Proceedings of the ICSB WorldConference

Stockholm, Sweden, June 2011

“Entrepreneurial Technology Scouting” – A New Theory Driven Method in Generating Higher Levels of Spin-off Activities at Universities

Sean Patrick O. Sassmannshausen1 Schumpeter School of Business and Economics, University of Wuppertal Gaussstrasse 20 – D-42119 Wuppertal, Germany Tel: 0049-202-439-3979 E-mail: [email protected]

Summary: For many years, Universities have supported spin-off activities. There has been success, but many professors still haven’t developed any entrepreneurial intentions. We have run a four year program to encourage entrepreneurial spirits among professors in order to leverage the quantity and quality of spin-off activities. We report on our experience, following a single case approach. We found that professors can be categorized into five distinct groups, according to their attitudes towards commercialization of research. To increase entrepreneurial intentions across faculty, each group should be addressed in its own way. Following Shane’s theory, we help professors in identifying new opportunities by developing entrepreneurial intentions based on individual prior knowledge and by delivering guidance for meaningful applied research.

1. Introduction This paper is a report on “good practice” in generating a higher level of technology entrepreneurship at our university, the University of Wuppertal, Germany. In 2006/07 we have introduced a new, theory driven model to encourage academic spin-offs. We address both, 1

Dr. Sean Patrick Sassmannshausen is Managing Director and Lecturer at the Research Institute for Entrepreneurship Research (IGIF) at the Schumpeter School of Business and Economics, University of Wuppertal, Germany. Sean Patrick Sassmannshausen

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increasing researched based entrepreneurial opportunities as well as increasing the number of persons with entrepreneurial intentions throughout our university. We want to generate more and better entrepreneurship. Even though that we have focused on encouraging spin-offs in clean technologies and renewable energy in a first phase of our project, the model has been transferred to a broader variety of technologies and knowledge industries. With this paper, we want to share our four years of experience and contribute to the literature on how to increase levels of academic entrepreneurship outside the U.S. context. As Wright at al. (2007, p. vii, 3) noticed, most literature on that topic deals with practice from the United States whereas there is a lack of publications spreading out successful developments in Europe and other parts of the world (on spin-outs in Europe see Clarysse et al. 2005). Furthermore, many reports on practice from the United States reflect atypical situations since they describe cases of “stand-alone” academic hot spots, such like MIT or Stanford (Colyvas et al. 2002, Shane & Stuart 2002, O‟Shea et al. 2007, see Wright et al. 2007, p. 3). This paper aims to narrow this gap. It contributes to the “need to understand the spin-off creation process and […] how wealth can be generated in the traditionally non-commercial environment of universities” (Wright et al. 2007, 3). 2 Fostering Spin-offs in an Academic Context – a Review and Critique on the State of Art Enhancing academic entrepreneurship is one mean in the on-going commercialisation of research from universities. Previous practice was pointed at licensing technologies (see an article titled “Who is selling the ivory tower?” by Thursby & Thursby 2002). To leverage the number of license contracts, technology scouts were brought into universities. Their task was to identify technologies which are yet well-developed but not used for licensing agreements with established firms. Therefor traditional technology scouting (see Rohrbeck 2010, Dertzbaugh 2006, and Thursby & Thursby 2002) at universities is characterized by one central activity:

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Searching for patents or inventions which are yet not turned into “innovations”, whereby the borderline between invention and innovation is marked by the market orientation of an innovation. In general, an innovation is defined as a commercial application of an invention. Paul Trott (2008: 14) notes that an innovation consists of three elements: a theoretical conception, a technical invention, and its commercial exploitation. According to Trott, the theoretical conception is the new idea by itself. Converting such intellectual thoughts into a tangible artefact (usually an item, devise or process) is an invention. Turning the artefact into a marketable product or service finally is described by the term innovation. Commercialisation of research (Zhao 2004; Markman et al. 2008) has become a central task for universities under the “triple helix paradigm” (Brundin et al. 2008). One instrument designed to support commercialisation of research is technology scouting. Common practices in technology scouting focus on identifying yet unutilised inventions and turning such inventions into innovations. Traditionally, technology scouting aims to generate revenues by selling inventions to existing outside businesses. However, in recent years, it alternatively became on vogue to transfer inventions into innovations by spinning off new companies (Di Gregorio & Shane 2003; Harrison & Leitch 2007). Several reasons have spurred this development: The transition of universities from places limited to pure research and teaching into the triple helix paradigm (Brundin et al. 2008) has put a much stronger emphasis on transferring knowledge from the ivory tower to the world offside campus (see Shane 2004). Legal developments like the Bayh-Doyle Act in the US (see Mowery et al. 2004) or the abolition of the “Hochschullehrer-Privileg” in Germany (the patent ownership shifted from professors to their employer, i.e. the university) allow universities to generate revenues from patents and many other forms of intellectual property. This makes it more feasible

