The Impact of Research-Based Spin-offs: an assessment of FORNY supported firms in Norway

The FORFI-project 'The Impact of Research-Based Spin-offs: an assessment of FORNY supported firms in Norway', a collaboration between the University of Nordland, Nordland Research and NTNU, examine the development of science-based firms in Norway. The aim is to generate new knowledge about the development processes of these enterprises as well as the economic and social effects of this form of commercialization of research results. Since the FORNY program is nationwide and has been in continuous operation since 1994, the availability of historical data on the commercialization of research in Norway is relatively good. In this project, we have systematized different information sources to map the development and impact of science-based firms established between 1994 and 2012. Because of the long time period and good access to different data sources, this material provides unique opportunities to study how companies develop, and thus why some succeed while others fail. Through the FORFI-project, the project team and about 10 master students have collected and analyzed a rich data material that also forms the basis for numerous studies and PhD theses in the coming years. The main findings from the project were presented at the Research Council's annual conference on the knowledge base for research and innovation policy in 2015 and in the final report from FORFI ("excellence. Innovation. Impact"). An analysis of science-based firms established from the four largest universities in the period 2000-2010 (129 firms), showed several interesting trends. Not surprisingly, these firms are highly research-intensive, and only a few had positive operating results, which confirms that this type of companies often have long development process before their products or services are established in the market. More interesting is that these firms have very high survival rates and that relatively many have been acquired. Among the companies that were established more than 10 years ago, 15 percent have been acquired by industrial players. This can be seen as a successful outcome, but acquisitions of science-based firms have rarely been studied previously. It may be questioned whether previous analyzes have been inconclusive because acquisitions has not been counted. The findings suggest that in addition to the creation of new viable businesses, commercialization of research science-based firms may also be a channel to transfer new technologies and innovations to existing industry. The project also looked at whether legislative changes at the national level and the establishment of a technology transfer office (TTO) at the university level has an effect on the number of firms that are established from the university and the quality of these firms. An analysis of comparable data on science-based firms from universities in Italy, Norway and the United Kingdom shows that both legislative changes and establishing a TTO leads to more the establishment of more firms, but the average quality of these firms decreases. This may indicate that universities are able to adapt to new expectations of increasing their commercialization efforts, but this adaptation is more symbolic than substantive. These results are perhaps not so surprising, since developing a science-based growth company is highly demanding and depends on long-term efforts by many actors. Studies of successful universities shows that science-based start-ups are supported by an ecosystem that has taken decades to build up. In other words, it is clear that universities with a history of developing science-based firms also are those who succeed in this in the future. The challenging question is how universities with previously limited experience with commercialization can succeed in bringing forth successful businesses based on research. To implement the right measures, it is crucial to understand the development of science-based firms. An important dimension in the development of science-based firms is how they develop networks to provide the necessary resources and develop the business. A case study of two Norwegian and two British Science-based firms provides more knowledge about how startups can build different networks depending on what competencies they need. The study also shows how entrepreneurs can transform their networks so that contacts who originally was of benefit in one area can later be valuable contacts in another area. For example, a contact that was originally used as a consultant to develop the business concept, may later play a central role in providing financing or in recruiting new members to the founding team. Other studies have looked at board composition, experience of the CEO and the development of the business model in the FORNY-portfolio of firms.

This project addresses the lack of systematic research on the long-term impacts of new ventures created to commercialize scientific research, so called research-based spin-offs (RBSOs). Given the prominence given to RBSOs in current research and innovatio n policies, and the substantial amount of resources used to promote these firms, the limited knowledge about their impacts is an impediment to the design of efficient policies and support mechanisms. An internationally unique database will be created base d on an extensive archive providing historical documentation of RBSOs in Norway over the last two decades and combined with existing register data, and hand collected supplementary information. This novel combination of data sources and methods makes it p ossible to overcome methodological weaknesses of current research related to only considering surviving firms, the time span needed to measure the development and impact of RBSOs, the biases resulting from excluding mergers and acquisitions and the limita tions of relying on successful single university cases. This approach makes it possible to explore largely unaddressed research questions such as: What is the link between initial research base and resources (e.g. financing) and the long-term performance of RBSOs? Do the most successful RBSOs become acquired? What are the economic and societal impacts of RBSOs? How can these impacts be measured? Implications of the study will inform the discussion about whether the prominence given to RBSOs in research an d innovation policy is warranted, how the economic and societal impacts of RBSOs could be measured, and how government policies and support initiatives to promote the growth and potential impacts of RBSOs should be designed. The project is a collaborative effort comprising leading national and international researchers in the area of academic entrepreneurship.