Investor, entrepreneur and academic. Vinit Nijhawan has an expert lens on the deep tech space, leading the Office of Technology Development at Boston University, working with over 30 spinouts. He is MD of Mass Ventures, a venture capital firm that funds deep tech startups.
As part of our Voices in Innovation series, Vinit shares his expertise on the challenge of shifting from researcher to entrepreneur, tips for navigating from spinout to scale up, along with learnings from the US that we can apply.
On shifting from spinout to scale up...
"When we think about scale ups from academia, there are two stages.
Stage 1 is a technology development stage and could last three to four years - and beyond for life sciences. What you are scaling here is the technology and the technical team. My tip in this first phase is to build a cohesive skilled technology team that addresses all the risk areas of technology development. It is important that the tech function and the business function is co-equal in importance. The business function would be small, maybe one person, who would have an eye on the market to make sure that the tech development is relevant to market needs.
Stage 2 is a business scale up stage. Once you have a product, which generally means you have a level of regulatory approval, you are moving into a revenue stage. At this stage it can be common there is a CEO change. The PHD might be the CEO, and now you might need a professional business-orientated CEO.
Most of the scale up at this stage is the business function. ' Look at your leadership and make sure its the right kind to drive revenue and growth. Another tip is to make sure you look for the right kind of investor. You need much bigger cheques at this stage . You need investors that have deep pockets, align with your vision and can stay with you".
On lessons we can learn from the US...
"The thing I see that is different in the UK to spinouts in the US, is equity structure in the founding agreement. In the US, the amount of equity that is given to the university and to the faculty member is commensurate with the work that has been done in the past, but takes into account that most of the work that will be done to make the spinout a success will be done in the future. So the people who will be involved in that success in the future should receive most of the equity. In the UK, this is not the case and we have seen universities asking for 50% equity in some cases. This is just completely wrong.
The other thing I've seen, is a shortage of seed capital, compared to Boston. Whilst a real challenge, this has a silver lining, in that UK spinouts have had an enforced capital efficiency in the technology phase, which can lead to higher chances of raising growth capital at the next stage. Some investors will look upon this efficiency favourably. The UK government does need to address the dearth of seed capital for deep tech in the UK, along with financial institutions".
Watch the full conversation below:
You can read more about the UK landscape for spinouts in our Spotlight in Spinouts report series.
Our Entrepreneur's Handbook is a practical guide for entrepreneurial academics on how to spin out engineering and technology ideas into business.