From life-saving medicines to clean energy technologies, university-based scientific research holds the key to addressing many of the world’s most urgent problems.
But getting the fruits of research out of the lab, applied, scaled-up and delivering impact has long been a challenge for universities. The time taken to develop deep technology and the upfront costs involved in, for example, creating prototypes and testing, far exceed the ‘move fast and break things’ mentality of shallower technology, on which many expectations of Silicon Valley-style VC-backed startups are based. It is true that some technologies – and some people – lend themselves to spinning out or startup creation better than others. But I have found also that many academics under-estimate the amount of work and value contributed by the actual business part of the commercialisation process. The intellectual property (IP) is important, obviously, but it is only the start.
At the 2024 Oxford Saïd Entrepreneurship Forum (OSEF) we took a dive into the particular challenges involved in academic and deep tech entrepreneurship via a panel discussion featuring Mairi Gibbs, CEO, Oxford University Innovation; Riam Kanso, CEO, Conception X; Matthew Ritchie, Co-founder and CFO, Dendra; and Alan Roth, CEO, Oxford Drug Design.
Their combined experience, different perspectives and incisive observations built a picture of a peculiarly challenging corner of the entrepreneurial sector. Yet it is one that the world is relying on if it is to reach the UN Sustainable Development Goals. Researchers who believe that they are working on something ripe for application and commercialisation need to start getting to grips with how they will operate in this unfamiliar environment.
Change the academic mindset
Academic and university priorities are different from business priorities, and becoming a business founder (or what one of our panellists calls a ‘venture scientist’) is more than just an identity shift.
For example, patenting intellectual property (IP) should happen early – certainly before publishing, which is what academics have been trained to focus on. If you publish first, you cannot patent, so a potential venture scientist has to remember to reorder their activities, at least to keep their options open.
In fact, in a purely commercial world, a company will often choose to keep quiet about its research and development activities, patenting at the last possible moment before going public with the final new product or service, because that will ensure the maximum time for market exclusivity. But that could take years, which is a long time for a career academic not to publish.
Another mindset that can inhibit an academic’s entrepreneurial journey is perfectionism. Developing a product for market involves testing, experimenting, iterating, and adapting. It requires flexibility and the ability to work collaboratively with others, especially those who may not understand the details of the research. For example, it can be useful to seek feedback from potential customers – not to try to sell the product at that point, but to understand what they would need to see for them to consider it useful. Letting an initial product idea go can be necessary, but is painful, and venture scientists should prepare themselves for that unfamiliar feeling.
Learn how to deal with regulation
Regulation is usually presented (at least by parts of the media) as the enemy of entrepreneurialism and a barrier to developing the products that customers actually want.
Deep-tech-based ventures are more likely than others to have to come up against regulators, either because they are in already highly regulated areas, such as medicine, or because they depend to a large extent on data.
There is little point in complaining about regulators, so entrepreneurs in these areas have to learn to live with them. Advice from our panel was to engage as early as possible and ask for help, especially if the business is working on something that does not fit neatly into an existing regulatory pathway. Regulatory consultants can be valuable in negotiating this process, and so too can other founders who have already been through it and can share their firsthand experience. Entrepreneurship centres, such as that at Oxford Saïd, and university technology transfer teams can be helpful in connecting new founders to mentors who have navigated similar regulatory challenges. Programmes such as our network of experts and Oxford Venture Builder are designed to support Oxford’s founders to overcome these challenges.
On the other side of the coin, regulations can enable market creation and create opportunities. Many clean technology companies, for example, have been created to answer the requirements of the UN’s Paris Climate Agreement and the laws passed in that context.
Navigate the landscape of finance
Venture Capital (VC) is the type of financing most immediately associated with entrepreneurial ventures. Moreover, the deep tech sector continues to attract significant investment despite broader market corrections. This resilience is partly due to the sector’s potential to address some of the world’s most pressing challenges, such as climate change and healthcare. And from that point on, the conversation will be about the business: What exactly are your milestones? Why are those your plans? How are you going to deliver on them? What will you use the money for? How will you reach your target market, and what does that market look like? Is this really going to be worth the capital risk that investors need to take?
This points first of all to the need for founders to gather from the start a strong complementary team – not just tech and finance, but people who understand how to take the technology and get it into the market in the most effective way. In addition, as with regulation, it helps to have someone to talk to. As one panellist said, ‘It’s really a marathon. No one understands what it’s like to pitch to 100 investors and hear "no" for breakfast, lunch, and dinner unless they've been through it.’ Another crucial point is pitching the right thing at the right time -- for example, to avoid getting boxed in to hitting revenue metrics too early.
Securing seed funding is crucial for deeptech startups, providing the essential capital to transform innovative ideas into viable prototypes and attract further investment. The Oxford Seed Fund, a student and alumni led fund run by Oxford Saïd Entrepreneurship Centre, offers seed funding to promising startups affiliated with the University of Oxford, supporting them with both capital and a robust network to scale globally.
But it is perhaps more important to realise that VC is only one of a range of funding options, and that not all companies are suited to it – certainly not at every stage. One panellist warned tech founders against ‘predatory’ deals, ‘where someone might get six weeks of mentorship and then $30K in exchange for 7% of their company. That’s a huge dilution.’
As the wrong type of funding can kill off a company early, a better choice might be to pursue grants, which are awarded by governments and through pitching competitions (like the Yope x Oxford award hosted at OSEF), both nationally and internationally. Grant funders often choose the recipients based on a genuine interest in what they are doing – as opposed to what their potential financial performance will be – and there are many businesses that have benefited from long-term support from early grant funders.
A final option is to partner with an established corporate. Corporate venture capitalism can offer genuine partnerships where they also provide access to expertise and markets, sales channels, and even in some cases manufacturing and other capabilities. This approach is not without risks -- if the corporate faces tough times, their venture capital activity can be the first thing to go, and even in the best of partnerships, the corporate is likely to want different things from the startup which will become apparent as it begins to scale.
Network with energy and purpose
A final recommendation that is not exclusive to the Oxford entrepreneurial ecosystem but that definitely applies to students and academics here is to take advantage of the wide variety of skills and experiences in evidence across the university, and to look beyond it to the wider business and alumni communities. Here there are networks of commercial leaders who can provide help, not necessarily at the early tech phase, but with go-to-market strategies, raising capital, organisational structure and alignment.
Entrepreneurship is a team activity, not an individual one. And indeed, it requires more than one person to take an idea through all the different stages from the laboratory to the market and thence to a size and a scale where it is making a difference. It also takes time. So as one of our panellists urged: ‘Really do get going’.
In conclusion, embarking on a deep tech venture is both challenging and rewarding. By leveraging the right partnerships, networks, and a collaborative approach, entrepreneurs can navigate the complexities and drive their innovations towards success. Leveraging all the resources available within each ecosystem is something that founders should do as a pathway to success.
