The Collider’s Program co-director, Albert C. Mikkelsen, elaborates on the conclusions of The Collider’s panel he moderated at 4 Years From Now, “Tech-transfer: can it save us from the end of the startup era?”. Enjoy the read:
Will tech transfer save us from the end of the startup era? As commented in an article from a few weeks ago, the complexities of today’s developing technologies have spurred a debate on whether the startup model will continue to be effective in driving innovation.
This was the debate I had the honour to moderate held at The Collider’s panel during 4YFN, Mobile World Congress a couple of weeks ago in Barcelona. The panel counted with four outstanding speakers: Elena Canetti, Partner at Inveniam Group; Ricardo Baeza-Yates, CTO NTENT; Tom Hockaday, CEO at Technology Transfer Innovation; and Ali Muhammad, Principal Investigator in Robotics Systems at VTT Technical Research Center of Finland. Their input allowed to draw five key conclusions from the debate:
1. Technology & Deep Science as the Embryo of Progress:
“From Gutenberg’s print to 5G, science and technology have been at the heart of progress in business and society”
Although perhaps the background of the panellists leads to a certain subjectivity, it is true that big advancements in business have been historically underpinned by advancements in science and technology. Without these, value proposals mostly focus on incremental changes through optimisation and small adjustments.
2. Sustained Controlled Chaos:
“As Nietzsche said more than a 100 years ago, “One must still have chaos in oneself to be able to give birth to a dancing star””
New technologies and deep science requires time and, in the words of Ali Muhammad, a certain “Controlled Chaos”. A linear process focuses all attention on one specific outcome, but discovery requires a large element of serendipity and chance, which are achieved by constant inquiry and exploration of tangential topics.
3. End of the VC Era and Cracking the Patient Capital Model:
“Where are start-ups, innovation and VCs headed to?”
Whereas Elena Canetti explained how seed capital is dying in Israel — and mainly surviving through public support -, Tom Hockaday mentioned how it was thriving in the UK — probably due to smart tax incentives for seed investment. Nevertheless, data already shows that although Q4 2017 saw a record in venture investing, the number of deals is decreasing. The panel explained this by two key factors: the capital requirements needed by the complex technologies of today (for more detail please read After the End of the Startup Era and Why Tech Transfer Could Save Us From The End of the Startup Era) and the inherent incentives of the VC model: (1) seeking ever larger funds because of the higher pay that these mean for their managers; (2) seeking to minimise risk by investing in the later rounds that large funds give access to; (3) and obviously ignoring small seed or pre-seed investments that have virtually no impact on the large fund beyond adding complexity to accounting and increasing its risk.
Nevertheless, the panel agreed that this should not immediately mean the end of the startup era. In fact, Elena Canetti spoke about The End of the VC Era. Based on this and the two previous conclusions — technology and deep science as the embryo of progress and sustained controlled chaos — at the end of the debate we came to the conclusion that someone will need to crack the Patient Capital business model. If that is possible at all, and if any private business is willing to take such a risk, would be the whole topic on itself to be covered on another article.
4. Necessity is Key:
“As Nordics say, Idleness is the root of all evil; as the English say, Necessity is the mother of invention”
In both the case of Israel and Finland — two of the most innovative and entrepreneurial economies worldwide and represented in our panel by Elena Canetti and Ali Muhammad respectively — the key to their success was either a crisis or a need. In the case of Israel, already in the 50s when it had literally almost nothing, entrepreneurship — alongside innovation, technology and science — was a requirement for its inhabitants and for the nation as a whole. And in the case of Finland, it was the crisis spurred by the fall of Nokia — the revenues of which were equal 20% of Finland’s GDP (for more details read The Nokia Effect and Finland and Nokia: an affair to remember, among many other articles covering the subject) — that propelled the country to becoming one of the world’s hotspots for entrepreneurship and innovation. Necessity drives creativity and there are no advancements in technology or businesses without that first spark of creativity.
5. The Tech Transfer Dilemma:
“From Researcher to CTO: Tech Transfer’s Talent Dilemma”
As Elena Canetti suggested, tech transfer is “not a piece of cake”. There are many factors that are obvious to this: technologies may not be advanced enough for the market, finding the right technology for the right market at the right time and managing the cultures and incentives of researchers, entrepreneurs and investors among many others. To these, Ricardo Baeza-Yates added that there is a certain “Transfer Dilemma” with the research team that has developed the technology or the science behind a business: usually these are people who excel at research and exploration and who are comfortable doing just that. Usually, these people when they try the day-to-day pressures of operating a business decide to go back to research (as would happen vice-versa with most executives).