Pitch the future

A panel of experienced early stage technology investors from VCs in the London ecosystem sit in eager anticipation for the big reveals of some of the UK’s brightest research students. Eight investors have been invited to hear the presentations, with the expectation that four might accept.

Thirty London Business School students and 13 early career researchers from various London universities, plus one from Sheffield, were taking part. Each researcher brought with them a technology they’d been working on and wanted to commercialise.

The UCL team introduced Bioactive Aerogel, a dental-repair toothpaste. The Royal College of Arts team proudly presented Soothtech – a haptic device that touches you like a human might. Investors were also introduced to a novel microbiome-based antimalarial, IoT devices powered by scavenged sound, a hydrogel synthetic meat scaffold, an early diagnostic for prostate cancer, a Kindle-like Braille reader, and more.

Researchers were typically current or recently graduated PhD students, characterised as “early career researchers”: excellent scientists with mastery of a technology they had been developing for a few years. Unlike most career scientists, they’d spotted a specific application for their technology and were interested in developing its commercial potential as an investable venture.

“I’m not sure who was the most apprehensive about the final presentations,” says Jeff Skinner, Executive Director of the Institute of Entrepreneurship and Private Capital at London Business School. “The teams probably thought they were. In reality, I know that I was the most on-edge. So much effort had gone into the design of our Innovation to Market course and so much time had gone into running it. I was trying to manage sky-high expectations and the reputational risk of showcasing a succession of dud proposals to the early stage professional investors.”

In the event, the presentations were wonderful and the initiative was a resounding success “that was felt by all.” Skinner says he “purred from the front”. Not every team had made it to investor-readiness level, but the progress and enthusiasm were palpable and the overwhelming feedback from the investors was that these were all backable ventures in the making; in many cases the investors wanted to follow teams’ progress and develop relationships.

Seed of an idea

“For almost 20 years, I was Commercial Director at UCL, where I put in place schemes to help researchers commercialise promising technologies,” says Skinner. “We had some wonderful successes, but nowhere like enough new ventures emerged, given the ideas, talent and drive of the research teams. The problem wasn’t money – seed capital was always available for well-designed ventures. The problem was getting them to that stage.

“When I joined LBS in 2007, the school had already been championing entrepreneurship for 30 years. My job was to build on that legacy and create more effective ways to equip and inspire our students to build new ventures of their own. Probably because our students are so gifted and driven, we’ve had some fabulous successes.

“There has never been a shortage of new ideas, but few were based on leading-edge science. All seemed to be based on solving existing problems, using existing technologies. There’s nothing wrong with that, but it’s often harder to build a solid foundation or competitive edge, which makes it all the more remarkable that so many of our Entrepreneurship Summer School students did. All the while, our students – many of whom had backgrounds in the tech sector – wanted to work on technology-based ventures.”

Illustration: Angus Greig

Combining research and commercial expertise

Nowadays, says Skinner, most universities want to generate socioeconomic impact from publicly funded research “because there are large financial incentives for doing so. Great technology lurks in every university, waiting for someone to do something useful with it. Since most disruptive technology has a large ‘know-how’ component, that ‘someone’ has to be the researcher. The problem is that most aren’t interested in developing the commercial potential of their technology and those that do, don’t know how.”

The standard response from universities is to bolt on a ‘Technology Transfer Officer’ to assist and enthuse the researcher, but these “only really have the bandwidth to cope with low-hanging fruit. Another way is to provide commercial training programmes for the ‘want-to-but-don’t-know-how’ contingent. But they overestimate the extent to which commercialisation skills can be taught and applied from cold.”

The solution, Skinner argues, is to meld teams that combine research and commercial expertise into effective commercialisation teams: “Despite the two communities being physically close and keen to engage with one another, it’s fiendishly difficult to do this in any systematic way, since high-performance teams need mutual chemistry, trust, knowledge and respect; all of which rely on the gradual building of social capital. But, when you do manage it, the result can be spectacular.”

Idea into action

Launched last year, the Innovation to Market elective recruited early career researchers from top universities and LBS students with a tech-sector background and, over the course of six months, tasked them with building a credible, investment-ready venture. The course ran over two terms with small class sizes and students signing NDAs (external researchers joined free, only paying £1,000 if they dropped out). The final assessment was made by the eight invited investors during the presentation from the research teams.

