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Annual Review

5 June 2015

Insights from universities

Early stage Report 2015: Universities are increasing, and increasingly diverse in, their entrepreneurial support programmes. Regional differences show continental Europe broadly behind the US and some emerging market academic institutions. Fewer than half of universities have specific corporate partnerships for startups.

Author: James Mawson, editor-in-chief

Global University Venturing has carried out its first survey of early stage participants with the majority of the respondents coming from Europe and North America.

Regional breakdown

Europe (continental) - 14/41
UK - 11/41
North America - 15/41
Asia - 1 – Tsinghua

Source: Global University Venturing

This breakdown broadly reflects the Organisation for Economic Co-operation and Development’s (OECD) regional analysis of the top 50 universities, primarily because many of these top universities answered the Global University Venturing survey.

Top 50 universities in 2013

US - 34
UK - 8
Netherlands - 2
Switzerland - 2
Taiwan - 2
Denmark - 1
Israel - 1

Source: OECD scoreboard

Global University Venturing then asked what programmes they had in place to support entrepreneurship on campus. Everyone said their institution had a technology transfer office (TTO).

There was more diversity by region on other support mechanisms. Half of continental Europe-based academic institutions had no incubator, or proof-of-concept, seed or university venturing fund.

By contrast, almost all UK-based institutions provided mentoring, incubator and startup competitions, while eight out of 11 that answered this survey question had a seed fund and six had a venture fund.

The UK results were similar in the number, albeit a lower proportion, to the US, which had six out of 15 with seed or venture funds.

What entrepreneurial support mechanisms do you provide?

Mentoring resources - 32/41
Tech transfer office - 31/41
Startup competitions - 31/41
Incubator (owned by university) - 24/41
Proof-of-concept grants - 24/41
Seed fund - 18/41
University venture fund - 16/41
Corporate partnerships on entrepreneurship - 16/41
Incubator (affiliated with university) - 14/41
Student startup fund - 12/41
Student-managed venture fund - 2/41

Source: Global University Venturing

The main support mechanisms, however, disguised a welter of initiatives going on at the most innovative universities. These included student crowdfunding sites and entrepreneurship programmes, university challenge-originated funds, with continuing close ties to the university, an integrated TTO company and research park, accelerators, “advanced hackspaces” and “makethons”, grow-on spaces – scale-up incubator space – pre-incubation programmes, special statute for student-entrepreneurs and a university-wide “entrepreneurship” elective.

However, Tim Bernstein, partner at commercialisation firm Yet2, said: “Our corporate clients would not be that interested in the universities or research centres that score highest across a broad set of entrepreneurial measurements. Seems like those would primarily just be the bigger universities.”

Rather, he said, corporates would be more interested in the universities and research centres with:

  • The most prolific flow of new ideas and startups.
  • The best track record and commitment to developing startups and technologies beyond standard academic realm, further toward realistic markets – includes resources and capabilities and a willingness to develop beyond lab scale, especially an ability to generate comparative performance data.
  • The most realistic view of the economics of working with industry – an understanding that no one can expect $500,000 or $1m in industry sponsorship or license cheques up front.
  • Most transparency in decreasing the level of effort required to find relevant valuable opportunities – help to filter the wheat from the chaff.

But just as nearly half of the corporations surveyed looked to universities for help in their early-stage entrepreneurial endeavours, so nearly half (16 out of 41) of universities had specific corporate partnerships concerning entrepreneurship.

However, when asked what were the top three most innovative corporations – national and international – with which they had worked at the university, there was some separation by region. The majority, 40, of “innovative” corporate partners for each university were local firms, while universities chose 27 from a continent separate from their home territory that they valued working with.

For continental Europe respondents, all bar four universities, including two in Russia, chose local corporations or their own startups. In the UK, the mix was mainly UK and US businesses but with some continental European corporations. For US universities, the mix was mainly domestic businesses with some in continental Europe but none in the UK.

Universities’ most innovative corporate partners
(those with at least two nominations from different universities)

Dow
GlaxoSmithKline
Google
Novartis
Rolls-Royce
Samsung
Syngenta

Source: Global University Venturing

Being able to attract and work with the best and most innovative multinational corporations is an important signal that the work done at a university could be globally significant, while building strong ties with the local business community benefits society and the economy.

