Professor Bart Clarysse
A report on Professor Clarysse's inaugural lecture on high-tech entrepreneurs.
Related links
Bart Clarysse, professor of Entrepreneurship, used his inaugural lecture (Thursday 19 February) to explode the myths surrounding the economic importance of high-technology start ups to the Europe.
Professor Clarysse, who has first hand experience of running start-ups, researches the development of new technology based companies. Companies, which attempt to commercialise their own ideas are seen by policy makers and technology transfer offices as being vital to the economy.
"People think of the big names like Microsoft, Apple, HP, Intel and Xerox as once being new tech-start-ups," said Professor Clarysse at the lecture. "Yet most of these highly successful companies did not develop their own ideas. Typically they took existing technologies, developed by pioneering - and sometimes financially unviable - companies. They bought other businesses to help them succeed and appear credible."
Real technology start-ups tend to grow slowly, have a poor survival rate and contribute little to the wider economy in economic terms. Compared to the US, European start-up performance is poor. In Europe, after seven operational years these new firms comprise, on average, 18.5 employees with revenues of £250,000 and a mere 36% likelihood of surviving beyond 10 years.
In the UK there are over 2,900 of these companies that have been in business since 1991. Despite spending over £2.5 billion, they are responsible for only 40,000 jobs. "They don't become the new Microsoft," said Professor Clarysse, "They just stay micro."
Professor Clarysse believes that policy efforts should not be solely aimed at encouraging start-ups and nurturing technology transfer from universities. Ideally, concentrated funds between £2 - 4 million would be made available for companies that are potential purchase targets, usually by a large customer via a trade sale. These trade sales can realise high values, even when a start up has little or no revenue. Big sale prices are achieved when the new firm's business model is set up for sale from the begining. This is contrary to conventional business thinking and methods.
Science policy should support the development of large companies in the UK that are able to acquire smaller firms and then be sold on to an overseas interest. This would generate the most significant benefit and cash flow into a national economy. It is quite different to the current volume approach of raising numerous companies, many of which will never have a significant economic impact.
Further challenging the norms, Professor Clarysse suggested that many start-ups fail because they reach the market too soon. "There are no first mover advantages in high-tech," he said. "In fact it's a disadvantage as single firms cannot reduce the time required to move from product launch to a take off in sales, some 14.2 years on average. So it's better to join a market late."
In addition to critical mass through significant, focused funding, Professor Clarysse highlighted the importance of a team with joint working experience. This requirement was one of the founding ideas when he designed the new Innovation, Entrepreneurship and Design (IED) course - a mandatory part of the Imperial MBA. This ensures that designers, MBAs and engineers work together to develop a business plan and the crucial pitch document suitable for a venture capitalists or managers of R&D budgets in a large company.
Professor Clarysse is head of the Business School's Entrepreneurship Hub which seeks to work with industry, entrepreneurs and the academic community to improve the practices of start-up businesses. It is arranging a best practice series for experienced entrepreneurs beginning on 24 February with a session on "Beyond the start-up: Is there a 'best way' to scale up a venture?"
ends
For further information, contact
Elliott White - 0207 594 9154
Article text (excluding photos or graphics) available under an Attribution-NonCommercial-ShareAlike Creative Commons license.
Photos and graphics subject to third party copyright used with permission or © Imperial College London.
