Making use of existing IP to start new businesses

Aside

The Future Business Pre-Incubator (‘FBPI’is looking to find ways of leveraging the UK ’s (and Europe’s) technologies into new businesses, and so contribute to economic growth. With YCombinator and Techstars in the US focusing on internet businesses, FBPI is looking to see how to combine UK (and European) entrepreneurialism and support with IP that has been generated by some of the world’s leading scientific academic communities.

          Last Autumn, FBPI held a week-end at Oxford ’s Said Business School whose objective was to see if groups of business people, engineers and scientists could come up with ways of commercialising some of the publicly funded IP that was presented. Out of eleven ideas, one group registered a new company the following day, which quickly found ongoing funding (and is likely to take space in the new European Space Agency (‘ESA’) Incubator at Harwell); one more is in negotiations to license technology and has applied for the ESA Incubator, and two more are awaiting feedback on the technology before continuing their application.

The recent rapid growth of start-ups in the US, especially in internet businesses, has not been matched by anything remotely comparable in the UK . FBPI asks how we can create similar heightened levels of activity in other regions and industries; for example, how to exploit the differential capability that Europe has, by focusing on science and technology and engineering based businesses.

FBPI notes that the traditional software/mobile incubator follows a US model in a segment where Europe does not have a competitive advantage. What this network does is focus on existing patented technologies, to which entrepreneurial talent, expert mentors and seed-funding can be applied. All of these, FBPI notes, are available locally. The Thames Valley area is one of Europe’s largest hi-tech clusters, with a number of outstanding scientific facilities at Harwell alone, and is close to the regional HQs of three large mobile Telcos; at Oxford it has two universities and two Business schools; it has one of the world’s largest science parks and two other significant ones, the European Space Agency incubator and the Science and Technology Facilities Council’s Innovations Technology Access Centre.

FBPI sees its process as an open market that connects ‘knowledge pools’. Supporting the development process from its beginning and up the escalator of growth, it will aim to seek entrepreneurs among local institutions and communities; it will seek access especially to ESA’s, CERN’s and other IP portfolios; it will run start-up week-ends designed to identify commercialisable IP and match it with appropriate entrepreneurs; it will enable prospective new businesses to have suitable accommodation in incubators; it will ensure that cohorts of mentors from academic and commercial institutions are available; and it will seek to ensure that development capital is readily available. In addition it will seek to collaborate with or franchise an Accelerator brand, that will help to validate its regime.

Having tested the efficacy of the start-up week-end to produce IP that might have commercial potential, FBPI is now seeking to replicate these, by catalysing 20 such week-ends over the course of the ensuing two years, each one in a different area; for which it has pitched for £300k funding from the Technology Strategy Board and other funders.

John Whatmore                                                                       March 2013

The Centre for Leadership in Creativity

London

 

An economically priced, part-time Accelerator; and Accelerator Academy has more plans

Aside

A small scale but significant presence in incubation, White Horse Capital plans to extend its initial accelerator for aspiring entrepreneurs on the ‘escalator of growth’:

* by supporting the conversations that precede commitment to entrepreneurship,

* by supporting the formation of teams and the adoption by them of issues that will generate hi-growth businesses,

* and by supporting them in their later growth phases.

Most investors in early-stage ventures find themselves moving inexorably up the escalator of growth, gradually seeking to invest in more mature ventures because they have a more visible record and because the returns look better, leaving the earlier stages open for newcomers, speculators and subsidies.  White Horse Capital is a venture capital company that has opened its hand by running a fixed-price, part-time Accelerator for hi-growth businesses in Tech, Media and Telecoms.

The Accelerator Academy programme consists of a 3-hour session one evening per week, and a 2-hour session every other week for 12 weeks. Each week’s Monday 6-9 pm session starts with a speaker on a topic that is very closely relevant to the development of every early-stage venture eg sales/financing etc – followed by Q & A; and the second session is for groups of 3 or 4 entrepreneurs, to develop worked examples about that problem as it applies to each of their businesses. In the final part of the session they are required to articulate an assignment for themselves  which they will present to their mentor, whom they meet once a week. In addition, there is a Clinic at 4-6 pm every other Tuesday, at which the participants bring to the six mentors a current issue with which they are wrestling.

The cost of this programme is £600 per business (ie approx £50 per session) together with a small share option for their mentor and for the Accelerator Academy.

While the applicants for the first three ‘semesters’ have included some who have been in employment and thus not focused whole time on the development of their venture, all of the participants on the fourth semester, just beginning, are self-funded and so fully dedicated to their venture. This represents a move to focus on first year startups that are up and running, not just aspiring entrepreneurs with an idea.

The six mentors (for each semester) are tied closely in to the participants and their businesses: they are committed to give 70 hours of their time to the task (ie about a half day per week, each mentoring two businesses); and they receive an option in each – of between 1½ and 2½% depending on whether the business is in revenue or not; and some invest in businesses during or at the end of the programme – as occasionally does White Horse Capital. (The Accelerator Academy has a panel of 12 mentors, all of whom are exited entrepreneurs and have ‘done it before’, six of whom work with alternate semesters (of which there are three a year).

The Accelerator Academy still uses an electronically based selection programme, but is finding that it broadly matches up with intuitive judgments about appropriate candidates (the mentors all participate in the selection process.) The Academy has received 100-150 applicants for each semester, from whom about 30 are selected for interview by Skype, from whom 15 are selected to fill the 10-12 places on each semester.

The Accelerator Academy is looking to extend its range along the escalator growth (in the footsteps of Biocity in Nottingham          ) – by forming relationships with sources of potential entrepreneurs, such as pre-seed programmes, hackathons and bootcamps, by providing coaching via trade and professional bodies, and by running earlier-stage programmes: a half-day programme for introductions, a 2-day intensive Accelerator Bootcamp – for ideation and team creation, a three-month coaching programme – for validating ideas; and then post-accelerator support for early-stage hi-growth investment, and ultimately White Horse Capital’s Accelerator investment Fund. By these means it hopes to raise the quality of its candidates and strengthen its post-programme support and funding capabilities.

Its results are encouraging: Semester 1 included one business that subsequently was absorbed into Groupon, but all those looking for investment have found on-going funding. About 60% of Semester 2 (which finished about four months ago) have received or are on course to obtain ongoing funding, and already a third of Semester 3 (which finished about a month ago) have raised equity. The Accelerator Academy is seeking to ensure that it does not lose participants mid-programme, and like other programmes that they manage to raise on-going funding, and that they turn into hi-growth companies that create long term shareholder value.