New Study By IESE Business School Shows Ways to Bridge Europe's ‘Valley of Death’
The study Corporate Venturing: Insights for European Leaders in Government, University and Industry, led by Josemaria Siota, Andrea Alunni, Paola Riveros-Chacón, Mark Wilson, Mattias Dinnetz and Julia Prats, provides an overview of corporate-startup engagements, covering their historical evolution, main models and characteristics, current trends, and their connection with the technology transfer field.
The European Valley of Death: A relevant challenge
Europe, like other regions, is excellent at moving from money to research but falls short at moving from research to money:Europe is strong in research. European institutions make up 21% of the leading 100 international research organizations (as determined by factors such as the number of publications in academic journals).It fails when it comes to commercializing the discoveries those publications contain. An estimated 95% of the existing patents in Europe are ‘inactive’.A relevant question. The remaining 5% contribute to more than 40% of the European gross domestic product.
Among other causes of this gap, private investors tend to be unwilling to take on research projects, which are usually characterized by high risk, huge expenses and long-term gestation periods.
The rise of corporate venturing: Connecting the dots
Meanwhile, the collaboration between established corporations and innovative start-ups – known as corporate venturing – is growing at speed globally:Since 2013, the number of annual corporate investments in start-ups has more than tripled, from 980 to 3,232, while the total size of this investment has risen sevenfold, from $19 billion to $134 billion.
How can the scarcity of resources that science start-ups face, and the growth of corporate interest in working with new ventures, support each other? How can leaders support this process?Promote co-investment mechanisms for early stage ventures. Create co-investment funds to support the market validation of discoveries, group together corporations and investors interested in science start-ups, and enhance philanthropic funds.Tailor existing investment mechanisms for technology transfer. Adapt the European financial SME-instrument for science start-ups, track the European corporations that are starting to deploy pre-equity investments, and validate related policies through sandboxes.Further support Europe´s technology transfer field. Align regulatory frameworks to simplify how start-ups scale across European countries, provide training to academia on industry-engagement, and share best practices.
For more on the study’s findings see:
This study was supported by the European Commission, IESE Business School, Oxford University, and Università degli Studi di Perugia, among other institutions.
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