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to derive revenues from patent ownership by both, selling patents to existing firms or spinning off new ventures, hoping for future royalties. Among those two options, generating revenues by cooperating with well-established firms seems less risky. However there are some reasons why cooperating with spin-off companies is a valued option too; even though the risk of exploiting a patent‟s value might be much higher. On one hand side, some patents may exist that don‟t find any interest from outside businesses and therefore are difficult to sell or to licence. Such a disadvantage position can generate a university‟s interest in making own use of the potential value by spinning off a technology based venture. However, it can be doubt if the success rate among new ventures based on those patents not valued by incumbent firms will be high. In some cases spin-offs may succeed, if incumbents have not recognized new opportunities which occurred from new technology. But in many cases, incumbents will have made good assumptions why not to purchase a new technology. On the other hand, during the past decades, politicians have understood the impact of entrepreneurial activities on job creation, supply of new, superior goods, and problem solving in the area of yet unmet demand – in short the impact on positive economic development in general. Thus in many countries, politicians have introduced supportive entrepreneurship programs, including the provision of governmental funds dedicated to fostering entrepreneurial intentions at universities and seed capital for university spin-offs (e.g. Meyer 2003; Yang et al. 2006; information for example on the German government‟s EXIST-Program is available on the internet at www.exist.de, see Koch & Kautonen 2005). From an evolutionary point of view, it can be preferable to hand patent rights or licences over to new start-ups. Often, incumbent companies purchase technologies or intellectual property rights on innovative products just to keep them away from the markets. This suppressive strategy

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is chosen when new technologies or products are a threat to existing portfolios, especially if such portfolios are based on huge portfolio-specific upfront investments which at once would turn into sunken costs. Fostering entrepreneurship therefore cannot only spur quantitative economic development but will also help to speed up changes in qualitative aspects in the supply of products and services. Today, universities do not only licence patents to spin-off ventures but they often also own equity in their start-ups. Universities now cannot only earn royalties from patent ownership but also participate in the overall process of value creation, represented by an increasing value of their equity. The value of equity is often leveraged by a multiple of several hundreds or thousands of per cent added to the initial investment. Such opportunities to participate in increased valuations of spin-off companies are not inherent when licencing technologies to existing corporations. This sometimes provides the utilisation of patents by spinning off new ventures with an advantage over collaboration with existing firms.

Figure 1:

A common approach to technology scouting.

However, initializing spin-off companies by traditional technology scouting remains a rather rare event (Swamidass & Vulasa 2009). The definition of innovation as given above by Paul Trott reveals the general short comings of traditional technology scouting. The common approach of technology scouting (as it is installed at many universities‟ knowledge transfer institutions to generate revenues from technologies and patents) focuses on one singular step in Sean Patrick Sassmannshausen

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the process chain of innovation, i.e. turning inventions into innovations (see figure 1). In having such a narrow focus, it neglects three key issues in fostering entrepreneurship (see Zhao 2004 or Swamidass & Vulasa 2009 for complementary suggestions of common barriers to commercialisation of research outcomes in general): 1) The technology bases of “single patent firms” are usually too small to ensure sustainable success; 2) often, there is a reason why such technologies sit “ideal on the shelf” somewhere in a research lab (i.e. the inventor has his/her reasons (tacit knowledge) not to proceed with any commercialization); and 3) the inventors lack of entrepreneurial ambitions, especially in an academic surrounding. (1) Single patent firms have narrow portfolios of technology and therefore are at high risk. Usually, an innovation comes with a set of patents to complement one another. Single patent firms are at great danger if the patent is subject to legal attack or if competitors learn to work a way around the protected technology. Furthermore start-ups often find it difficult to enforce patent rights, especially if a production process is object of patenting. (2) Reasons for technologies to sit ideal on the shelf somewhere in a university‟s laboratory often include the inventor‟s value assessment, based on his tacit knowledge. For instance it is known to the inventor that the market size for a certain devise is much too small to scale up a business. Or the value that a new devise could generate for potential customers is much smaller than the costs for raw materials, production and shipping, questioning the willingness of potential users to pay a sufficient price. Sometimes inventions are great from an academic point of view but simply not applicable for commercial use. Image the CERN research lab; it is unlikely that such a multi-billion Euro-facility will ever be reassembled for commercial purposes, even though experience from the first facility in Switzerland surly would allow for Sean Patrick Sassmannshausen

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reducing investment costs significantly. Besides those economic limitations, often technologies which remain unused in a university‟s portfolio to be discovered by technology scouts are simply not good enough to build the bases of a technology driven venture, otherwise they would have been used right away by their inventors or the university‟s technology transfer office. (3) The third shortcoming lies within the individuals behind inventions. Often, they lack entrepreneurial intentions and entrepreneurial orientation. They have decided to follow an academic career track and – often for good reasons – don‟t see any point in turning back to a business career. Driven by altruistic motivation or simply not in favour of commercial activities they prefer the academic achievements and honour from excellence in research over the exploitation of commercial opportunities. However, in some cases, researchers are just not trained for recognising business opportunities or (even if they do recognise a potential opportunity) they feel stressed and uneasy when it comes to developing a business model and to evaluate the commercial impact of an opportunity, due to a lack of entrepreneurial capabilities and experience. Technology scouts face the dilemma that complex technologies lack their inventor‟s entrepreneurial management skills needed for exploitation, and potential entrepreneurs lack the technological expertise needed to cope with the given technology. Building teams (consisting of technology oriented inventors and entrepreneurial oriented innovators) is often seen as one possible solution, but in practice this approach rarely is successful. 3 Entrepreneurial Technology Scouting as a New Method in Creating Spin-offs Our practice of “Entrepreneurial Technology Scouting” is designed to overcome these three major liabilities associated with traditional technology scouting. Entrepreneurial Technology Scouting is an instrument designed to address both, the quality and quantity of spinoffs. It can be stated that on average the number of spin-offs from universities remained quite

