What makes some scientists successful entrepreneurs? To discover the magic ingredient, researchers investigated the companies established by Professor Robert Langer, a star scientist-entrepreneur. The paper, to be presented at the R&D Management Symposium, looks at the pre-formulation stage of 30 ventures co-founded by MIT professor.
This subject, ‘Improving the translation of scientific inventions from lab to market’, is one of the themes of the R&D Management Symposium, which will be held online on 4-5th August 2020, and the research was led by one of the organisers of the symposium, Professor Elicia Maine, W.J. VanDusen Professor of Innovation & Entrepreneurship at Beedie School of Business, Simon Fraser University, Canada, along with Professor Jon Thomas, BC Regional Innovation Chair in Canada-India Partnership Development at UFV, Canada.
Below we review the paper Endowing university spin-offs pre-formation: Entrepreneurial capabilities for scientist-entrepreneurs and include some extracts from it
Reducing failure rates in university spinoffs
Few science-based university spinoffs succeed in raising substantial VC financing or reaching an initial public offering (IPO), with well over half of all new ventures failing within 10 years of formation. To identify practices that would help improve the translate scientific inventions from lab to market, researchers investigated the pre-formulation stage of 30 ventures.
The process model developed by the researchers is based on the dynamic capabilities theory, which explains how firms can create and capture value through responding to evolving opportunities. It identified four pre-formation entrepreneurial capabilities that are critical to the success of science-based university spin-offs and makes recommendations for scientist-entrepreneurs, investors, university leadership, and for innovation policymakers.
Professor Maine comments: “Our study suggests that innovation policies aimed at innovative start-ups should focus on supporting scientist-entrepreneurs in the pre-formation stage of university spin-off emergence. We propose that such entrepreneurial capabilities can also be taught more broadly to university scientists.
“Given the long timelines from invention to innovation and the large sums of capital involved, early-stage entrepreneurial capability in technology-market matching could be enormously beneficial.”
Four potentially replicable practices for scientist-entrepreneurs are recommended
- Technology market matching at early stage – scientist-entrepreneurs will increase their likelihood of value creation by developing proficiency in technology-market matching to formulate projects which address critical unmet needs and to capture broader value.
- Protected IP – focusing on platform technologies, publishing in elite journals and filing early, broad, blocking patents can increase a science-based spin-off’s likelihood of securing financing, with the caveat that such patents are expensive to file and maintain.
- Improving sensing capabilities – academic entrepreneurs can equip science-based university spin-offs for success by mentoring lab members to develop solutions for significant unmet market needs, attracting venture capitalists, identifying and nurturing business talent.
- Soft starts – incubating a nascent spin-off until the breakthrough technology has demonstrated commercial viability and the scientific leadership is mentored gives the university spin-off a greater chance of meeting venture capital investor expectations.
Taken together, these practices can help in translating scientific inventions from lab to market.
Technology market matching
The focal scientist-entrepreneur practiced pre-formation technology-market matching in both directions: leading from the market and leading from the technology through formation of multiple ventures from a single platform technology.
Leading from the market is less common for scientist-entrepreneurs but can be clearly demonstrated in the genesis of the star scientist’s co-founded ventures Applied Inhalation Research (AIR) and MicroCHIPS.
In the case of AIR, when applied mathematician David Edwards came to him to get advice, the star scientist steered him towards a known problem, which would utilize both Edwards’ mathematical modelling expertise and Langer’s most renowned platform technology of controlled release polymers. This market-focused research sought to design therapeutic particles, which could be inhaled deeply and dispersed widely throughout the lungs. Edwards and Langer, went on to develop large porous particles for pulmonary drug delivery, filing a broad, blocking patent in 1996 and publishing the key research in Science in 1997, and co-founding AIR that same year.
The formation of multiple ventures from a single platform technology is another form of technology-market matching, in this case leading from the technology, although the process is still iterative.
Timing of patents
The researchers used patent-paper-venture matching to obtain objective data on the timeline from invention to spin-off formation. This revealed that broad, blocking patents are filed early and broad protection is also generated through multiple patents on alternative scientific mechanisms, which is unusual.
Surprisingly, the timing of filing such patents is also distinctive in the approach of this star scientist.
The conventional wisdom for biomedical firms is to patent narrowly first and patent more broadly later in commercialization. In contrast, Langer – his lab members, collaborating labs, and the MIT TLO – file broad patents as early as possible and in such a way as to give his collaborators protected room to take the technology in different directions through patent continuations-in-part (CIPs) sharing the same priority date as their parent document.
“Unusually, we see evidence of the scientist-entrepreneur and the MIT TLO coordinating the manner in which claiming and protecting the IP is done to enable broader technology-market matching from platform technologies,” continues Professor Maine.
In several instances, the star scientist’s patents have been licensed by field of use and even by type of therapeutic payload to allow multiple opportunities for value creation. This strategic management of IP is particularly evident with Langer’s platform technologies of controlled release polymers and biodegradable polymer devices .
Such field of use licensing is practiced both by the MIT TLO and by the spin-offs themselves, once they have in-licensed and built their own IP portfolio.
Implications for investors
Professor Maine continues: “Investors might also benefit from the insights provided by our study. Our measure of broad, blocking, relevant patents might be a useful metric for them to utilize in identifying high potential ventures ex-ante.
“Investors – particularly those with domain-specific expertise – may also choose to invest in long term relationships with scientist-entrepreneurs, helping them develop technology-market matching capabilities and introducing them to their networks of potential venture CEOs.”
Endowing university spin-offs pre-formation: Entrepreneurial capabilities for scientist-entrepreneurs J.Thomas, Martin Bliemel, Cynthia Shippam, Elicia Maine https://doi.org/10.1016/j.technovation.2020.102153
The 2021 R&D Management Conference has been announced as taking place on Wednesday 7th – Friday 9th July at the Technology and Innovation Centre (TIC), University of Strathclyde (following a Doctoral Colloquium on Monday 5th and Tuesday 6 July at Strathclyde Business School). Read more here.