Some countries have taken less interest or have been less successful, with a number of universities responding to the Global University Venturing survey unsure how to answer, but universities have played a central role in other regions where this has already occurred, notably on the east and west coasts of the US.

The public University of California system, which has regional campuses in Los Angeles (UCLA) and San Diego among other sites, are individually and collectively powerful, and recently set up a $250m university venturing fund to back its student and faculty entrepreneurs.

UCLA alone said its state wide impact was through employment – 103,000 people being paid an aggregate $5.6bn, output of $12.9bn, tax generation of $1.9bn. UCLA startups alone contributed employment of 4,411 being paid $295m, delivering a combined output of $1.1bn and local, state and federal taxes of $108m.

In northern California, research conducted in 2011 by two local professors found Stanford University’s economic impact via innovation and entrepreneurship by Stanford alumni companies had posted aggregate world revenues of $2.7 trillion annually and had created 5.4 million jobs since the 1930s.

This followed research published in 2009 by one of the Stanford authors, Charles Eesley, into Massachusetts Institute of Technology’s (MIT’s) entrepreneurial impact on the east coast.

In its less-conservative direct extrapolation, MIT found 25,800 then-active companies founded by its alumni, employing about 3.3 million people and had aggregate annual global sales of $2 trillion, producing the equivalent then of the world’s 11th-largest economy.

This level of impact takes decades to show up and requires an ecosystem that can reinvest in its talent.

Katharine Ku has been director of Stanford’s of technology licensing office since 1991 and in a series of blogs set out more than a decade ago some of the prerequisites for successful licensing activities.

Similarly, Lita Nelsen has been part of MIT’s technology licensing office since 1986, and has been its director since 1992, and on winning the Global University Venturing lifetime achievement award last year said: “My husband and I graduated from MIT in the 1960s, and each of us joined our professors’ startup companies.”

The talented also reinvest in their innovations, and by helping others build a collaborative ecosystem their alumni and institution can also benefit from. Nelsen, keynote speaker at this year’s combined Global Corporate Venturing Symposium and Global University Venturing: Fusion summit, was instrumental in setting up the UK’s TTO association, PraxisUnico, while MIT has partnered a host of other regional initiatives, from Russia to Portugal in Europe and across the Middle East and Asia.

In Europe, the history of a university’s impact can be even longer, and could be, as Uppsala University, the oldest university in Sweden and the Nordic region, said: “Huge. We have been here for more than 500 years, the last 400 years as a major part – more or less dominating – of the city.

“Many of the companies in the local environment [that] are big companies [and] part of international company groups such as GE [and] Thermo [Fisher Scientific], started as spin-outs from the university 40 to 50 years ago.

“Other global companies, such as ABB [and] Sandvik, recruit a lot of our students every year. Government officers and public officers are [also] often recruited from Uppsala University. The University Hospital is the biggest employer in the region, with about 10,000 employees and both national and international patients.”

In the wake of MIT’s and Stanford’s influential economic reports, other universities have updated or looked more closely at their impact.

UK-based Birmingham University said in early 2013 that consultancy Oxford Economics had calculated its economic impact on the city of Birmingham and the West Midlands region, following a similar economic impact study in 2005-06. The consultants said the university generated £1.07bn ($1.66bn) of spending in the West Midlands economy in the 2011-12 academic year, a 38% increase since the 2005-06 study, made a value-added contribution of £530m to the region’s economy, supported 11,830 jobs in the region, including a high proportion of highly-skilled roles, was a net importer of talent to the region, and attracted £145.5m of research funding in 2011-12, 87% of the research income received by all Birmingham higher education institutions and 12% of the region’s total research and development spend.

Imperial College London said it had a large global impact but regionally was “a large employer and creator of skills and talent”, adding: “Our spin-outs start out in London, employ thousands of people and have raised over £1bn of capital. The new Imperial West development – a £3bn campus – will be an ecosystem for innovation with university, investors, startups, incubation and industry all co-located in west London.”

In Scotland in the UK, University of Strathclyde’s Economic Impact Study for the 2012-13 academic year by consultants Biggar Economics found the institution provided £276.5m in gross value added (GVA) and 7,805 jobs in the city of Glasgow and £527.5m GVA and 13,194 jobs in the UK.

