6 Steps to a Successful University Spin-Out

The University of Minnesota just celebrated its 100th start-up spin-out  in ten years. Since its formation in 2006, the Venture Center at the Office for Technology Commercialization has focused on producing successful startups. In fact, the University of Minnesota was recently ranked fifth in the nation for technology commercialization initiatives by Nature Biotech.

We sat down with Dale Nugent, a Venture Development Executive at the Office for Technology Commercialization’s (OTC) Venture Center to get some insight into their process for developing successful start-ups out of the university. He outlined for us the “University Start-up Pipeline” and discussed how start-ups go from idea to reality. There are 6 stages of the pipeline, and the rate of flow between these stages is a good indicator of start-up’s potential for success; if there isn’t momentum, it’s usually a sign of a deeper problem. However, if the start-up follows these steps and pivots when the flow slows down, it is likely to add to the group of 100 start-up spin-out successes.

1. Seek and document new ideas

Start thinking with an entrepreneurial mindset. As you research and innovate, take the time to assess the contexts in which your findings might be marketable.Think about unmet needs in your field. Note your most surprising results. These are hallmarks of valuable innovations. Make a point of writing down your entrepreneurial ideas and schedule in some time to review your notes and bounce ideas off of your colleagues. When you do this, be careful not to reveal any secrets that might be patentable. Often you can talk about the benefits of your new idea without specifying how it does it.  If you think you’re really onto something, you need to think about protecting your idea. University researchers can contact OTC’s for help with this. If you think you’re onto something, go with it!

2. Evaluate commercial potential and IP position

Now you’ve got an innovative idea and want to move forward. It’s at this stage where you must evaluate whether or not this idea will sell. This is where many researchers get hung up because although their findings may be groundbreaking, it doesn’t always mean their idea is commercially viable or protectable. Here are some tools to help you decide if your idea has commercial potential:

3. Develop market analysis & financial analysis

The next step is to find the business model that makes the most sense for your technology. Oftentimes, licensing the technology to an established company with resources and infrastructure allows the technology to enter the market more quickly. However, with more disruptive technologies, a startup model can be a better route to prove acceptance for a technology so that the commercial potential is clear. Check out these market and financial analysis tools to help you determine your technology’s market potential:

BOTTLENECK!
As focus is redirected from the invention to the business plan in stages 2, 3 and 4 many innovators slow down in their flow between stages. As a researcher, you must thoroughly assess your own skills, experience and capacity for new work to decide if you are the right person to continue spearheading the commercialization effort. If not, think about adding another person to the team to develop the business relationships and provide the executive leadership necessary for success. The Venture Center will encourage innovators to be realistic about their involvement early on in the pipeline stages. Unless a researcher intends to leave the University to work at their start-up full-time, it is highly recommended that they look for an individual who can partner with them, lead the business, and drive progress on business (versus technical) tasks.

4. Develop business plan and presentation

A compelling speaker and “face” of an organization is key for this step. You need to get people excited about your idea by communicating a clear value proposition that puts your innovation above competitors. You must also have a coherent strategy for bringing the technology to market. Here is a powerpoint with a couple of tips for writing a business plan and related documents to communicate what your company will do.

5. Negotiate business and legal terms

When you’ve reached this phase, the goals of your start-up are clear, now you need “freedom to operate” using the intellectual property the company will revolve utilize. Know that this process takes time. Even for experienced business people, a technology license agreement has “a lot of moving parts”. The Venture Center at OTC exists to help start-ups get through this process smoothly as possible. You will also want to have a good business lawyer and other outside advisors helping you at this stage.

6. Execute license to start-up

When the negotiation is complete, the final step is to sign the licensing agreement for a newly formed start-up to use the developed technology. The startup then acts as a separate, wholly-owned entity that can fund itself through equity, grants, loans, etc. as it enters a new phase of growth.

Innovation Leadership: What's EQ Got to Do With It?

 

 

Do you know someone who is technically brilliant but not an effective collaborator or leader?  Someone who really knows his stuff, but likes to talk much more than listen to anyone else’s point of view?  Someone who has all the answers and doesn't appreciate it when others challenge his ideas or suggest another option?  Chances are you do.  And chances are you choose not to work with these people if you don’t have to.

As technical professionals, we are trained to solve problems, challenge the status quo, and have the right answer.  This works very well when we are working independently on scientific and technical problems.  It does not work as well when we are working as entrepreneurs in search of a viable business model for an idea or IP.  We have to collaborate across disciplines, learn fast, pivot as needed, and iteratively refine not only the “product” but also the overall business model and value delivery system.  Leaders of new ventures are faced with a world of strategic, operational and organizational dilemmas often characterized by competing priorities, perspectives and demands across multiple stakeholders.   Often there is no single “right” answer.  

The inherent complexity, uncertainty, and ambiguity of this “fuzzy front end of innovation” demands persistence, passion, openness and resilience.  In this context no one person can have all the answers or do all the work.  A growing body of research shows that in jobs of moderate to high complexity IQ is necessary but not sufficient for success.  In these roles, the key differentiator of top performers becomes emotional intelligence or EQ—the ability to recognize and understand emotions in yourself and others in order to more effectively manage your behavior and relationships.  In fact, research shows that 58% of star performance is accounted for by EQ versus IQ.

