by Victoria Scarborough, Materia Prima Ventures

While on a recent beach vacation, I made some observations that reminded me of how our choices can make for a successful trip. Preparing for a day at the beach is no small matter. First, all the right gear must be packed and ready to travel—towels, sunglasses, hats, chairs, umbrella, beverages, snacks, and the ever-present sunscreen. Your day goes so much better when you’re prepared with all the right tools. When you hit the beach, the next big decision is where to plant your stuff. Exactly where is the best, most opportune spot that will give you and yours space to spread out and yet be close to the action? A lot of discussion happens at this juncture as I saw each group stop and take time to vigorously debate their best position on the beach. After all, during the day, conditions can change. The tide shifts, the sun moves, clouds move in, and the winds can blow sand in your eyes. Your choices matter. It dawned on me that these “startups” on the beach were exhibiting similar behaviors to those university startups we may deal with in our daily work.

Working with small university startup companies presents larger companies with a unique set of challenges as to how to choose the right group who can truly deliver a desired technology solution. There are some fundamental questions you must ask in order to understand if they have the right tools and expertise to deliver what you need. First, you must understand that they may not have figured out their right place on the beach—that is, they have yet to identify their best market opportunity. It might be with you or it may be with someone else. But remember, they’re just so excited to be on the beach with you! They do not really understand your business. Only your due diligence will sort this out and must include answers to some key questions.

Who are they and how are they staffed? It is essential to have a person primarily rooted in the technology, others to do work in the lab, and—most importantly—a leader who has experience in business. Know that academic and business backgrounds respectively represent two distinct skill sets, but each must be strong for long-term survival.

  • How are they funded and for how long? (Typically, receiving SBIR funding is a good signal that expert government reviewers believe there’s a good team in place to get through to a proof-of-concept.) Do they expect money from you? How much? For how long? Are there any obligations to venture capital groups or other funders?
  • What is the status of their intellectual property (IP)? Are there other countries covered besides the United States? Sometimes universities may hang on to some IP to help a startup build capability. Having leverageable IP is essential to meeting your long-term business needs. Make sure you understand who owns the IP, for how long, and for what technology space/vertical. Understanding their licensing terms is essential.
  • Does the IP represent an addition to existing technology, raise the bar to another level, or is it truly new to the world as a breakthrough? None of these excludes the other if there is technology you feel helps your business. But breakthrough technology typically needs a longer ramp up to commercialization with a higher risk of failure.
  • How much current IP exists in this technology space? Too much may leave you little room to maneuver, too little could present more risk that needs further long-term research. You will need to do your homework here.
  • Where are they in their technology roadmap? Do samples, prototypes, and data exist? How much?
  • How do others address this technology need? Are there other more viable and simpler options available to your competitors if you introduce this technology? Do not be blindsided by shiny object syndrome and fall in love with the technology.
  • Does their culture match yours? Flexibility and trust on both sides help the relationship grow. If there are difficult stakeholders, the surf is up and red flags should be flying on this beach. Heed the warning of others that “culture eats strategy for breakfast.”
  • Will this technology differentiate you from your competition in a way that will disrupt their momentum? This is the dream, right? And it’s a long-shot. A startup will not be able to answer this question for your business.

Obviously, each large business has its own set of unique questions it must answer for itself. But, if you cover the essentials, you will have a good idea if a university startup has the potential to meet your needs. Your relationship will begin firmly rooted in synchronicity based on a business case you both understand, with articulated expectations for both parties, and milestones for progress that include options to go forward and under what conditions the relationship will be terminated. This collaboration is now set to go forward. The forecast is good. It calls for bright days ahead.

CoatingsTech |  Vol 14, No. 7 | July 2017