Each year INSEAD produce a global innovation index, which chronicles the abilities of various countries around the world to support the creation of innovation. It looks at everything from the legal infrastructure, the ease of creating a business, the quality of academia and availability of finance.
European countries traditionally dominate, due in large part to the excellence of their academic research. Where the continent tends to fail, however, is in the commercialization of that research. Indeed, estimates suggest that around 95% of current patents in Europe are inactive.
The remaining 5% are believed to contribute to over 40% of the region’s GDP, so there is a clear incentive to do much better at commercializing the exceptional research being done across Europe. New research from IESE makes the case for corporate venturing to help rectify the situation and bring more academic excellence to market.
Crossing the valley
The paper highlights how corporate venturing is a rapidly expanding endeavor, and corporate investments in startups have grown from 980 in 2013 to 3,232 per year today. This represents a sevenfold rise in investments, up to $134 billion in total. The report outlines three strategies to help join up this corporate enthusiasm for innovation with the difficulties faced by academics in commercializing their work:
- Promote co-investment in early stage ventures, with a particular focus on proof-of-concept projects. These co-investment funds can test the market validity of discoveries, with companies working alongside scientists to do so.
- Tailor existing investment mechanisms towards tech transfer. The existing European financial SME instruments for scientific startups needs to be adapted and work more effectively with corporate venture funds so that small experiments in selected regions are supported.
- Provide greater support for tech-transfer in Europe, with a particular emphasis on aligning regulatory frameworks to make it easier for startups to scale across borders.
“Corporate venturing is becoming a dominant trend among companies. Additionally, the issue for corporates is no longer where to find start-ups, but rather how to effectively (and a timely way) implement their solutions,” the researchers say. “In the future, it is expected that mechanisms such as the corporate accelerator may be refined, although it is unclear how.”
They firmly believe that corporate venturing can play a crucial role in helping translate the research excellence across Europe into commercial success.