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low (Williams 2005, Wright et al 2007, p. 2). Proton (2005) found that in 2004 out of 172 European universities only 52 created one or more spin-offs. O‟Shea et al. (2007) report on evidence that even though some leading universities in the U.S. spin off a larger numbers of companies each year, most U.S. universities spin off neither zero or one company, and almost no institution (despite for those rare but famous exceptions) spins off more than five start-ups per year. Hence it seems obviously evident that a program that aims to increase entrepreneurial activities cannot rely on some random individuals to step forward with intrinsic entrepreneurial motivation and a ready developed technology. Instead of just supporting entrepreneurial projects that already exist, a project needs to create entrepreneurial projects and to develop entrepreneurial personalities at the same time. “Entrepreneurial Technology Scouting” is based on Scott Shane‟s theory of “Individual Opportunity-Nexus” (Shane 2003). With this publication, we want to communicate “good practice” experience. However, to shape our report in a more scientific manner, we conducted focus group interviews with scientists from our university‟s departments of natural science and engineering. In these sessions, we captured a picture of faculty‟s pre-perception of entrepreneurship, spin-offs, start-ups, and their opinion on commercialization of science in general. In addition, we conducted individual interviews with several professors and research assistants (pre and post PhD or other doctoral grade) from various departments throughout the process of Entrepreneurial Technology Scouting. In these interviews (as well as throughout the project itself) our partners showed different levels of entrepreneurial intentions and were affected differently by our project‟s attempts in influencing their intentions. Therefor we can build distinct categories of professors, according to their predisposition and evolution of entrepreneurial intentions. In addition, we have conducted interviews with external partners, i.e.

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managers from our incubators and science and technology parks, business angels, VC managers and bank managers. In crafting this paper we can furthermore rely on several pieces of documentation including the project‟s grant application form from 2006, yearly reports for 2007, 2008, and 2009 as well as a report on the project‟s sustainability, all available upon request. However, even though we have gained lots of success with our approach of Entrepreneurial Technology Scouting, we still have learned some lessons. Academic institutions (which are considering to adopt our approach or to create something similar) can capitalize on both, our positive and negative findings. 4 Results Different from traditional technology scouting, Entrepreneurial Technology Scouting doesn‟t focus on inventions which are already there in the lab. Instead, Entrepreneurial Technology Scouting is a holistic instrument that is designed to address both, the individuals‟ entrepreneurial intentions and the creation of opportunities (i.e. opportunities to conduct meaningful research and entrepreneurial opportunities that derive from such research later on). Therefore we aim to bread “gazelles” by: 1. Creating entrepreneurial orientation and entrepreneurial intentions among faculty members via dialog and culture. 2. Cultivating

entrepreneurial

capabilities

among

faculty

members

and

research

assistants/associates via training and education. 3. Aiding processes of individual and team based opportunity recognition by conducting technology forecasts, screening the faculties‟ research track and capabilities, and initializing applied research.

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The design of our program results in a “push and pull-approach” to opportunity recognition that addresses both, technological and entrepreneurship development. Figure 2 provides a brief overview on the design of Entrepreneurial Technology Scouting.

Figure 2:

A process model of Entrepreneurial Technology Scouting.

The process of Entrepreneurial Technology Scouting differs from common technology scouting. Instead of searching for inventions which already exist, Entrepreneurial Technology Scouting attempts to generate new applied research projects which will result in inventions, innovations, and finally in the incubation of new enterprises. The process is two-sided, influenced by demand and supply side factors, as indicated by the forward and backward pointing grey arrows in figure 2 above: On the demand side, the Entrepreneurial Technology Scouts identify technological trends, existing or future technological gaps, and existing or future demand for new or improved technologies. This demand-side oriented approach is already known by the term of “trend scouting” (Becker & Reinhardt 2006). Global players like 3M, BMW, Festo, Henkel, and Siemens utilize trend scouting. On the supply side, Entrepreneurial Technology Scouts identify technology push factors. What are the relevant technological developments which will spread out and create markets in the future? Sean Patrick Sassmannshausen

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Entrepreneurial Technology Scouts use technics like scenario technics, relevance trees, collective mind mapping, technology gap analysis, political analysis and others. Goal is not to produce exact forecasts but rather to provide well-grounded opinions about future developments. Or, as Paul Saffo puts it: “The goal of forecasting is not to predict the future but to tell you what you need to know to take meaningful action in the present.” (2007, p. 122). Usually at least three technics are combined in a single forecast. By this, data triangulation is achieved and technical and political forecasts turn out to be more reliable. For instance, our research centres had been well prepared in advance, when German government introduced a 500 Million Euro grant dedicated to fostering electro mobility, even though we had no direct access to or knowledge of any previous lobbying activities. On the day that government released the grant announcement, an internal interdisciplinary group was already in place, involving many professors and working under the title “electro mobility: university‟s capability and future joint research program grant applications”. In result, the university was able to place grant applications faster and on a larger and more interdisciplinary scale than competing schools did. It might take years until a first spin-off company will derive from this effort, but we believe that best results can be achieved from such a research based program with a long-run design. To date, there are other spin-offs which are in the stage of either seed or market entry (for instance see www.wavescape.com or www.rofobox.com); hence we agree that the pipeline needs to be filled for the mid- or long-turn, and we agree on the fact that a university‟s pipeline for spin-off companies needs to be filled from sound research, not from short term activities. In this, we follow an approach implemented at the MIT in Cambridge, MA (see O‟Shea et al. (2007) for a report on fostering entrepreneurship at the MIT). As a side effect, this research centred approach gains much more recognition and acceptance from faculty members and opens up the possibility to involve those faculty members who have no entrepreneurial intentions.

