Creating Start-Up Ecosystem in the University

By Dr Eryadi K Masli  In addition to delivering learning and teaching activities, universities are one of the few places where researchers and/or scientists are working to discover and create new knowledge.In the era where competition is getting more aggressive, the …

Creating Start-Up Ecosystem in the University

By Dr Eryadi K Masli  

In addition to delivering learning and teaching activities, universities are one of the few places where researchers and/or scientists are working to discover and create new knowledge.

In the era where competition is getting more aggressive, the role of universities is changing “from gatekeepers of knowledge to curators, creators, connectors, certifiers and codifiers of knowledge”. The new knowledge is leading to innovation and economic growth. However, not all universities can commercialize the created knowledge and turn it into innovative products.  The question revolves around how universities can effectively harness and commercialize new knowledge. 

Beyond Knowledge

In general, most universities commercialise their research output by licensing their intellectual property to the industry. In return, the universities will get some licensing fees and/or royalties from the industry partners as licensees. Each university will have its own financial and legal arrangements with the industry partners. The practice of technology transfer is advantageous because it allows university scientists to focus on their research without the need to directly manage or operate companies. The universities share the licensing fees and/or royalties with their scientists.

Again, each university has a different policy in sharing the revenues from commercialising its intellectual property. For example, some universities will have three parties receiving the income generated from the licensing: the university, the school/faculty where the scientists are affiliated with, and the scientists themselves. This arrangement precludes the universities from releasing the potential of the entrepreneurial spirit of their scientists. It is a common belief (and in reality, it is mostly valid) that scientists only care about their work, not thinking about running their own start-ups.

However, with the right policy and conducive environment, the universities have the alternative to speed up the commercialisation of their scientists’ works by encouraging them to spin off their research.  In addition to their profound expertise, some scientists have the capability to become co-founders of startups. To gain the benefits of commercialisation, it is imperative for the universities to create a vibrant start-up ecosystem in their campuses.  

The Power of Teams

Creating a successful start-up as a spin-off is not an easy task. It is not just about science or technology. But there is one crucial ingredient as Steve Blank (famous for his Lean Launchpad) said that “it is about the team” on the success of startups. Where can the scientists find other co-founders for establishing their start-ups? This is where university students can be “recruited” to collaborate with the scientists to launch their start-ups. These students, ideally, can be at the Master’s level with three to five or so years of experience in the industry. 

In collaborating with the students, the scientists (post-doctoral researchers) can access the necessary skills and expertise to translate their inventions into spin-offs and commercial opportunities. The combination of business and technical skills will attract investors. This type of collaboration to create university spin-offs generates monetary and social values quickly.  

In creating the start-up ecosystem, the universities need to establish incubator and accelerator programs that will nurture these spin-offs to bring their products to the market faster. Additionally, universities must align themselves with the investors (angel investors, private equity funds, venture capitalists) actively investing in university spin-offs.

For example, in Malaysia, there is Cradle Fund, Malaysia’s early-stage start-up influencer, incorporated under the Ministry of Finance Malaysia (MOF) in 2003 with a mandate to fund potential and high-calibre tech start-ups through its Cradle Investment Programme (CIP). The cradle is presently administered by the Ministry of Science, Technology and Innovation (MOSTI). Even there is a Malaysian Business Angel Network (MBAN) Sarawak chapter, which was assisted by the Cradle Fund. The role of angel investors is very important as they have more appetite for the risks in investing the very early-stage spin-offs.  

Through incubators and accelerators, the universities are providing training to scientists on business development, market analysis, etc. This is to create an entrepreneurial talent pool available to support the potential spin-offs in the universities in the longer term. While most of the scientists’ workload is currently determined by their research publications and/or the number of patents they generate, the universities should have an accommodating policy to allow their scientists to take time off (fully or partially) to run the start-up.

In exchange for this privilege, universities will be allowed to have equity in these spin-offs. To enhance the startup ecosystem, it is essential to include mentoring and service providers such as patent lawyers, commercial lawyers, accountants, and other professionals as integral components of the ecosystem.