“Scientists can make good CEOs -  they need enthusiasm, strong communication skills, determination and the ability to lead a team. Academic science and biotech are not that dissimilar – 90% of the things you try and do don’t work out the way you want them to, you just need determination and creativity to try again and get it right. “

– Dr Will West, CEO, CellCentric.

Most people would consider the term “academic entrepreneurship” an oxymoron – academics are not usually noted for creative risk-taking where business is concerned. This isn’t too surprising as academics and entrepreneurship do not go naturally hand in hand; academia is concerned with careful scientific research, building reputation, and publication of results while entrepreneurship is concerned with the much more messy world of money, managing people, gut-feel risk assessment, business building, relationships and profit.

But as odd as academic entrepreneurship may sound there is, in fact, just such a role in the business world and it is one that is becoming more valuable as high-tech industries become more complex and need completely new approaches to staying competitive and “in the game.”

Ideapreneurs versus Entrepreneurs

 "The needs of the laboratory are very different from the needs of a company".

-- J. Barrie Ward, Chairman, CellCentric Limited

Most academics are what might be called “ideapreneurs” – admittedly a dreadful portmanteau but it does effectively capture the how their thinking is orientated. Academics tend to be very high on creativity, intensely competitive in their field but low on financial literacy and “delivery” in the commercial sense. To put that in a business context, most academics don’t understand the 80/20 rule of spending more time (80 percent) on making sales as compared to time spent on incremental improvement of what is to be sold (20 percent).

Academics also tend to be detail conscious even when the details they are focusing on may have no direct impact on the ultimate outcome. This means that they also often don’t see the bigger commercial picture and miss opportunities because they are engaged in an intellectual quest without the limits that commercial development demands. To the true academic, ideas are all that matters and anything else is simply a distraction.

Interestingly, risk is definitely something that academics understand but in a different context from entrepreneurs. Academic know well the consequences of backing the wrong theory or taking on a flawed methodology; either can waste time and destroy a reputation. But for academics the difference is that in taking on risk they usually do so in a measured way that doesn’t require snap judgements and gut feel. Entrepreneurial risk taking tends to be the opposite: Low on information, high on instinct, exactly the combination that makes academics uncomfortable.

While all of the foregoing is true of most academics there are a few individuals who aspire to be entrepreneurs and want to succeed in early stage life science companies that are involved fundraising, regulatory development and commercialization. For those rare individuals to be truly successful they must reorient their thinking away from the narrow academic focus and towards a broad commercial view using the disciplines and insights that academia affords.

In the UK only a handful of academic entrepreneurs have made a success on the world stage. The leading ones are notable for their ability to identify great opportunities from their perspective as academic experts and then apply entrepreneurial skills to realize competitive advantage.

The Entrepreneurial Mind

“Why were they CEO to start with? In more than a few cases because no-one else would step up to the plate.”

– Dr William Bains, Cambridge University.

Entrepreneurship requires a certain way of thinking that is radically different from the academic mindset; it is more action-focused and less analytical. Particularly in Europe academics are trained to be almost the opposite. They generally aren’t taught the fundamentals of business and entrepreneurship as part of their studies. There’s a good argument that any country that wants to be competitive in the global economy should include mandatory business studies in undergraduate curricula as well as making related courses available as electives right through to postgraduate study level.

Looking at the life sciences sector the majority of CEOs with academic backgrounds are either:

• Scientists who realized during their education or early in their academic careers that science was not for them (some may have had to go through a PhD and a couple of post docs to come to this realization). These people moved into big pharma or biotech in a commercial role, often through business development, and then made their way up the corporate ladder.

• Accountants who were able to understand some science but more importantly know how to put together a good story to attract money and commercial partners.

For an academic to transition later in their career and become entrepreneurial requires a different kind of individual.

So, can an academic reorient herself? The first hurdle concerns what Americans like to call “mindset” – the mental positioning one has to specific circumstances. Without a basic interest in business and willingness to take risks, an academic isn’t going to make the transition. Part of the challenge is in leaving relative stability for relative chaos; from working in the context of a large, structured, hierarchical organization often with minimal personal interaction into an often weakly structured, highly dynamic, results-oriented environment where personal interactions can be crucial to success. It is like going from being a passenger on a large cruise liner to becoming the captain of a tiny lifeboat.

Beware the Founding Academic!

“Founding scientists even when they become CEO should only stay there in the first few years. When the business has gained enough clout it has to be managed by an experienced business person.”

– Sabine Louët, News Editor, Nature Biotechnology.

Founding academics with an entrepreneurial drive are essential to get today’s high tech enterprises off the ground. They can provide a solid science base and can be instrumental in bringing a company to technical maturity but once the business is established founding academics need to make way for experienced managers.

In essence, founding academics are usually most effective as early stage Chief Scientific Officers, Chief Technical Officers, or Chief Executive Officers but once business is underway they should then move over to become, for example, non-executive directors, board observers, or paid consultants and make way for more commercially focussed individuals to drive the business.