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Entrepreneurial Technology Scouts match University‟s internal capabilities with the results of forecasting, esp. technology demand and supply analysis. Instead of asking the question: “What are the inventions inside our University that are not utilized?” Entrepreneurial Technology Scouts ask the question: “Which professors, chairs and centres inside our University are capable to play a significant role in what kind of related future developments?” The question partly reflects Scott Shane‟s notion on the role of prior knowledge in the recognition of opportunities (Shane 2003). To find sufficient answers to such questions, it is often necessary to bring together several professors with complementary profiles. We use the university‟s interdisciplinary research centres in providing a platform for initialising joint research efforts. However, the scouts communicate these opportunities as opportunities to conduct meaningful research, not pushing any possible entrepreneurial aspects at this stage. This rather cautious approach fits with entrepreneurial intentions among faculty members. Many professors have chosen an academic career path for good reasons. For instance they feel attached with research and teaching by a solely idealistic motivation. Or they simply preferred to escape from the pressure and stress of the commercial hemisphere, for reasons of work-live balance, occupational endeavour with personal health, family life, personal interests or alike. Thus, pushing entrepreneurship too early could harm, not help. During our focus group interviews and thereafter, we found five distinct categories of professors, according to their commercial ambitions (see Braukmann et al. 2010). To understand what group one professor belongs to can help to build the right strategy in leveraging entrepreneurial ambitions. A “one method fits all” approach in leveraging entrepreneurial intentions could probably frighten off most professors, except for those in category 2 (see figure 3).

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Entrepreneurial Intentions in an Academic Surrounding Professors with… 1)

2)

3)

4)

5)

Disproportionate attitude to commercialisation

Balanced attitude to commercialisation

Non-commercial orientation

Consciously noncommercial and altruistic intentions

“Lazy bone” attitude

Little emotional attachment with university and the profession of being a professor and teacher Misusing university‟s resources for own companies‟ purpose Title of “Professor” utilised as part of business model “Secret serial entrepreneurs”, often in conflict with current contract, capitalizing on new knowledge privately

Figure 3:

Applied research Clear perception on researchcommercialisation interface “Intrapreneurial” professors Legally and ethically balanced between job at university (Professor) and entrepreneurial career Think “win-win” on the returns from new knowledge, utilisation in both hemispheres, commercial and academic

Focus on fundamental research, teaching, and PhD education

Focus on applied and fundamental research, teaching and PhD education

Not interested in research or excellence in teaching either

Intrinsic motivation to preform good as a professor

Intrinsic motivation to preform good as a professor

Knowledge generation is an end in itself, not just a mean

New knowledge can be both, ends and means

Often secretly frustrated by some incident throughout the career or by family issues

Money is less important than overall reputation

Money is less important than reputation within a certain community

New knowledge is used strategically to pursue advances academic careers, journal publications are more important than patents

New knowledge is shared willingly (open source) and regarded a “public good”, patenting is “immoral” and publishing is “good”

Main interests have shifted from work to leisure Consciously keeping a low profile Don‟t generate or even adopt new knowledge at all

Five categories of professors, according to their commercial ambitions (see Braukmann et al. 2010)

It seems intuitively right that each category of professors needs its own approach when the goal is enhancing individual entrepreneurial intentions. However, it is not our goal to turn professors into entrepreneurs at large. Turning professors into entrepreneurs often results in conflicts as described by category 1 and known by the literature (Tuunainen 2004 and 2005, Vestergaard 2007, and Snowdon 2003). Tuunainen (2005: 173) points at “evidence to the effect that developing an entrepreneurial university is not as straightforward as it may seem from a more generalized perspective. Developing such an entity, at least in the confines of traditional, publicfunded universities, is complicated by the emergence of a boundary between public and private activities.” […] “Controversies over four distinct issues arose: 1) the bureaucratic authority of a Sean Patrick Sassmannshausen

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department chairman, 2) the allocation of teaching loads, 3) the ownership of research tools and materials and 4) the intellectual property rights of the researchers. Ultimately, the controversy was resolved through a formal written contract that established two boundaries: a border between the social roles of university researchers and those of private entrepreneurs, and a physical separation of the work done by academic projects from that of corporate development. As a result, the hybrid research group/firm was „purified‟ into a private entity with no direct ties to the university.” A second kind of conflict can arose between academic entrepreneurs and the “successful” activities of a start-up support unit on one side and the university, as represented by its president or rector, at the other side. In this conflict of opposed interests, the start-up support unit has a strong interest in turning academics into entrepreneurs, whereas the University has an interest to keep good professors on an academic track. As one president of a university had mentioned: “High-flying academics in our universities are a source of novel and imaginative ideas, however the absolute number of such academics is limited. Convert them all to spin-off company technical directors and watch UK academic research output falter as they concentrate their efforts on bringing just one idea to market” (Snowdon 2003). To avoid such conflicts we suggest role separation (Tuunainen 2005, Vestergaard 2007): We try to win professors for functioning as mentors, providers / owners of some equity, and active board members, but to continue on an academic career path. At the same time we try to win research associates (who typically are on determinable working contracts) for an entrepreneurial career. The equity of an academic start-up (1st Stage) will reflect role separation and hence typically be structured with

