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Understanding the University’s Role in Startup Ecosystems

November 14, 2016

 

Successful startups are not created in a vacuum. They are connected to networks comprised of faculty, mentors and other innovators. Higher education institutions can play a crucial role in an entrepreneurial ecosystem, and even a more important role within developing economies. We spoke with Dr. Griselda T. Martínez, program director of Spanish Entrepreneurial Training Programs at New Mexico State University’s Arrowhead Center about the impact educational institutions can have on empowering and growing a network within emerging economies.

How do early-stage startups benefit from universities as an active partner in the regional entrepreneurial ecosystem?

Startups benefit from university involvement in ecosystems in a number of ways. Universities are hubs of human capital, knowledge, and expertise. They are able to connect entrepreneurs, who are also often innovators, with subject matter experts in areas outside the entrepreneurs’ areas of expertise such as accounting, law, engineering, or business, to name a few. Quite often, university experts serve as consultants, helping entrepreneurs in the process of a startup creation and growth. These relationships are invaluable given the value embedded in the learning process that can be replicated by the entrepreneurs in any other situation.

Universities can also play a critical role in a startup’s vetting process. With a concentration of knowledge in the crucial aspects of launching and growing a business that includes technical as well as business knowledge, universities are able to offer validation checkpoints throughout a startup’s journey. A positive side effect to the vetting process: entrepreneurs behind the startups become more business savvy, more confident, aware of the critical aspects and ready to speak the required and specific language relevant to the different stakeholders. Stakeholders may include potential partners and investors.

Universities and other academic institutions can also offer a venue where ideas can turn into proven concepts by using the technical capabilities such as specialized equipment and the technical expertise not available in the industry, and available at a prohibitive cost. Capstone courses working as proof-of-concept labs are an opportunity for both startups and faculty members to capture the knowledge, creativity, and ideas from students and turn them into the creation of working prototypes of a product or service at the completion of the academic course. The ability that startups have to be flexible and receptive to suggestions from students represent to entrepreneurs the ability to continue their creative process with concrete outcomes beneficial to the venture creation.

Lastly, students who are aspiring entrepreneurs can tap into the university’s intellectual property (IP) portfolio for licensing opportunities. This potentially can turn research projects turned into IP into real products taken to the markets by entrepreneurs through the creation of startups.

How do universities benefit from that partnership?

As a key component to a vibrant entrepreneurial ecosystem, entrepreneurs and academic institutions are key elements to this equation in the greater context. Entrepreneurs building startups bring energy and enthusiasm to the university and an incentive to promote applied research. In emerging economies, research may not exist within the culture. The possibility of partnerships through capstone-like classes and other research projects allow entrepreneurs to provide a reality check on the kinds of resources and programs universities should provide versus what they think they need to provide. This is crucial in keeping the institution’s programs relevant for current and future students with respect to industry and innovation as an element to the academic training experience for students. Working with real projects that will become products transform into applied research projects led by researchers and involving students. Additionally, the learning process of students providing viable solutions in a real environment bridges the gap between theoretical and applied knowledge.

By startups joining the university’s network, entrepreneurs become a valuable resource for faculty members and students when they engage with current students. University affiliated startups become potential mentors, coaches, investors, by providing internship opportunities for students, new hires for their own company, and/or donors. Prospective students may also have the option to consider specific universities based on the institution's reputation to non-academic aspects such entrepreneurial culture, startup creation, funding, competitions, and other opportunities linked to startups and entrepreneurship. This is key to any university and/or any community working on building an entrepreneurial culture and ecosystem targeting the student population.  

The ability to transfer out technologies developed at academic institutions is another benefit to to partnering with startups. Academic institutions produce intellectual property (IP) through research and is protected through patents, trademarks, or copyrights. Entrepreneurs linked to startups may be the actors transforming IP into real products and taking them to local and global markets. The more successful a university is at transferring technologies out of the laboratory into products, often known as commercialization of technologies, the higher the rates of return on investment. The funds result of technology transfer may become available to fund other projects, expand in the number of research projects, and ideally create an array of programs that continue to incentivize the technology transfer process to a larger number of licensees.

