The Venture Capital–University Interface

Entrepreneurial start-ups have left an indelible impression on much of the USA's recent economic history. As hotbeds for technological innovation, university research laboratories create groundbreaking innovations that have been at the heart of many successful start-ups. However, powerful ideas do not necessarily beget successful companies: great ideas must be identified, acquired and developed into successful businesses using a unique blend of skills. Venture capital funds exist to perform this valuable – and lucrative – role. Some venture capitalists scour the campuses of major research universities in search of the next big idea, but the process is not as straightforward as discovering an inventor at a laboratory bench. A range of practical, personal and legal hurdles must be cleared before an idea can begin to transform into the core of a new company. With these common hurdles in mind, interviews with 94 geographically and commercially diverse venture capitalists were conducted to achieve a better understanding of the relationship between the academic and venture capital communities: what motivates the various stakeholders, which are the most pressing problems facing university–venture capital relations and what can be done to improve the process for everyone involved? While many factors influence start-up success, five main areas emerged for universities looking to improve the university–investor interface: understanding investor motivations, supporting entrepreneurs, streamlining bureaucracy, improving access and visibility and fostering a culture of innovation on campus.