Venture Studio U: Embracing Startup Creation on Campus
Is higher education a fit for the venture studio model? We think it passes the test.
There is a Catch-22 within all large corporations: on one hand, they have unparalleled insights into their business model and the consumers they serve, but on the other, they struggle to convert these insights into meaningful new growth. This is why High Alpha Innovation was initially formed; our very reason for existence was to unearth the insights buried within a corporate partner by systematically launching and supporting external startups. However, a curious thing happened in our earliest days: we were contacted by several large universities that were also interested in our venture studio model. Could we have been wrong about something as fundamental as our founding mission?
In hindsight, this twist makes complete sense. Universities, like large corporations, have capabilities and vast networks of talent focused on research and development. Unfortunately, universities can also struggle to turn their ideas into successful startups. For every Facebook or Moderna that is hatched out of a dorm room or university lab, there are thousands of concepts -- and even incorporated startups -- that go nowhere. A recent study showed that 40% of startups from the top 50 patent producing universities never hire a single employee (see Footnote 1). The problem, it seems, is quantity over quality; there is no shortage of ideas on campus, but there are few mechanisms to nurture and commercialize those ideas into thriving businesses.
Universities, perhaps even more than corporations, must constantly seek to innovate and deploy new ideas into the marketplace. Startup creation spurs investment and strengthens the brand of the institution. Universities are also interested in their impact on the surrounding community. After all, there is little more beneficial for a struggling local economy than a vibrant startup ecosystem supported by university leadership, faculty, students, and talented graduates who opt to remain in the area. We’ve seen it in action around our headquarter city of Indianapolis, for example, where High Alpha has created more than 700 jobs via its venture studio. Most importantly, startup creation is at the core of a university’s mission: to promote curiosity, learning, and personal growth.
University motivations are timeless, yet it still remains difficult to commercialize successful startups within some of the most innovative communities in the world. Common failure modes include a slow, often bureaucratic governance model, lack of external validation and systematic processes to shape and support new ideas, and academic founders that hope to manage a startup while maintaining the tenure they have worked decades to achieve. Moreover, existing pathways such as tech transfer offices tend to focus on IP licensing and not underlying ideas, business models, and market receptivity.
This is how the venture studio model first gained traction in this space. Unlike some alternatives, studios are well adapted to leverage strengths and mitigate a few weaknesses of the university ecosystem -- in part because they form startups outside of this same ecosystem. Universities will remain world leaders in research and development, but the “back end” of their innovation processes are often missing structures to propel ideas into commercially viable startups. A venture studio can shepherd university innovation by actively shaping promising concepts, recruiting entrepreneurs, and launching ideas with the highest probability of success. Once launched, venture studios nurture and support their startups with the resources (e.g., talent, networks, and administrative support) required to succeed. This is a key value proposition of our model: research shows that startups within a venture studio can reach Series A funding 2x faster than alternative routes. They are also more than 2x likely to survive to IPO, exit, or merger (see Footnote 2). In this way, the venture studio model can help a university focus on quality over quantity while simultaneously providing outsized financial returns.
Have a promising piece of research or technology with no known market application? A studio will explore opportunities to test fit and ensure viability. Have a professor that would like to continue working in the classroom? That is okay; we will find a talented founder team and incentivize them to scale the startup with the professor as an advisor. Need to limit overall cost required to support startups once they leave the campus? The studio provides functional support to entrepreneurs and startups until they can make it on their own. In short, a venture studio provides an effective “build function” for university-born ideas along with the dedicated funding required to continuously launch and support higher ed’s most promising startups.
At High Alpha Innovation, we’ve learned so much in our first year working with universities. One notable insight: every institution has a different starting point for their innovation and entrepreneurship programming. Regardless of a university’s starting point, our approach can be adapted to complement their financial and strategic aspirations through the creation of startups. High Alpha Innovation remains committed to the overall mission of its university partners, as well as the benefits of our venture studio model in this space. One thing is for sure: the universities we work with have fulfilled their mission as academics -- they helped us think differently and expand the boundaries of our own business.
- Todd Hollingshead, “Nature Study: Increasing number of university-licensed startups the US are not actually operating,” BYU Communications, January 23, 2020, https://news.byu.edu/intellect/nature-study-increasing-number-of-university-licensed-startups-in-the-u-s-are-not-actually-operating
- Nick Zasowski, “Disrupting the Venture Landscape,” GSSN, 2020, https://www.gan.co/wp-content/uploads/Disrupting-the-Venture-Landscape_GSSN-White-Paper_120920.pdf
High Alpha Innovation partners with the world’s leading organizations to drive innovation through startup creation, leveraging the venture studio model pioneered by High Alpha. Our dedicated team of company builders, strategists, and designers apply a proven playbook to systematically execute your innovation strategy. We have learned through first hand experience that combining the speed of a venture studio with the knowledge and scale of a large organization can lead to amazing results.