And while attention is naturally focused on the current crop of top universities primarily from the US and Europe, institutions from other regions have been learning best practices and applying them to their local conditions.

Sergey Kortov, a vice-rector of science and innovation Ural Federal University UrFU (Ekaterinburg) in Russia, said his university was “a socially-responsible, higher-education establishment”.

He added: “It vigorously participates in solving the region development priority tasks, acting as a partner of regional and local administrations in implementation of social infrastructure strengthening programmes and improvement of services quality in social and cultural spheres.”

He listed the following forms of contribution to social-economic development of the Ural region – collaborating with educational establishments, art, culture, sports and other organisations and financial and organisation support of events directed to solve problems in the community.

Tsinghua University said it was one of the most prestigious universities in China as its alumni include 26.8% of the Chinese Academy of Sciences, 17.6% of the Chinese Academy of Engineering, more than 400 ministers, vice-ministers, provincial governors and vice-governors, as well as many presidents and vice-presidents of universities. Yi Jiang, general manager of the Xin Centre-Tsinghua University, said last year Tsinghua had filed 2,010 Chinese and 400 international patents, and had 30 patents transferred and 31 licensed, valued at RMB150m ($24.2m). It had between two and five spinouts and at least 20 student startups.

This puts Tsinghua in the top tier of research commercialisation centres.

How many spin-outs – companies based on university IP – did your institution generate in the last academic year?

0 / 1
1-2 / 7
2-5 / 13
6-9 / 8
10-15 / 4
16-20 / 1
20+ / 3

How many student or graduate startups did your institution generate in the last academic year?

0/don’t know / 9
1-2 / 4
3-5 / 5
6-9 / 2
10-15 / 2
16-20 / 1
21+ / 11

Source: Global University Venturing

In Europe, many TTOs felt under resourced or were building up their focus in this area. Russia-based UrFU said during the latest academic year of 2014-15 nine startups were created on its grounds after changes in the past 18 months.

Another respondent based in the UK said: “We had about eight invention disclosure forms last year, about £280,000 of revenue skewed heavily by a key licence, perhaps half a dozen patents filed, but patents are not the driver, they are a consequence of our commercialisation activities. All this needs to be seen in the context of two full-time tech transfer staff catering for all the intellectual property (IP) issues emanating from the university and a research income of only £10m.”

Another said its licensing revenues were generally around £750,000 annually, ranging from £500,000 to £1m over the past five years, after its “structured IP panel process that assesses opportunities prior to invention disclosures and patent filings”, which results in a “very high percentage of disclosures being filed [25-30 a year] and patents ultimately issued”.

In the US, the Association of University Technology Managers (AUTM) in its latest survey found 5,198 licences were executed and 818 startups were formed out of academic research in 2013. However, the AUTM said: “Only 70 institutions reported this startup company data, against a total population of approximately 300 institutions. Most tech transfer offices do not have the resources to track this data, so these numbers are grossly under representative of the true impact of technology transfer on job creation.”

Lacking resources can hamper the support institutions offer to entrepreneurial students after graduation but many of the most successful offer a wide sweep of options.

Tsinghua said it had an incubator and accelerator programme, X-Lab, to support the entrepreneurship of Tsinghua alumni, and had university venture funds to which those startups could apply.

In Russia, within the innovation infrastructure of UrFU, there is a centre of technologies transfer and entrepreneurship.

Across continental Europe, most respondents broadly echoed one answer: “Not sure if it is the task of a university to provide post-graduation services to students,” leaving these services mainly to federal, state and other programmes, such as Exist-Grunderstipendium and Junge Innovatoren in Germany.

In the US, in the Pittsburgh region, there are several accelerator programmes and funding, often with state and federal support, while a number of universities can provide a few years of mentoring and use of their incubation facilities, as well as courses on how to start your own business, workshops, networking events and guidance on where to find the support you need.

The attitude among public academic institutions is increasingly following that of privately-funded peers that faculty and alumni are important beyond the few years they spend on campus. As one US respondent said: “[They are] always [Johns] Hopkins family.”

Copyright Mawsonia Limited 2010. Please don´t cut articles from www.globaluniversityventuring.com or the PDF and redistribute by email or post to the web without written permission.

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