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

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50.1% of equity owned by the founders (former research associates, who now opt for an entrepreneurial career); shares origin only partly in return for cash, but mostly in return for intangible investments and entrepreneurial energy and start-up management,



25.0% owned by an active Business Angel in return for cash, share premium (agio), and active support as a board member (often chairman) with rich industry experience, and



24.9% owned by the professor who backs up the business with technical expertise, mentoring, board membership, contacts, and some cash. The professor typically serves at the board, but not as the chairman since this would limit time and energy spend on the job at the university.

The University agrees on a 3 to 5% royalty on those patents which origin from university‟s research efforts and at the same time allows passing the ownership of patents from the university‟s patent agency over to the start-up company. Holding company stock (shares) in return for transferring patent ownership in combination with royalties is an additional deal structure. In 2nd stage financing, the percentage of shares owned by all three (or four) groups of owners will decline in return for venture capital, with the VC owning 25% or more and providing additional share premium. While this approach is known to professors in category 2, all other groups have difficulties to understand the benefits. Professors in category 1 feel that they give away too much, whereas professors in category 3 and 4 hardly see any point in such commercialisation of research. And professors in category 5 tend to have no interest at all. We will address these issues later. First, it needs to be pointed out that timing is essential, especially throughout early seed stage. Due to the structure of governmental support programs, spinning off companies at the right point

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in time is important (besides overruling influencing factors from the demand side). There are two relevant federal programs: (1) With the help of the federal “EXIST Gründerstipendium” program, we can support smaller knowledge based entrepreneurial projects with up to 112,000 Euros in granted seed money (no obligation to pay back) during a one year period in advance of the official foundation of an enterprise. The money is provided to cover coaching, business plan and prototype development,

patent

strategies,

and

the

founders‟

living

expenses

(see

http://www.exist.de/exist-gruenderstipendium/index.php for details). (2) Large scale, technology driven entrepreneurial projects can be fostered in advance of launching a new venture with a second branch of the “EXIST” program. “EXIST Forschungstransfer” (English: research transfer) has two stages: In its first stage it provides labour costs for three research associates and one MBA over a 18 month period and additional 60,000 Euros for other expenses like purchase of raw material and devices, costs of patenting, prototype development etc. The money provided in the first phase can add up to approx. 450,000 Euros in granted funds, according to the wage level of involved researchers. The aim of the first phase is to prove feasibility of commercialisation by prototyping and business planning. From the university‟s legal point of view, this stage is an in-house program; hence patents achieved in this phase belong to the university. In case feasibility is given, a second phase can be entered in which an enterprise is founded. Aim of the second stage is continuing the development from functional prototype to marketable product, establishing an enterprise as new legal entity, identifying distribution channels, and attracting venture capital or other funds for financing market entry. In this second stage, governmental funds sum up to a maximum of 150,000 Euros, whereas the founders are expected to provide additional 50,000 Euros (see http://www.exist.de/exist-forschungstransfer/index.php for

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details). Often, those 50,000 Euros are split amongst entrepreneurs (formally research associates), professors, and business angels by the “50.1+25.0+24.9 per cent-model” as explained above. In case more R&D is needed to finish product development, the young company can apply for a so called “ZIM” grant, a grant of approx. 500,000 Euros per project that is part of the German economic recovery program and is designed to either increase research co-operations between SMEs and universities or financing SMEs in house research efforts (more information at the internet: http://www.bmwi.de/BMWi/Navigation/Mittelstand/zim,did=291224.html). Programs similar to those on the federal level are provided by the state. However, to successfully apply for any of these programs, each project has to undergo sound evaluations. For VC investors (who often join in after the second phase of the EXIST program), a company with 50,000 Euros equity has already seen additional investments worth 600,000 or even 1,100,000 Euros from governmental grants (with no financial obligations in return), has marketable products and owns intellectual property with only a small royalty payable based on revenues, instead of a fixed fee which would only add to the burn rate. Hence our spin-off companies already have “a lot of flash to the steak” as one of our VC partners mentioned. As the development of products and business model is advanced, patents exist, and the founding team has already weathered through 36 month of ups and downs, the internal risks are limited which frequently origin from technological development, bad business intelligence, or disruptive team dynamics. This allows a well-structured and balanced VC-deal, from the founders‟ point of view. However, even the best technology will not be commercialized by academic entrepreneurs if there are no promoters pushing forward the entrepreneurial process (see e.g. Baumol 2004). As shown in figure 3, not every professor will have a vital and natural interest in functioning as an entrepreneurial promoter. We found that in internal communication different arguments can win

