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InnovamMare: "How to create and running research spin-off companies" by Nicola Redi

13 April, 2021

In the framework of InnovaMare strategic project - Blue technology - Developing innovative technologies for sustainability of Adriatic Sea, coordinated by the Croatian Chamber of Economy, and co-financed by the European Union, ERDF (European Regional Development Fund), through Interreg VA Italy-Croatia Programme (2014-2020), the University of Trieste has organized an online three-days “Train the Trainers” held on 6th, 7th and 8th of April 2021.

“Train the trainers” event consisted in an education module addressed at all InnovaMare partners to enhance their knowledge on innovation strategy and innovation management. The training was held by two expert lecturers of the innovation management field: Nicola Redi and Alberto di Minin.

During the first day (06/04) and the morning session of the second day (07/04) the venture capitalist Nicola Redi explained how to create and running research spin-off companies. During the afternoon session of the second day (07/04) and the third day (08/04) with prof. Alberto Di Minin the topic of Open Innovation has been discussed, strating from the implementation to the execution of open innovation.

Please find below the summary of the sessions developed by Nicola Redi.

Research and Innovation have two different goals:

  1. the first aims at enlarging mankind knowledge
  2. the latter occurs whenever an invention has an impact on society or solves a market need.

Still, there is no innovation without research: deep tech, basically the outcome of scientific research, is today’s principal tool for innovation. Meanwhile, in the last 15 years the corporate world has changed its innovation model, from a closed to an open one, and deep tech startup companies are nowadays the main driver of innovation from science to market. Technology transfer is the process translating research findings into businesses, moving from labs into global markets through novel products and services. Proof of concept (PoC) is the first step of technology transfer and yet the most critical: it determines up to 80% of future product’s lifecycle costs and a thorough knowledge of the specific industry and the end market is mandatory already during this phase. Financing PoC projects is a mandatory condition for an effective technology transfer process; however, the combination of money and technology alone does not enable the successful growth of a deep tech business. Five dimensions are in effect required to act together to launch a research spin-off:

  • I) technology and top researchers,
  • II) smart money,
  • III) experienced managers,
  • IV) top class infrastructures to translate technologies into real products and
  • V) the presence of perspective customers since the very beginning.

Venture capital is wrongly perceived as the appropriate financial tool for the early stages of a deep tech startup. Data show that venture capital funds invest primarily after a company has passed the technological development phase and shows consistent market metrics. Furthermore, it takes nearly two and half years after incorporation for an entrepreneur to get its company funded, both in Europe and in the US. Other means of financing are therefore to be considered when launching a new deep tech business, making sure that both informal investors and investment funds are aligned beside their intrinsic differences. Disinvestment is always a mandatory requirement of investors: European and US market data indicate that industrial acquisitions are the exit scenario in nearly 9 cases on 10; going public through an IPO has little chance to happen. Valuations are also far from those usually communicated in the media. So-called “unicorns” are rare and often artificially inflated: more “grounded on hearth” expectations should be raised to entrepreneurs. Corporate are rational investors and do not follow fashionable startuppers: while there are clear signs of a potential new speculative bubble around venture capital, mostly in late stage rounds, acquisition pricing has been vice versa lowering in the last four years.