“We gave participants 10 weeks to form into ‘management teams’ and another 14 to build investment propositions,” Skinner reveals. “During those first 10 weeks, we brought researchers and LBS students together every fortnight to study and socialise. The teaching sessions were all based on real technology-based startups facing real issues. The importance of focusing on an initial application and market, even if eventually proved wrong, is that you learn a ton: how the revenue model impacts venture valuation; treating investors, as well as users, as your customers; intellectual assets and property; building teams and dividing equity between them.

“During the programme, we invited successful founder teams to share what they’d learned and we invited tech-investors to say what they looked for and how they liked to work with founders. Crucially, we put huge emphasis on building teams, with everyone mixing over breakfast and lunch. We ran a pitching evening in the local pub. To our delight, some researchers invited interested LBS participants to their university laboratories. Others met over coffee or dinner to bounce ideas around.

“We put a lot of emphasis on everyone selling themselves, peer-to-peer. LBS students might be tempted to assume the CEO role. Researchers might assume that the technology was king. We worked hard to dispel any such notions – venture teams operate free of hierarchy and full of mutual respect. By week 10, the management teams had formed and it was down to business.

“The teams had 14 weeks to build a business case that they would present to real early stage investors. Each team had to provide an initial plan of action and was allocated an experienced mentor to act as a sounding board. We introduced another two formal sessions to keep teams on track, but otherwise we left the teams to themselves, hoping that the looming deadline and challenge of the investor presentation would maintain drive and momentum.

“The course gave them the opportunity not only to learn a new venture methodology, but also to practise it by working with an entirely different group of peers with a variety of commercial experience on a shared journey towards creating an investable new venture and presenting it to a panel of professional investors.”

Building on success

Skinner asked all students to provide “candid feedback” after the course. “Overwhelmingly, LBS students said this was the highlight of their degree and that they would unhesitatingly recommend it to others. Ditto the researchers. But a major redesign is still needed. The upfront socialisation element is clearly crucial, but it needs to be more structured. Informal lunches are fine, but inefficient.

“We need ‘speed-dating’. We need more laboratory visits. We need to inject group assignments to get participants mixing and working together far earlier. We need to set aside more time for the socialisation of technologies, as well as technologists, to enable the LBS participants to appreciate things in depth. We also need more challenges built into the ‘fieldwork’ element as they develop their commercialisation plans. We need to position them as real venture teams, held to account by investors and boards. In their reflections, some even said that they’d like the option of ejecting those from their team who failed to engage or deliver – all valuable elements to be built on for the next edition.”

Looking back

Skinner believes the “experiment” highlighted the need to understand researcher mindset, motivation and “pace”. He says, “Many researchers want to generate impact from their technology. Revenue is good, but as a reward and not as an objective. For the LBS students, money is always on their minds, since business needs to be economically viable – and wildly profitable to attract investors.

“When it comes to ‘pace’, the researcher’s discipline is to be sure of your facts before saying anything, and collating the evidence can be quite plodding and unexciting. For students at LBS, the thrill is in the ‘deal’, in encouraging potential partners to commit time, money or credibility to a new venture. It’s this motivation and pace that drive mindset and that, at its core, is the culture of the programme.

“There’s also thinking around building consensus and commitment to an application and user – and pivoting as a team when you’re wrong. That means learning to have the courage to change direction when you encounter a showstopper, rather than ploughing on with something that isn’t going anywhere.”

Skinner says researchers also need to be able to ask penetrating questions of the scientists and investors. “This is wildly important. Firstly, because the research teams need to be able to understand the strengths and weaknesses of the technology that they are selling to potential investors and users. And, secondly, because the researchers can easily lose the respect of the scientists and investors if they continue to ask facile questions. It’s a fine balancing act.”

Opportunity for 2022 and beyond

Skinner is proud to run the I2M programme again this year. “I’m already recruiting researchers, and it will remain without charge for one more year at least, thanks to UKRI’s munificence. So, if you know a researcher you think would benefit from working with a team of experienced MBAs, invite them to get involved by contacting me directly at jskinner@london.edu.

Jeff Skinner is Executive Director of the Institute of Entrepreneurship and Private Capital at London Business School