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professors from different categories. In leveraging entrepreneurial intentions, it is a good starting point with professors in all categories that entrepreneurial opportunities come into existence not by mere chance, but by a rather systematic approach to creating opportunities from research challenges and prior scientific knowledge. Thus, opportunities derive from professors‟ common grounds. Looking into each category however reveals the need to follow distinct approaches in leveraging entrepreneurial intentions. Category 2 is the easiest, as professors in this category tend to function as entrepreneurial promoters, genuinely motivated by their individual level of entrepreneurial intentions. Still, to involve them in a network of professors with similar interests, to privately and publicly acknowledge their contributions and to provide all kind of support from start-up consultancy to incubation and regional as well as financial networks can even further leverage entrepreneurial activities in this group. The challenge with professors in category 1 is not about motivating entrepreneurial intentions but rather to bring them back to playing the game by the rules. Little experience has been made with this group throughout the past three years in the project. Category 1 professors tend to hide from official arrangements as they “fear the light”. Category 3 professors are the most promising group in terms of additional entrepreneurial potential and the easiest to win them over. However, results won‟t come without any specific input. To this group, role models are even more important than in general. As Danson already found in 1995 (p. 86) “knowing an entrepreneur is an important “rocket“ in the process of converting potential into actual business creators.“ This is even more true for professors in category 3 when the role model too is a colleague from category 3. And it‟s even easier since we only want to motivate professors for functioning as a promoter, with some equity and intangible investments in a start-up that will be managed by former research associates. We don‟t need to

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(and don‟t even want to) convince them to separate from their academic career path. In addition, grants from the EXIST program mentioned above will add to their third party funding success indicators, likely adding to both, direct job income (according to individual employment contract) and academic reputation. In fact, reputation is as important to this group as it is to category 4-professors. For both groups it is equally important that entrepreneurship is not only about making money from commercialisation of research, but rather about creating value and making the world a better place. While money is an unequally important argument among professors of different categories, it‟s equally important to all of them that their research could make a difference not only in a laboratory but also out there in the real world. And making a difference correlates with scientific reputation. As professors in category 4 display a non-commercial, idealistic orientation, making a difference is the only argument that probably can win them over for promoting entrepreneurship. We found that this group can develop a strong attachment with the idea of social entrepreneurship. And since almost all forms of entrepreneurship can fulfil some social functions (Schramm 2010), not much more is needed for a good start in working with this group than implementing the idea that results from research could make a difference and (social) entrepreneurship provides a good momentum in making a difference. Furthermore, professors who publish results from applied research via open source platforms contribute to a positive entrepreneurial ecosystem, as shown by cases like Oracle. Despite category 3 and 4, professors from category 5 are difficult to reach or involve. Educating and inviting this group can randomly lead to positive results, but after all, in favour of concentrating scarce resources, we recommend to focus on category 3 and 4. In addition, discriminating our target group by age was found useful in most efficiently directing attention and resources as well as in placing the right arguments. For younger professors

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(approx. age group 49 and younger), arguments related to scientific reputation and chances for third party founding (e.g. EXIST Forschungstransfer, ZIM etc.) were most appealing. Taking up the entrepreneurial challenge (or not) is left to the decision making of subordinated research associates by this group of professors. Different from their younger colleagues, older scientists cared more for making a difference in the real world and showed a more active supportand encouragement for research associates ready for leaving the laboratory to start a business together with the professor as an active promoter. To professors in the age group 50+ it seemed important to know that results from their research are going to live on after retirement and will be used to create sustainable value in future. Older professors were more likely to provide cash for equity and to contribute more time on fostering entrepreneurial projects than their younger colleagues. In addition, younger colleagues had a greater need for complete information and longer decision making processes whereas older professors often followed their gut feeling and took rather fast decisions, based on prior knowledge and personal experience, as described by Shane (2003). Stimulating research associates‟ entrepreneurial intentions and providing this group with entrepreneurship education are additional tasks. Whereas professors can be associated with five distinct categories, it is hard to tell whether their research associates belong to a similar category or not. Furthermore, not every person is capable to pursue an entrepreneurial career track. And not every research associate is motivated for this unique path. Providing entrepreneurship education, networks, acknowledgement, incubators on (or next to) campus, and contact with role models are essential elements in fostering entrepreneurial intentions (see Malecki 1997). The text book standard model of entrepreneurial intentions and entrepreneurial orientation (e.g. Lee et al. 2011) can‟t be transferred from industry to an academic world, because of differences in the degree of freedom at work and because professors who directly work with associates are

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typically involved in the very same spin-off project. The key drivers for high entrepreneurial intentions as given by the standard model just don‟t apply for the academic world, at least in most cases. Furthermore, for post-PhD research associates, especially in engineering, job perspectives and income from regular employment are most promising in Germany. In Germany‟s corporate world, engineers with a PhD traditionally can make it to the C-Suite much easier than their colleagues from business school or law school. Engineers have very good alternatives instead of choosing an entrepreneurial career. What would then lead to an entrepreneurial career choice? Factors positively influencing entrepreneurial career choices among post PhD research associates from engineering and natural science departments include a high demand for self-determination, the ambition to make a difference or to contribute to something new and big, relatively high demand for independence in decision making, a certain independent live style, the possibility to determine where the business takes place (business location), and a strong demand for individual freedom that is combined with attaching the start-up company‟s CI with personal believes and goals. In our project team we too practice role separation. This allows focussing on certain tasks, accordingly building excellence in these tasks, and to build trust with partners. We distinguish five teams: (1) Entrepreneurial Technology Scouts (who are led by an expert professor in technology forecasting, a vice president of a highly acknowledged external institute (the so called “Wuppertal Institut”, a think tank in energy and environment)) are post PhD researchers who know a lot about technologies, technological developments, research challenges and forecasting. Surprisingly at first glance, they know little about entrepreneurship. Since their

