Tech Transfer eNews Blog

Lack of focus on scaling up may limit the long-term success of university-launched ventures

By Jesse Schwartz
Published: March 22nd, 2023

A detailed article on how and why TTOs can benefit from a more intensive focus on the scale-up of university-born ventures appears in the March issue of Technology Transfer Tactics. To subscribe and access the complete article, or for further subscription details, click here.

Scaling up is sometimes the forgotten stepchild when it comes to university start-up efforts, yet the scale-up phase is often the most important in terms of long-term success and impact: creating jobs, building revenue, and driving economic growth. Some TTOs have realized that getting a start-up formed is not enough, and that a focused effort on scale-up can greatly increase the odds of long-term success.

The timing and types of scale-up aid can vary from one program to another.

The University of Georgia in Athens typically starts working with start-ups on a form of scale-up when they are successful in obtaining Small Business Innovation Research (SBIR) funding, says Ian Biggs, director of start-ups for Innovation Gateway, UGA’s tech transfer organization. In order to get an SBIR, the start-up has to be able to manage the SBIR award and commit to delivering a certain amount of activity within a certain time, so that means it needs to evolve, he says. UGA refers to this as the development phase.

“That’s where a lot of university [start-ups] have a bit of a hiccup because until that point, essentially, they can exist with just the inventor working on it,” he says. “The defining factor of this development phase is you have to have a team. One of the biggest drivers of getting projects through that difficult part of Phase One SBIR and moving into Phase Two is that we help them find the right team to work on their project. And that is not easy. Because in all honesty, it’s not a particularly attractive proposition.”

The Phase One SBIR funds will not last long, but the funding goes further with the help of a consultant who has worked with start-ups before, Biggs says, and UGA often engages a consultant for that early-stage management. Biggs says they are not needed on anything near a full-time basis, but their assistance is invaluable.

“We help people find consultants that they could bring in to be essentially almost an interim chief operating officer but only use them for one day a week,” he says. “Trust me, that’s not particularly easy, because the inventor still is the main decision maker.”

This interim step is often needed to get the start-up into the serious scale-up phase, which UGA views as occurring after a start-up has obtained some venture capital money. The VCs will typically have a good idea of who they would want to put in as management from their side, Biggs says. But to look after progress until that point, you need somebody in place who is credible to a VC, he says. It’s in between those phases where trouble often lurks.

“The really tricky part is before you take VC money, but after you reach the point where you need a team of people to work on the project. And that’s where if you leave it up to people who’ve not been through this before, progress tends to slow down significantly,” he says. “SBIR Phase Ones are not that forgiving if you don’t hit the deadlines that you put in your proposal.”

One of the key messages that UGA tries to drive home at this stage is that most expenditures are actually driven by time. Every day you spend broadly similar amounts of money, Biggs tells them. If you work on your project for two hours of that day, or you work on it for 20 hours of that day, the expenses don’t really change much, he says. The rent of the lab doesn’t change, and the people cost doesn’t change, because you pay them per day. The lesson is all about urgency, he says.

“Very recently we’ve brought on a full-time pipeline manager whose job is to keep in contact with all of the projects in the pipeline. It’s very easy for people to just stop responding or stop doing the work,” Biggs says. “Unless you’re looking — we’ve got 135 projects in the pipeline — it’s easy to miss somebody who’s just slowly stopping. We try to keep in contact with them, make sure that we know what they need, and show them how to take advantage of resources that are available.”

In many cases a start-up has encountered some roadblock that they think is insurmountable, but the program can put them in touch with someone who overcame the same problem and can guide them over the bump in the road, he says.

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