This is easier said than done. Founding academics, in common with most business founders, will often fight hard to remain involved with the evolution of their "baby" but academics that stay intimately involved can do far more damage by keeping the company focussed on science rather than business development.

On the other hand a founding academic who realises that the “idea” is not the be all and end all can make a good C-level executive.  They realise that a great idea needs great business skills and capital to be commercialised. Finding an academic who is willing to be hands-off when the time is right is rare unless they have been through one or more start–ups.

While letting go can be very hard for a founding academic the problems this creates for the business side of the company can be enormous. In our experience this challenge is never easy to deal with.

Once professional investors come on board there is usually a more-or-less gradual transition to a professional management structure.  This gradual process is a result of both dilution (the investors slowly gain control at each funding round until they can simply force management changes) and of the vicissitudes of commercial life.

This sometimes makes founding academics realise that perhaps they would prefer their former life back. Praise indeed to the academic who recognises that professional management teams do a better job and would therefore be a better way to protect their investment but that isn’t always the case. I know of one investor who remarked that his number one job was to 'counsel out' founding academics from portfolio companies. 

A key issue is that during the startup period there is usually not enough money around to pay for a professional management team which gives founding academics more reason (or perhaps excuses) not to let loose the reins. This explains some of the differences between the US and Europe where the role of founding academic is concerned.

In Europe there is a big gap between academia and business. European academics are often naïve about what it takes to make a company successful seeing success as an extension of the academic activity that preceded company formation.

In the US the availability of significant early stage funding (not grant money) is far greater than in Europe and investors usually have enough board level clout to ensure that professional management is involved earlier on. In the absence of a similar venture capital market Europe needs the academic sector to subsidise the research and early commercialization phases.

In the absence of the angel and venture capital markets of the US, fledging European biotech companies absolutely depend on the unfortunately ambiguous relationships with university research departments.  The development and staffing costs are often met by university departments and academic budgets until there is something to take to market.

Commercial success in life science companies, as in any other high tech endeavour is all about having the right people in the right place at the right time. But this actual mix of people and skills changes over time. The right people at start-up, that is, in pre-incubation, technology-driven, phases that are usually still within an academic environment, are not necessarily the right people to take a company to an exit, in whatever form that might be – IPO, RPO, trade sale, selective spin-off, M&A or major licencing deal, etc.

Should academic entrepreneurs jump the fence?

“One issue that is often forgotten […] is the need for all successful companies to change. … Very often academic founders can be inhibitory in allowing these changes to happen … they often cling to the linkage between the company and its scientific heritage.”

– Dr. Andy Richards, Serial Entrepreneur.

Should academics that chose to commercialise their IP and spin-out a company around it give up the comfortable safety net of their professorial chair and university salary and commit to their new business venture? The answer is a very firm “it depends …”.

The problem is that we want academics to keep on inventing and we should not try to turn our world class academics into third class businessmen. Academics should not be forced to jump the fence into management unless they are clearly C-level executive material.

There will often be contractual ties with the university and there are benefits in academics staying linked with the institutional network to allow for fast track access to resources and other opinion leaders, all hopefully at a lower cost to the start-up. Sometimes the enterprise needs the connectivity best gained by an academic, particularly in cross-disciplinary technologies. By staying in academia, they have access to facilities, like electron microscopes, etc., that can be next to impossible for start-ups to get access to let alone acquire.

Is a mixed model of participation, commitment and reward a better model? Many CEOs would prefer academics to stay where they are, contributing to the company via consultancy. This is because CEOs know well that academics are usually untrained and or inexperienced as managers, whatever their own views of their abilities. The perfect scientific founders stay in the university, keep out of day-to-day management, and make their contribution via consultancy and remain committed to the cause.

The Future of Academic Entrepreneurs

One of the aspects to consider is the sheer difficulty that academics face in getting an idea across the “valley of death” between innovation and successful exploitation. For a typical innovative technology the valley is at least 10 years wide and $40m deep.”

–Simon Davey, ex-CEO, Sagentia 

Academics are a diverse group and the fact is that only a few are capable of running a commercial organisation from startup to exit event or even to maturity. So how can academics who aspire to being entrepreneurs evaluate themselves and how do investors evaluate the aspiring academic entrepreneur? The key is education and business knowledge.

An academic who has the right training and experience, who understands the issues and challenges, and who can conceptualize the commercial goal and fix a course is the ideal partner for the professional managers who are experts in teamwork, finance and legal, and so on. But professional managers face an inordinate disadvantage in the life sciences world because they are rarely competent in the potential and the pitfalls of the science involved.

In our experience the potentially successful academic entrepreneur is recognizable because he has communication skills and a business vocabulary. The business professionals who want to partner with such a rare beast will have the ability to groom the academic for their exit in such a way that the academic can see the added value the professional business managers bring.

In the UK we have excellent scientists and academics but we’re not very good at helping them to exploit their science. What we need are more business people with scientific expertise who can recognise commercial opportunities and have the right contacts with the financial community and industry to help bring such opportunities to the market. And most of all we need academics who not only aspire to be entrepreneurs but who also have the background and training to be successful.