Assessment of proposals for new technology ventures in the UK: characteristics of university spin-off companies

Abstract University “spin-off” companies are high technology ventures that originate from research work in a university, resulting in the generation of intellectual property and, usually, the subsequent involvement of key researchers. The analysis distinguishes between 14 new technology-based firms that are university “spin-off” companies and 14 community companies that had no connection with a university. The analysis described in this paper is based on a specially developed assessment methodology that comprises a structured decision-making model. This technology assessment methodology is based on the identification of key criteria for analysis. The study identified the most significant variable for university “spin-off” companies being that of protecting competitive advantage. This result can be attributed to the need for universities to protect their intellectual property, which is to be rewarded with an equity stake in the company. Two other significant variables were identified as the level of product innovation (compared to competitors) and market criteria (including the potential customer base).

[1]  S. Prowse,et al.  Angel investors and the market for angel investments , 1998 .

[2]  G. Meyer,et al.  The potential of actuarial decision models: Can they improve the venture capital investment decision? , 2000 .

[3]  S. R. Rosenthal,et al.  Towards holistic front ends in new product development , 1998 .

[4]  Ken G. Smith,et al.  A Multidimensional Model of Venture Growth , 2001 .

[5]  Dean A. Shepherd,et al.  Venture capitalists' expertise: A call for research into decision aids and cognitive feedback , 2002 .

[6]  Michael Ahearne,et al.  When the Product is Complex, Does the Advertisement's Conclusion Matter? , 2000 .

[7]  Dan R. Dalton,et al.  Governance and Strategic Leadership in Entrepreneurial Firms , 2002 .

[8]  Karen A. Bantel.  Technology-based, “adolescent” firm configurations: strategy identification, context, and performance , 1998 .

[9]  C. Loch.  Tailoring product development to strategy: case of a European technology manufacturer , 2000 .

[10]  Richard L. Divine,et al.  CREATIVITY + BUSINESS DISCIPLINE = HIGHER PROFITS FASTER FROM NEW PRODUCT DEVELOPMENT , 1999 .

[11]  Stephen C. Perry,et al.  The Relationship between Written Business Plans and the Failure of Small Businesses in the U.S. , 2001 .

[12]  D. Shepherd,et al.  New venture survival: Ignorance, external shocks, and risk reduction strategies , 2000 .

[13]  Charles W. Hofer,et al.  Improving New Venture Performance: The Role of Strategy, Industry Structure, and the Entrepreneur , 1987 .

[14]  Hyungrae Jo,et al.  The relationship between an entrepreneur's background and performance in a new venture , 1996 .

[15]  G. O'Connor,et al.  Managing radical innovation: an overview of emergent strategy issues , 2002 .

[16]  David Wilemon,et al.  Sources and assessment of complexity in NPD projects , 2003 .

[17]  Hamid Noori,et al.  Developing breakthrough products: challenges and options for market assessment , 1999 .

[18]  Dean A. Shepherd,et al.  The nature of information and overconfidence on venture capitalists' decision making , 2001 .

[19]  Mohan V. Tatikonda,et al.  Technology novelty, project complexity, and product development project execution success: a deeper look at task uncertainty in product innovation , 2000, IEEE Trans. Engineering Management.

[20]  Stephanie Rosenkranz,et al.  Simultaneous choice of process and product innovation when consumers have a preference for product variety , 2003 .

[21]  R. Cooper,et al.  Winning Businesses in Product Development: The Critical Success Factors , 1996 .

[22]  B. Zirger,et al.  A Model of New Product Development: An Empirical Test , 1990 .

[23]  Richard T. Harrison,et al.  Is it worth it? The rates of return from informal venture capital investments , 2002 .

[24]  E. Waarts,et al.  The dynamics of factors affecting the adoption of innovations , 2002 .

[25]  J. Fiet.  Reliance upon informants in the venture capital industry , 1995 .

[26]  Robert W. Veryzer.  Discontinuous innovation and the new product development process , 1998 .