Connecting the dots: Josemaria Siota on the present and future of the tech transfer ecosystem

Josemaria Siota is the executive director of IESE Business School’s Entrepreneurship and Innovation Center and a designated corporate venturing expert at both the European Commission and the World Economic Forum. He is a prolific author and in-demand public speaker on the subject. Considered one of ‘the world's most influential speakers on corporate venturing’, he has published books and studies for Harvard Business Review, MIT Technology Review, World Economic Forum, PwC, the European Commission, Forbes and more. During our interview, Josemaria shared his unmatched insights on the corporate venturing ecosystem, its response to the current crisis, and his vision for the future of the sector and initiatives like The Collider.

With extensive experience in all kinds of innovation and research initiatives, what is it about this field that excites you?

Impact, relevance and novelty. Having a deep, long-term and positive impact on society, and how this work can support that. Waking up in the mornings and knowing you’re going to do something that really matters to people. And trying to spot gaps nobody has covered that will be great in the future – designing the future is something relevant to me.

So what led you into the world of tech transfer? Was it always an interest of yours?

When I started my professional career, I was an IT engineer. I loved to code. But I realised I wanted to do something more – I was looking for that impact and relevance. My first thought was to be on the corporate side, so I built some ventures, with variable success and some failures. I started to think about who the leaders were in this field, so I started to connect with academics, entrepreneurs and so on. I’ve discovered what I call three waves of expertise. The first being innovation, which will always be successful. Second, corporate venturing. And the current wave, and third, tech transfer.

Is that wave moving at the same pace in Europe as, for instance, the US?

I like to define tech transfer as the process of commercialising discoveries from research to the market. For that to happen, you need good research and the raw material. You need a market to adopt that raw material, and you need something in the middle. In Europe we have 21% of the top research centres worldwide, according to several metrics. So we’re quite strong on that. In the States they’re very strong – from Harvard and Stanford to MIT. Also in Asia, there’s strong research. But that’s only one part of the equation. In Europe we’re really good on moving from money to research, but there’s room for improvement on moving research to money. We need the mechanisms to move from A to B.

So that gap needs to be filled? The bridge between the two is lacking?

A recent report we published with the European Commission found that, while there are 3 million patents at the European Patent Office, 95% of them are dormant, inactive or under-used. The remaining 5% account for 40% of European GDP, so imagine activating just another 5%. This European ‘Valley of Death’ is caused by a lack of funding for proof of concept, particularly for deep tech and deep science entrepreneurs.

 

A big corporate investment director will always choose an entrepreneur with an easily understood business model that guarantees ROI in seven years, over another whose language they don’t quite understand – one whose product is complex and maybe promises ROI after 15 years.

 

On the other hand, there are tremendous corporate investment resources and venture capital has multiplied between four and five times since 2013. What if we had an intersection of both, where the weaknesses of some are the strengths of others? Complementary intersections between corporations and research… something that I’m beginning to call ‘corporate deep tech’.

A large part of your career has been devoted to bridging that gap. How do we facilitate tech start-ups partnering with larger corporations?

Only 0.4% of non-deep-tech entrepreneurs raise funding from venture capital, and seven out of eight disappear within three to five years. So imagine a deep-tech entrepreneur – it’s really tough.

 

We need more mechanisms for corporations to work with deep-tech entrepreneurs. And I am starting to see it. In the energy sector, BP is starting to provide ‘tickets’ of between $50k to $250k for proof of concept from deep science entrepreneurs, with 12 months to validate that concept. Another thing that’s growing, and this is going to be big, is corporate venturing squads.

 

Imagine five corporations from different sectors joining forces with entrepreneurs. They share the risk, each reducing costs of proof of concept by 80%, and increase the value proposition to the entrepreneur, offering collective resources, expertise and distribution channels across different sectors.

 

The ‘push’ to market needs better cross-pollination of knowledge across Europe. Expertise is sometimes regionalised across research centres, which maybe hire academics to push discoveries with no previous benchmarks. So we need to connect tech transfer officers and research centres better, and to professionalise the industry; there are not many master’s in tech transfer right now.

 

Lastly, we need more co-investment mechanisms. Public-private investment mechanisms like InnovFin, which is targeting that gap.

Where do you think The Collider, as an accelerator programme, falls into that?

I see it as an innovation connectivity platform, connecting the dots between corporations’ needs, research and solutions. It also provides an ecosystem, allowing for a higher impact at a lower cost. And it’s an acceleration network, where big companies can tap into European deep-tech expertise.

Given the current pandemic, is it the right time for corporations to get involved with innovative start-ups, or is this a period for reflection?

I’m always being asked this! There’s been a huge increase in volatility. Corporate venturing teams are under extra pressure to be faster and predict more accurately while tightening costs. Skills like agility and a good sense of what’s next are becoming more relevant because an opportunity today may have gone in 30 days, and you may be missing the biggest growth opportunities.

 

With lower budgets and higher risk, there’s actually more competition for top-tier entrepreneurs. With the new corporate venturing squads, a strong idea is even stronger in the new normal because you’re innovating to tackle the main pains the corporations are suffering.

 

The ecosystem now includes enablers: venture building programmes like The Collider, VC firms offering corporate venture capital as a service… even corporations consulting for firms in other sectors. New types of consulting firms are emerging that ask corporations what they need. Then there are business angels, private incubators, universities and more. Deal flow is getting democratised.

So what do you hope to see happen in future?

Though, as I said, venture capital collaborations have risen four-fold since 2013, 75% of those collaborations fail. The best solutions I see are those corporate venture squads which reduce costs and risks while continuing to learn together. I hope to see the cross-pollination I mentioned – such as better knowledge-sharing among innovation centres. And in the middle, good private-public investment to smooth that connectivity.

 

I think we’ll see a professionalisation of the sector, and more mechanisms to encourage proof of concept, starting in Europe but cascading down into regional programmes. And higher corporate interest in working with these entrepreneurs; I see the number of corporate venture squads rising rapidly worldwide, through networks like chambers of commerce or venture capital associations. Soon, there’s going to be a boom.