When it comes to open innovation and corporate venturing, universities need to work together to create watering holes, not puddles
A puddle in the jungle could momentarily quench the thirst of a lion, that much is true. But a watering hole, served by a network of trickling rivers, would give it a permanent base to draw from. Not only that, it would attract a whole host of other animals from across the jungle, creating an ecosys-tem that the lion could become a part of.
In my view, universities need to model themselves on the watering hole when it comes to corporate venturing. Rather than isolating themselves as puddles that corporates can dip into, they need to work together to become giant watering holes that create whole new ecosystems.
This is the way we have been working at SetSquared, bringing together the power of five leading UK research universities to create a hotbed of technological talent into which some of the biggest names in business are tapping.
It all started in 2008 when we saw equity investment opportunities for tech start ups becoming more and more sparse. We started looking at other ways of attracting funding and noticed that, ancillary to the closing of markets from venture capitalists, corporate venturing was becoming more active. Big corporates were starting to make direct investment in small and medium-sized enterprises (SMEs) for strategic reasons, namely to bolster their supply chains, develop their products or services and, ultimately, become more competitive.
We realised if we could put companies from our univer-sity business incubator face to face with some of these corporates, we could not only help our start ups raise investment but also become a lifeline for forward thinking corporates looking to innovate.
From there, our Open Innovation programme was born. We ran pilots with BT and the UK National Health Service’s open innovations group and it quickly became clear that the model was going to be a success. Directly from the pilot, one of the companies based at our centre at Surrey University secured a £100,000 ($170,000) grant to develop the idea it pitched.
The start up, Mindings, is now using that investment to find innovative new products and services that will keep older people out of long term care where it is not necessary or what the individual wants. The products and services they create could one day save millions of pounds of public money, not to mention improve the lives of millions of elderly people.
The success of the pilot played a huge part in us securing the Intellectual Property Office (IPO) as a funding partner for Open Innovation. That partnership has allowed us to scale up the programme, making it available to more corporate partners and more SetSquared companies. We are now working with the likes of Barclays Corporate, Johnson & Johnson, Sony, CGI Group, Airbus and Ericsson.
One way we have honed our programme over the years is to work closely with the corporates to nail down a tight brief. That allows us to throw their problems out to our network of high-tech start ups and gain much more relevant solutions in response. The brief is king.
Our experiences from the programme have also unveiled some interesting trends. First of all, corporates tend to fall into one of three categories when it comes to the way they look for innovation.
The first is programme driven innovation. These corporates have clearly articulated roadmaps for new technology innovation. It is specified to within an inch of its life, which means it is clear and transparent. However, it does not allow for innovation outside that roadmap.
The second is ecosystem innovation. These corporates are less clear on the technologies they are looking to bring into their portfolio but they have an idea of emerging trends in the market that could be useful to them. They are looking to create a network of smaller companies around them, an ecosystem they can be in close contact with and be ready to draw from at a moment’s notice.
The final category is project driven innovation. These corporate partners have a specific project they are looking to boost with specific technologies.
Of course one corporate can display a mix of the three, but generally they lean one way or the other. In my opinion, those in the second category get more from their open innovation because their flexible nature means they often find surprise gems of innovation – research they did not set out to find but that is of real value to their business.
The fact that SetSquared is a partnership of five universities working together has undoubtedly made this programme the success it is. Collaboratively, we have a huge portfolio of innovative companies under our wing – some 200 within our incubator at any one time and hundreds more that have since flown the nest. Those graduate companies are often highly sought after by corporates because they often have some level of funding and the beginnings of a customer base.
Having a pool of more than 1,000 innovative tech start-ups at our fingertips makes us a rich source of innovation for corporates on a quest for innovation. We are essentially their watering hole.
Universities working alone simply cannot offer corporates this pool of talent, let alone the efficiency and ease of finding it all in one place. If universities in the UK want to pair their research and start up base, they should consider setting aside historic rivalries and joining together to create a more powerful resource.
While it is something we have already done at SetSquared, we are not ones to rest on our laurels and we are now looking at taking this collaborative approach to the next level. We are ambitious and want to become an integral part of a corporate partner’s global open innovation strategy. To do that we recognise we need to add more tributaries to our watering hole.
We are looking very carefully at partnering like-minded university business incubators in Europe and the Americas to expand our pool of innovation talent and help corporate partners pluck from a rich network of startups across the world.