The Collider’s Program co-director, Albert C. Mikkelsen, elaborates on the challenges of the startup era and how tech-transfer can make a difference.
Enjoy the read:
Most entrepreneurs, engineers, VCs and other experts agree that the next wave of technologies will be AI, Drones, AR/VR, Cryptocurrencies, self-driving cars and IoT Technologies. The common theme among these is that they are not as accessible as the web and smart phone revolutions, each for different reasons. AI requires vast amounts of data not easily available to any kid in any garage; hardware — be it drones, cars or IoT — is hard to prototype and the cycle to get customer feedback and data naturally slows down; all of these technologies require both deeper technical expertise than app or web development, as well as a wider range of experts; also, the impact that these technologies can have on society means that Governments will be wearier and entrepreneurs likely faced with complex and harsh regulations.
If this is paired with the fact that it is possible that VC & PE will have an increasingly harder time to raise funds as with the raise of central bank’s interest types other investment vehicles will become attractive again, the investment in start-ups may become smaller or, at least, pickier.
This sets the stage for what has been named “The end of the startup era”. The fact that, as that article points out, it is, for most people, impossible to name any of Y Combinator’s alumni after 2011 could be taken as a simple, visible even stupid but indicative proxy. Since 2011 the most recognised incubator in the world has not produced names that everyone recognised as being poised to take over the world, as it once did with Airbnb, Dropbox or Stripe.
But as much as the startup era as we know it may be coming to an end, it is widely recognised that the technologies mentioned in the first paragraph have an outstanding potential to change the status quo of many industries and, hence, represent an astonishing economic opportunity. Thus the question is not if, but how.
There are several approaches that will tackle this, definitely corporate innovation will be one (as the cases of the tech giants are already exemplifying) and, alongside it, an M&A market will likely become hyper-active (read more on Why the end of the startup era could be great for entrepreneurs). But the questions remains, where will the entrepreneurs with unique technologies, extreme hunger for success and unique ideas that will be financed or acquired by corporates come from? A good pretender is bridging the gap between tech transfers and incubator/accelerator models.
Where tech transfer initiatives take advanced technologies usually from universities to find market application, incubators and accelerators helps startups with training, office space and connections to customers, partners and investors. The mixing of the two should generate fertile terrain to generate start-ups with a differential capacity to compete in a complex, less quick and more expensive technological context.
Joining the two seems obvious but is not trivial. At First we have had the opportunity to lead the program for one of the first of such initiatives in Europe: The Collider. The initiative, launched by Mobile World Capital’smVentures, creates teams of three, with one STEM PhD who brings the technology and two business profiles, usually a clear CEO and COO profile.
Although it is still early to report on the results, as the program is yet in its first out of 10 months, some early observations can already be made. Firstly regarding the most prominent challenges. As the model is still in its infancy, there are many issues that need to be worked out: the creation of teams from scratch; the rapport between extremely different profiles who have extremely varied backgrounds; regulatory aspects regarding for-profit applications of publicly funded research; and even the adaptation of startup management methodologies and techniques such as design thinking or lean startup to mention the most well-known.
Secondly, about the model’s potential. In the first place regarding the interest generated; universities and research groups are showing great interest in finding market applications for their developments. Entrepreneurs are excited about the opportunity to bring cutting edge technology to markets, usually in which they have been working for a long time previously. Corporates have shown great interest in having teams demonstrate their wondrous technologies. In the second place regarding the format of the program: the technologies being transferred require the program to have both deep technical and regulatory expertise. Also, the time-to-market time frames are different for reasons already exposed, and thus the length of the program and funding given need to adapt to these requirements.
Thirdly, the required close relationship with established organisations. Whereas Y Combinator has roughly 50% of its startups developing B2B products, The Collider barely has a 20% of B2C start-ups, some of which are rather B2B2C rather than direct B2C. Also, it is likely that given the aforementioned funding, access and data requirements of these start-ups, their need for strategic partnerships and potential for early acquisitions is likely higher than in more traditional accelerator and incubator programs. They are more likely to work as providers, in partnership or as part of established corporates than to try to compete face to face with them.
Despite Kurzweil’s Law of Accelerating Returns, in today’s context some of the main opportunities for entrepreneurs are more complex, slow and expensive than we have grown accustomed to see. This does not mean that there are no outstanding opportunities outside the tech industry, nor that through the creativity that characterises great entrepreneurs, solutions that are simple, fast and cheap will be found. But speaking in general terms, it will still take a few years before AI, Drones, AR/VR, Cryptocurrencies, self-driving cars and IoT Technologies become as accessible as Python. Although some have achieved to hack their cars to be autonomous for $700, that story is more similar to someone connecting a computer to a network in the early 90s than the widespread adoption of the same technology in the late 90s and particularly in the 2000s. Hopefully, the same way that incubators and accelerators have been a cornerstone in seeding and helping early stage start-ups in the past 10 to 15 years, focused tech transfer initiatives will do so for the context of the decade to come.
EVANS, Jon (2017) After the end of the startup era via TechCrunch available at: https://techcrunch.com/2017/10/22/ask-not-for-whom-the-deadpool-tolls/ [Last accessed December 12th 2017)
FLAHERTY, Joseph (2017) Why the ‘end of the startup era’ could be great for entrepreneurs via TechCrunch, available at: https://techcrunch.com/2017/11/04/why-the-end-of-the-startup-era-could-be-great-for-entrepreneurs/ [Last accessed December 12th 2017]