Entrepreneurship in Biotechnology:The Case of Slovenia Osijek, September, 19, 2009 Jaka Vadnjal GEA College of Entrepreneurship
Jaka Vadnjal • MSc and PhD in business, BSc in engineering • 19 years of managerial, board and entrepreneurial experience in private sector and public administration with 13 years parallel teaching and research • Director of the Research institute and assistant professor at GEA College of entrepreneurship, president of the senate • Research: Entrepreneurship and VC • Biotech experience: From VC research, targeted research in the bio-tech sctor and some consulting experience • Proud husband and father • Drummer in an amateur rock band for almost 30 years
MethodologyforthisStudy • A qualitative research among six existing companies in Slovenia: • Limnos d.o.o. • Bio-techna d.o.o. • Celica d.o.o. • Bia d.o.o. • Educell d.o.o. • Bia Separations d.o.o. • Acies Bio d.o.o. • Overview of other practises • Consulting case from SLO
Biotech (entrepreneurship) features • Academic research is driving the industryIn SLO: All entrepreneurs are PhDs • Many techniques, skills, processes, etc. fit under the umbrella • A huge number of markets, products and services is and will be influenced by the technology • In SLO: health, food, industrial…
Expectations from Biotechnology are High (Vanhemelrijck, 2006) • To be the basis for the knowledge based economy • To be competitive • To create jobs and wealth • To cure and prevent diseases. • To increase survival • To improve patients’ quality of life • To feed the world • To return to the plant based economy • To optimize renewable resources • To help the environment (KYOTO)
Biotech and Entrepreneurship Have RISK in Common (Rothaermel & Deeds, 2004) • High degree of uncertainty: • What we’re going to do with it? • How it is going to work? • What can be achieved? • How will it be manufactured?(In SLO: completely confirmed) • Long and expensive product development cycle • Required investors and partners(In SLO: VC gap) • The potential for serious challenges to the legitimacy of the industry(In SLO: Some failures with negative publicity)
Profit & Wealth Will be Created When Product Delivers Value to Consumers! • Technologies do not create big wins unless they become a breakthrough consumer technology. (In SLO: People still do not understand what business is about, inluding inteviewed companies) • Selling stuff to each other moves the money but doesn’t create a vibrant, growing and sustainable industry.(In SLO: Very relevant!!!) • Only when the technology creates real value for end users so that sustainable revenues are generated and wealth is created.
The Times are turbulent • The industry and segments will fall in and out of interest of investors. • Ability to raise capital depends on the successes and failures of the other firms in your market. • Bad actors and bad acts hurt everyone. • In SLO: 2006-07 everybody spoke about bio-tech. A failure of a company happened. Evrebody knew it. Everybody feels that this was a downturn of the industry.
Partnering • Big partners are generally a necessary evil • Research institutions often behave as they were alone in the space, but those ventures that learn to work with them benefit from the relationship(in SLO: Completely confirmed): • Leading-edge knowledge • Skilled work force • Legitimacy • Access to specific assets • Partnering with other “ventures” can be beneficial, but involves a risk of helping competitors(In SLO: A fear of this is very present)
Academics and Science • The Role of Public Science • Primary goal is creation and dissemination of new knowledge that expands our understanding of the world • Secondary goal is to improve the lives of the people of the world • Academics succeed by publishing interesting findings in top academic journals that inspire others to build on their work.(in SLO: Completely confirmed) • Status in “Public Science” is conferred by sharing – you have to present and publish to be a player and players get stature and access to new knowledge and higher skilled researchers.(it is true for SLO)
Place to be… • Geographic clusters provide substantial benefits including: • Access to specialized labour • Specialized Suppliers • Lawyers • Investors • Specialized assets, machinery and inputs • Knowledge Spillovers • Outcomes from being located in a geographic cluster • Higher Probability of IPO • Higher Value at IPO • More attractive to partners • Higher survival rate • Clusters in science-driven industries have at least one great research institution at their heart • Idea: If we don’t have one, we may be able to establish one by pulling together all the best we have! Idea from the research: Slovenia is to small…
Risk Taken by Biotech-Entrepreneurs • Research risks • IPR risks • Financial risks • Regulatory risks • Market risk • Unfortunately: political risks(in SLO: Completely confirmed)
My Case: Consulting to Bio-tech Company • Academic research driven • Core team: • Senior: Professor (as “mentor”) • Junior: his PhD project • Project good enough for PhD and papers but not “prototype mature” • Raising VC to complete the project
One of the Projects… • Fire-blight as global problem • Bacteria • Copper substances: traditional way of preventive treatment • Antibiotics • Bio-tech invention • Economically: Substitutes for the two methods, more efficient, environmentfriendly, more cost-effective
Lessons Learned From Consulting Project • Consultant: Difficult to competently consult something that you don’t understand • Company: • Key people would prefer academic rather than entrepreneurial life • Bright minded PhD guy was able to write a reasonably good business plan (technically) however, • With lack of immagination of the appropriate business model • And probably also lack of commitment for entrepreneurship • VCs: Had many less risky and more “on-the-planet-Earth” projects to invest at that time (2005)
What can be done? • Increase entrepreneurial culture among young people from craft-men to junior academics – make them participate in at least one business plan preparation. • Stimulate clustering and partnership (both horizontally and vertically). • Support multidiscliplinarity, make science and business students work together (Bologna should allow that). • Attract bigger VC players to come to see what is going on in SLO. • Recognize winners (heroes) also by not expelling them from their academic streamlines: PhD entrepreneurs may have less time for publishing but may be add an enormous value to students (see bullet one).
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