Why is EQ so important?   As much as we hate to admit it,  our emotions trump logic when they run high.  Advances in neuroscience demonstrate that this is not “psychological weakness” but rather how our brains are hardwired.  When we FEEL angry, upset, frustrated, unappreciated, etc. we can’t THINK clearly. And these negative emotions are highly contagious and distracting, reducing the productivity of others around us as they try to avoid us, guess what we really want, or in extreme cases, work to sabotage rather than support our efforts.  Conversely, when we FEEL excited, valued and challenged to do great work, we become emotionally engaged and contribute up to 26% more discretionary effort!  This is the holy grail of high performance—especially for innovation leaders and entrepreneurs who typically have very limited resources and run the risk of burning out and/or burning bridges.

Fortunately, EQ can be developed if we are willing to practice new habits, and it can help us shine as leaders and deliver better results. Here are a few simple steps each of us can take to enhance our EQ and become more effective, engaging leaders.

1. Practice the platinum rule.   As children many of us learned the “golden rule”—treat others as we would like to be treated.  While this makes sense when working with others like us, we now live and work in a diverse world characterized by differences in background on many levels--disciplines, cultures, ages, genders, ethnicity, etc.  In order to fully engage a diverse set of team members, the “platinum rule” becomes much more powerful:  treat others as they would like to be treated.  Living the platinum rule requires taking genuine interest in others and getting to know who they are, what they value, and how they like to work—not by guessing, but by observing and asking them.  This gives us insight into how we can collaborate in ways that help them stay energized, committed and empowered to do their best work.  Here are two simple questions we can ask to gain this valuable insight:

·  As we begin this project, what is most important to you personally?

·  What can I continue, start, or stop doing to better support you?

2.  “Check in” as often as you “check on”.   We tend to be good at “checking on” task and project status.  “Did you get the problem solved? What did you find out from the test results?  When will you have the results to send me?”  However, we generally are not as good at “checking in” with our colleagues to see how THEY are doing.  “How are you feeling about our progress?  What is most exciting and most frustrating about the project for you?  What can I do differently to be more helpful?”  These types of questions demonstrate that you care about the other person and give you insight into how a stakeholder is feeling about the work experience.  This insight helps inform what you can do to help key stakeholders remain motivated and supported to do their part.  And simply taking the time to care goes a long way.

“No one cares how much you know until they know how much you care.”  

John Maxwell

3.  Make vulnerability a strength.   Each and every one of us has a handful of natural talents—areas of strength in which we excel and have fun.  Conversely, we all have “gaps”—areas where we may be weak, inexperienced, or good but not great.  Rather than feeling you need to be the “hero” who is good at everything, focus your time and effort on your signature strengths and engage others as partners to close your gaps.  The operative words here are “engage” and “partner.”  By noticing who is great at things you are not, inviting them to help you in a win-win way, and demonstrating genuine appreciation for their help and contributions, you inspire others to join you in a partnership of success.  This is much more powerful than either attempting to “go it alone” or “dumping” what you don’t like on others.

“Vulnerability is the birthplace of innovation, creativity and change." 

Brené Brown

4. Lean into discomfort.   How often do we hear someone say—“Oh, that’s the elephant in the room!”?  And how often to we spend time and energy talking about the elephant or our colleagues OUTSIDE the room without addressing the issue INSIDE the room where it lives?  Elephants can appear in 1:1 or team dynamics.  Wherever they appear, they distract us and reduce our productivity or performance.  Yet we seldom address them.  Rather than continually paying the price, we can choose to address them by (1) noticing them out loud in a nonjudgmental manner, (2) asking others if they see a need or opportunity to change something, and (3) offering and/or soliciting ideas for a different approach. 

Here’s an example:  Your team has weekly project meetings for 30 minutes.  For several weeks you have started 5-10 minutes late because people aren’t arriving on time—including the project leader.  Everyone talks about their frustration with the late start—which usually results in a late finish—but no one wants to address it because the leader himself is usually late.  Rather than ignore it in the room and get distracted by it outside, address it.  At the beginning of your next meeting simply point out, “We’ve typically been starting our meetings 5-10 minutes late. Should we change our start time?”   By simply putting the elephant on the table, you are empowering the group to make a conscious choice to do something, or nothing.  This act of conscious choice tends to diffuse the emotion and often catalyzes a positive change in behavior.

If you want to be a  leader who delivers great results AND attracts and retains top talent, EQ can make the difference.  I’ll close with the wise words of Maya Angelou:  

 “I’ve learned that people will forget what you said.  They will forget what you did. But they will never forget how you made them feel.”

If you're interested in learning more about EQ, here are some resources you might find helpful:

https://www.entrepreneur.com/article/241998

http://www.danielgoleman.info/topics/emotional-intelligence/

http://www.eiconsortium.org/pdf/emotional_competence_framework.pdf

http://www.talentsmart.com/about/emotional-intelligence.php