-tech Which institutions: - Big companies? - Start-ups? - SMEs? - - Universities • Which role: • Business oriented people? - Engineers? • Students/PhDs/postdocs? - Professors? Some data: "High-Tech Start-Ups and Industry Dynamics in Silicon Valley" Junfu Zhang, PUBLIC POLICY INSTITUTE OF CALIFORNIA (2003)

  11. Where do entrepreneurs come from ? In biotech Some data: Which institutions: - Big companies? - Start-ups? - SMEs? - Universities? • Which role: • Business people? - Engineers? • PhDs/postdocs? - Professors? "The Dynamics of California’s Biotechnology Industry" Junfu Zhang, PUBLIC POLICY INSTITUTE OF CALIFORNIA (2005)

  12. Some indicators in Switzerland Entrepreneurship acceptable as an average Figure 2: indice d’activité entrepreneuriale des entreprises Figure 1: taux d’activité entrepreneuriale Intrapreneurship maybe a problem • Global Entrepreneurship Monitor; Rapport 2003 sur l’Entrepreneuriat en Suisse

  13. Switzerland faces challenges The Swiss specificities People and infrastructure high quality Entrepreneurial spirit National growth rate Foster what you have SOURCE: trend chart on innovation – European Commission

  14. 66% of jobs Employment in Switzerland it is well known SMEs are an important component 99% of companies Source: OFS RE 2001 et www.pmeinfo.ch

  15. Jobs in “top100 Swiss” startups About 10-15 companies per year, creating in average 80 jobs each Source:http://www.inno-swiss.com/fr/rangliste.asp

  16. Employment in Switzerland Do startups grow faster than SMEs? Source: OFS RE 2001 et www.pmeinfo.ch Top100 Swiss data

  17. USA vs. Europe - Hi-tech It’s also about jobs Source: Personal Compilation from Yahoo data, sept05

  18. USA vs. Europe - Biotech It’s also about jobs Source: Personal Compilation from Yahoo data, sept05

  19. Jobs and wealth USA vs. Europe - Hi-tech USA vs. Europe - Biotech Source: Personal Compilation from Yahoo data, sept05

  20. 2.5% of jobs 45% of jobs 44% of companies Jobs in California biotech 98% of companies "The Dynamics of California’s Biotechnology Industry" Junfu Zhang, PUBLIC POLICY INSTITUTE OF CALIFORNIA (2005)

  21. Switzerland vs. US biotech Many Swiss companies remain extremely small

  22. Jobs in tech clusters “5 or more employees” might be an interesting measure "High-Tech Start-Ups and Industry Dynamics in Silicon Valley" Junfu Zhang, PUBLIC POLICY INSTITUTE OF CALIFORNIA (2003)

  23. Top US and European VCs US VCs are bigger but there is money in Europe Some VCs among the biggest Source: Personal data

  24. US and European VCs US VCs are bigger but there is money in Europe from 2000 to Q3 - 2004 Source: Amadeus Capital Partners (thanks P. Dutheil)

  25. L’âge du capitaine! Source: Personal compilation from 42 famous founders Source: Entrepreneurs from Technology-Based Universities: An Empirical First Look D. Hsu, E. Roberts and C. Eesley (Draft Sept, 2005)

  26. Research and Innovation • There has been an going debate on the contradiction in • doing quality research and spin-off activity. However: • many studies show a correlation between number of publications and patenting, between quality research and innovation (e.g. Agrawal 2002, Shane 2000) • in biotech, many very successful startups are linked to “Star” scientists, e.g. Genentech, Biogen, Amgen have Nobel Prize founders • who knows Einstein had patents on refrigerators ? (and made money with them!) • clearly Stanford, Berkeley, MIT, Harvard are among • the best for spin-offs • the best in research ranking • “a university’ s national academy membership is the most important variable in explaining its number of academic entrepreneurs” Zhang (2005)

  27. A few personal thoughts • It seems there may be an advantage for founders who are • ambitious, i.e. focused on growth • young • living in the USA? (at least know how it works) • It is more difficult but possible to succeed in Europe • Wealth and job creation are the two faces of the same coin • I am not sure the lack of resources is a good explanation • for the low success rate and number in Europe • The world is global, I am not sure what a local leader is

  28. So what? A few other lessons from the USA, at least from the Silicon Valley… - Public funding is huge (e.g. $3B for Stem Cell research in California) - Innovation should be opened (e.g. Saxenian’s work) - Ambitious projects/people more visible and likely to succeed? - People keep trying and risk taking is a value - It may be easier when you are young

  29. About failure and risk “Success is going from one failure to another, without losing your enthusiasm” Winston Churchill “Ever tried, ever failed? keep trying! fail better!”Samuel Beckett “If I am in total control, I am not going fast enough” Mario Andretti

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