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task is encouraging and directing applied research and not to push entrepreneurship, they don‟t need to talk a lot about entrepreneurship or about becoming an entrepreneur. (2) A second team, led by a seasoned professor, aims on leveraging entrepreneurial intentions (in terms of a promoter‟s role) amongst professors. The seasoned professor is a trustful partner to discuss for instance potential interfaces between entrepreneurship and public service law behind closed doors. (3) A third team executes “frontline” start-up support and business incubation by giving advice on writing a winning business plan (Rich & Gumpert 1985, Sahlman 1997), developing a lean business model, resource assembly, contact to entrepreneurial finance, market research, developing entrepreneurial business skills, and addressing entrepreneurial capabilities and intentions amongst junior and senior researchers. One aim of this team is to point at global markets and opportunities for fast growth. Wherever applicable, the team tries to turn ordinary scaled start-ups into gazelles. (4) A fourth team provides help in grant application, specialized on the federal EXIST program, ZIM and some programs executed by the state. Thanks to this small team, there are almost no red tape barriers to persons getting involved in our entrepreneurship program. (5) A fifth group assembles a network of external partners, including local incubators, business angels, coaches, a strong local bank, VC and others. To summarize, our approach to leveraging entrepreneurship is built on Scott Shane‟s theory of entrepreneurship (2003): Under the influence of Entrepreneurial Technology Scouting the event of opportunity recognition is not left to mere chance, nor is the fit between prior knowledge and opportunity recognition or even between prior knowledge and external influencing factors just accidently. In addition, a trustful communication among peer professors and the right arguments exchanged with the according category of professors increases the willingness to function as an Sean Patrick Sassmannshausen

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entrepreneurial promoter. Both elements in combination allow not only for better, but even for more entrepreneurship, including professors who hadn‟t considered entrepreneurial options so far. The supportive function (delivered by the third team) fosters the process of creating new ventures, decreases the number of “drop outs” during the process of new venture creation and increases new firms value preposition and initial firm size. The model of “Entrepreneurial Technology Scouting” has been successfully established across our university. Professors retained their academic jobs and encouraged post-PhD researchers to take the plunge: starting a business, backed by technology, by professors, and a supportive entrepreneurial ecosystem. Entrepreneurial Technology Scouting has proven to be a valuable instrument to leverage spin-off activities, in both quality and quantity. Some of our insights and experiences, as well as the overall program design might provide helpful ideas for other universities and even for large corporations which want to leverage innovation and corporate entrepreneurship. Hence we believe that Entrepreneurial Technology Scouting might be a valuable instrument at other universities just as well. Entrepreneurial Technology Scouting is a project based on entrepreneurship theory; it is not based on a certain local context. Therefore we expect that this approach can be applied by different universities in various national contexts.

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Braukmann U., Böth, T. & Ahrens, C. (2010): Anmerkungen zum Urheberrecht innovativer Vertikalpanoramen und zum Entrepreneur Jürg Steiner. In: Brock, Bazon (ed.) Himmel und Erde - Jürg Steiners Vertikalpanoramen sakraler Innenräume. Weimar: Verlag und Datenbank für Geisteswissenschaften 2010, pp. 276-277. Brenner, Merrill S. (1996): Technology Intelligence and Technology Scouting; Competitive Intelligence Review, Vol. 7(3), pp. 20-27. Brundin, Ethel; Wigern, Caroline; Isaacs, Eslyn; Friedrich, Chris and Visser, Kobus (2008): Triple Helix Networks in a Multicultural Context: Triggers and Barriers for Fostering Growth and Sustainability, Journal of Developmental Entrepreneurship, Vol. 13(1), pp. 77-98. Clarysse, B.; Wright, M.; Lockett, A.; van de Velde, E.; and Vohora, A. (2005): Spinning out New Ventures: A Typology of Incubation Strategies from European Research Institutions; Journal of Business Venturing, Vol. 20(2), pp. 183-216. Colyvas, J.; Crow, M.; Gelijns, A.; Mazzoleni, R.; Nelson, R.; Rosenberg, N. and Sampat, B. N. (2002): How Do University Inventions Get into Practice; Management Scince, Vol. 48(1), pp. 61-72. Danson, M. W. (1995): New firm Formation and Regional Economic Development: An Introduction and Review of the Scottish Experience; Small Business Economics, Vol. 7(1), pp. 81-87. Dertzbaugh, Mark T. (2006): Technology Scouting: A Transformational Role for the Science and technology Community, Defense AT&L, May-June, pp. 22-25. Di Gregorio, Dante and Shane, Scott (2003): Why do Some Universities Generate More Startups than Others? Research Policy, Vol. 32(2), pp. 209-227. Harrison, Richard and Leitch, Claire (2007): Voodoo Institution or Entrepreneurial University? The Role of Spin-off Companies in the Entrepreneurial System. Regional Frontiers of Entrepreneurship Research, Australian Graduate School of Entrepreneurship (AGSE), Melbourne. Koch, Lambert T. and Kautonen, Teemu (2005): Organizing New Venture Support in Regional Networks: Exploring Evidence from „EXIST - Entrepreneurs from Universities‟, Journal of Enterprising Culture, Vol. 13(2), pp. 127-144. Lee, Lena; Wong, Poh Kam; Foo, Maw Der and Leung, Aegean (2011): Entrepreneurial Intentions: The Influence of Organizational and Individual Factors, Journal of Business Venturing, Vol. 26(1), pp. 124-136. Sean Patrick Sassmannshausen

