Entrepreneurs often struggle to bring new products to market, but academic researchers face an extra challenge they might not expect: themselves.
Researchers in academia focus intensely on their specialized areas, which can make it hard to succeed commercially. A recent study from Harvard Business School looked at over 500 biomedical startups and found that companies closely tied to their founders’ research had more difficulty reaching key milestones, like raising money or finding buyers.
Too attached
The issue is that academics can become too attached to their own ideas and technologies. After spending years on a specific topic, they might have a hard time adapting when they discover that their technology isn’t quite right for the market. This resistance to change can be a major problem.
The study offers important lessons for both startup founders and universities, especially as they invest more in early-stage research that can lead to big innovations. While companies and universities have long worked together, this partnership is becoming even more crucial in industries like biotechnology, which are facing challenges due to fluctuating interest rates affecting venture capital and mergers.
The study focused on 510 startups founded between 2005 and 2015 in states like California and Massachusetts. It narrowed this down to 308 companies, all with at least one academic founder and one patent. The researchers measured how closely the startups’ patents matched their founders’ research. Surprisingly, they found that the more aligned the patents were with the founders’ research, the more the startups struggled.
Lower chances
For every 10% increase in alignment between the patents and the founders’ research, the startups were 4.2% less likely to raise $10 million or more within five years—a significant drop, given that 25% of startups usually reach this funding milestone. They were also 2.5% less likely to be acquired, compared to an 8% average chance. There was no significant difference in the likelihood of an IPO.
The researchers considered several possible reasons for these trends, such as whether the technology was too new or the founders were too controlling. However, they concluded that the main issue was that an overemphasis on specialized knowledge limited the startups’ options. This narrow focus can result in products that are too specific to appeal to potential buyers or difficult for investors to evaluate.
It’s not that the science is bad; it’s that the startups’ specialized focus makes them less attractive acquisition targets. The study found that successful exceptions are rare, usually involving companies bought mainly for their intellectual property.
These findings are important as university research spending hit a record $91 billion in 2022, according to the Association of University Technology Managers. Universities also launched over 1,100 startups that year, up 8% from 2021.
As universities step in to fill the commercialization gap left by companies, the researchers warn against focusing too much on commercial outcomes at the expense of basic research. The freedom to explore unusual or curiosity-driven research has been key to many breakthroughs. A shift toward more commercially driven research could stifle innovation in the long run, possibly leading to fewer major discoveries in the future.