Partnering with key actors within the ecosystem is critical when federal funding is available for innovative programs that aim to incentivize technology transfer and commercialization of technologies. An example of this in an emerging economy is the pilot program implemented in Mexico in an effort to replicate the U.S. National Science Foundation (NSF) I-Corps program, which was possible by a partnership between NSF, Mexico’s CONACYT, and academic institutions. This program aims to commercialize technologies by market validation through active teams formed by researchers, students within an academic institution, and business mentors.

What are some ways ecosystems can initiate and nurture university partnerships?

It is important to start with identifying a common mission or vision for this partnership. Finding an institution that shares the same goals, paired with the capabilities and capacities needed by the startup is also a plus. If the startups are proactively outreaching to the universities, bringing awareness of the benefits to both is key to setting a vision and mission in common in which both parts will contribute in their very own way.

To encourage universities to become an active ecosystem partner, it is important to highlight relevant and positive outcomes of non-traditional partnerships in creative programs, either within their institution or at sister institutions. Examples of this may include technology showcases of joint research that reached the market or sharing past success stories attached to partnerships such as the one being explored. It’s common for some level of entrepreneurial efforts or interest to exist within the institution. It is key that entrepreneurs are aware of them and actively engage in those efforts. Given the interest of universities in the students’ experience, entrepreneurs from startups can actively engage with aspiring entrepreneurs as role models and mentors.

International partners for emerging economies may represent potential funding sources and partners for further capacity building. Examples of such programs include the United States Agency for International Development (USAID), the Inter-American Development Bank, the World Bank, global non-for-profit organizations, and specific partnerships like the Mexico-United States Entrepreneurship and Innovation Council. Local champions connecting the dots through their knowledge of these types of opportunities within and outside the region may represent a game-changing strategy.

Entrepreneurs and other champions in the community should also make the institution aware of any potential challenges – and recommend ways to overcome those obstacles. It is important to maintain effective communication throughout the process, showcasing the flexibility and willingness to adapt in response to unforeseen hurdles from the startup's’ perspective.

What are common obstacles for these partnerships to develop and grow? How can either party overcome the hurdles?

Some universities are burdened with bureaucracy, which can make it difficult to start new programs. Building trustworthy relationships and recognizing the opportunities are mutually beneficial first steps. Finding faculty and/or researchers within departments that are open and flexible to work with startups on small initiatives that can be championed is key to larger initiatives to follow.

Academic institutions are required to show results and benefits as part of their education, research, and in some cases, economic development. To develop frameworks for new programs, it is crucial to track, document, and communicate the impact of the ongoing and past joint projects between universities and startups.

The creation of memorandums of understanding between universities and startups to collaborate may allow circumventing some of the bureaucracy tied to large academic institutions. Startups may provide small donations to fund equipment or other capabilities within the university. In exchange, students can be engaged in supporting and furthering startups’ research and technical challenges with the faculty members acting as liaisons between startups and student teams.  Some academic institutions allow for faculty members to create new classes and content of the new classes as long as they are relevant to the study plan.

Disengagement from faculty and staff may result from lack of understanding of the mutual benefits from working with startups. In this situation, startups need to take the initiative and communicate the benefits of a partnership. Startups and their technical challenges and (often limited resources) are a great opportunity for educational partnerships. Lastly, alumni joining startup teams may become a research liaison, building bridges between the academic institutions and the startup networks.

About Dr. Griselda T. Martinez

Griselda T. Martínez leads efforts towards providing both business and technical assistance to a wide variety of businesses in the region, the state of New Mexico and Mexico, including Hispanic and Spanish-speaking ventures. She oversees NMSU’s role in the New Mexico Small Business (NSMBA) Program, in partnership with Los Alamos and Sandia National Laboratories. She is also in charge of the implementation of programs targeting entrepreneurial education and ecosystem enhancement for Spanish-speaking national and international communities. She holds a doctorate degree in Economic Development from NMSU, with an area of specialization in Regional Economic Development.

[Image credit: Arrowhead Center]

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