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Malecki, E. J. (1997): Entrepreneurs, networks, and Economic Development: A Review of Recent Research, Advances in Entrepreneurship, Firm Emergence and Growth, Vol. 3, pp. 57-118. Markman, Gideon; Siegel, Donald S. and Wright, Mark (2008): Research and Technology Commercialization, Journal of Management Studies, Vol. 45(8), pp. 1401-1423. Meyer, Martin (2003): Academic Entrepreneurs or Entrepreneurial Academics? Research-based Ventures and Public Support Mechanisms. R&D Management, Vol. 2(2), pp. 107-115. Mowery, David C.; Nelson, Richard R.; Sampat, Bhaven N.; and Ziedonis, Arvids A. (2004) Ivory Tower and Industrial Innovation: University-Industry Technology Transfer before and after the Bayh-Dole Act, Stanford, CA: Stanford University Press. O‟Shea, Rory P.; Allen, Thomas J.; Morse, Kenneth P.; O‟Gorman; Colm and Roche, Frank (2007): Delineating the Anatomy of an Entrepreneurial University: The Massachusetts Institute of Technology Experience; R&D Management, Vol. 37(1), pp. 1-16. Proton (2005): Proton Europe Annual Survey: Financial Year 2004; published by the European Commission at www.protoneurope.org. Rich, S. R. and Gumpert, D. E. (1985): “How to Wright a Winning Business Plan.” Harvard Business Review, Vol. 63(3) (May/June), pp. 156-166. Rohrbeck, René (2010): Harnessing a Network of Experts for Competitive Advantage: Technology Scouting in the ICT Industry, R&D Management, Vol. 40(2), pp. 169-180. Saffo, Paul (2007): Six Rules for Effective Forecasting, in: Harvard Business Review, Vol. 98(7), pp. 122-131. Sahlman, W. A. (1997): “How to Wright a Great Business Plan”. In: Harvard Business Review, Vol. 75(4), pp. 98-108. Shane, Scott (2003): A General Theory of Entrepreneurship: The Individual-Opportunity Nexus. Cheltenham: Edward Elgar. Shane, Scott (2004) Academic Entrepreneurship: University Spinoffs and Wealth Creation. Northampton, MA: Edward Elgar. Shane, S. and Stuart, T. (2002): Organizational Endowments and the Performance of University Start-ups. Management Science, Vol. 48(1), pp. 122-38. Schramm, C. (2010), All Entrepreneurship is Social, Stanford Social Innovation Review, (Spring) pp. 21-22.

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Snowdon, Kenneth (2003): Spin-off and Entrepreneurial Training Model; Working Paper, University of Newcastle, UK. Swamidass, Paul M. and Vulasa, Venubabu (2009): Why University Inventions Rarely Produce Income? Bottlenecks in University Technology Transfer. The Journal of Technology Transfer, Vol. 34(4), pp. 343-363. Thursby, J. and Thursby, M. (2002): Who is Selling the Ivory Tower? Sources of Growth in University Licensing; Management Science, Vol. 48(1), p. 90-104. Trott, Paul (2008): Innovation Management and New Product Development; 4th Ed., Harlow, UK etc.: FT Prentice Hall. Tuunainen, Juha (2004) Hybrid Practices: The Dynamics of University Research and Emergence of a Biotechnology Company; PhD-Thesis at the University of Helsinki: eThesis. Tuunainen, Juha (2005): Contesting a Hybrid Firm at a Traditional University, Social Studies of Science, Vol. 35(2), pp. 173-210. Vestergaard, Jakob (2007): The Entrepreneurial University Revisited: Conflicts and the Importance of Role Separation, Social Epistemology, Vol. 21(1), pp. 41-54. Wright, Mike; Clarysee, Bart; Mustar, Philippe and Lockett, Andy (2007): Academic Entrepreneurship in Europe. Cheltenham, UK / Northampton, MA: Edward Elgar. Yang, Phil Y.; Chang, Yuan-Chieh and Chen, Ming-Huai Factors (2006): Nurturing Academic Entrepreneurship in Taiwan, Journal of Enterprising Culture, Vol. 14(4), pp. 267-290. Zhao, Fang (2004): Commercialization of Research: A Case Study of Australian Universities, Higher Education Research & Development, Vol. 23(2), pp. 223-236.

Keywords: academic spin-offs; Entrepreneurial Technology Scouting; gazelles; IndividualOpportunity Nexus in practice; Entrepreneurial Intentions, Entrepreneurial Capabilities

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