Do university incubators harm innovation?

There is scarcely a university in the western world today that doesn’t have some kind of facility to support students and academics who wish to create new companies around their work.

Alas, a recent study from Baylor University suggests that these incubators often do more harm than good, and actually reduce the quality of innovations emerging from our universities.

The research examined 56,000 patents granted between 1969 and 2012 from American universities with incubator programs.  Such programs typically offer budding start-ups coaching, networking, facilities and even finance to help them on their way.

Help or hinder

The paper found a direct correlation between the establishment of an incubator and a significant worsening of the quality of patents produced by that university.

“Not only do university attempts to encourage innovation and entrepreneurship by incubating businesses seem to reduce the quality of subsequent scientific and technical innovations, but they also appear to reduce the income generated by innovative activities,” the authors say.

Of course, it should be said that the quality of innovation was determined rather narrowly by the number of forward citations a patent received.  This is the number of times a patent was cited in subsequent patent applications and is a standard measure of market value for a patent.

“For example, if I had a patent in 2005, how many future applications cited my patent? If the answer is none, then the thing I patented probably didn’t stimulate new research in that area. It’s not as ‘foundational’ as a patent that was cited in a bunch of future applications,” the authors explain. “My patent would not be considered highly innovative.”

They contend that incubators draw funding and resources away from other facilities that are equally important for innovation, including personnel and lab space, and this competition dilutes the quality of the innovation produced.

Unicorn factories

Of course, patents are just one means of measuring the value of innovation.  Sage recently looked at another in its production of a ‘Unicorn League Table‘, which set out to explore the universities that produced the most ‘unicorn’ companies.

The researchers examined all startups classified as unicorns (ie being valued at over $1bn) in the Crunchbase database, and looked at the founders to see what institutions they studied at.

The top 10 are:

  1. Stanford, with 51 unicorns, including Shazam, founded by two Stamford alumni: Avery Wang and Dhiraj Mukherjee
  2. Harvard, with 37 unicorns, including Facebook co founders, Andrew McCollum, Chris Hughes and Eduardo Saverin graduated, while Dustin Moskovitz and Mark Zuckerberg dropped out.
  3. University of California, with 25 unicorns, including Gopron founder Nick Woodman
  4. Indian Institute of Technology, with 13 unicorns, including Ola Co-founders,  Ankit Bhatti and Bhavish Aggarwal.
  5. Massachusetts Institute of Technology, with 10 unicorns, including Dropbox cofounder Drew Houston (his cofounder Arash Ferdowsi  attended but dropped out).
  6. University of Pennsylvania, with 9 unicorns, including Elon Musk, founder of SpaceX
  7. University of Oxford, with 8, including Kevin Hartz (founder of Eventbrite) and cofounder of Linkedin  Reid Hoffman
  8. Tel Aviv University, with 7, including Joint founders of  ForeScout Technologies, Inc. Dnor Comay, Hezy Yeshurun,  Oded Comay, Ori Naishtein
  9. Cornell University, with 6, including Cofounders of Wayfair, Niraj Shah and Steve Conine
  10. University of Southern California, with 6, including James Burgess,  John Hering, Kevin Mahaffey – all of whom cofounded San Francisco based mobile security company Lookout.

Suffice to say, it would be a stretch to say that the data provides a clear link between the university and its merits as a unicorn factory, as the data doesn’t really provide any insight into just what it is about Stanford that seems to create so many high-value startups.

It does however remind us that some universities are home to many highly innovative people who can do great things in the marketplace.  The question really is whether an incubator is the best way to support them.  I’d say the jury is out.

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