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Dodging the “academic valley of death”

Valley of Death

Universities can help academic discoveries avoid venture capital pitfalls, says research at Cambridge Judge Business School

Universities can play a big role in helping scientific advances attract venture capital and avoid the “academic valley of death” that often defeats discoveries, says an article in Nature Biotechnology journal based on research at Cambridge Judge Business School.

The article entitled “Corporate venture capital and Cambridge” draws on interviews with the corporate venture capital (CVC) directors of six big pharmaceutical companies to contrast their expectations with those of academics behind scientific discoveries, and concludes that universities can play a role to attract venture capital by preventing a mismatch of those expectations.

The authors include Shailendra Vyakarnam, the director of the Centre for Entrepreneurial Learning (CfEL) at Cambridge Judge, and others with ties to the School.

The authors found that universities should build a strong business case as to how a discovery fits the “scientific portfolio” of a potential industry partner, and then help academics avoid pitfalls that often lead to the “valley of death” – the failure to secure funding for even promising discoveries because they are complex, expensive and beyond the commercial expertise of most scientists.

To reach those findings, the authors interviewed academics as well as the CVC directors of Johnson & Johnson, GlaxoSmithKline, Eli Lilly, AstraZeneca, Roche and Merck.

They found that academics consistently overrate the spinout potential of a discovery, compared to the more cautious views of venture capitalists. That reflects the emphasis venture capitalists place on in vivo data on a lead compound – data obtained from testing in the body of a living organism, typically long after an initial academic discovery – as the key trigger for discussion about a product being spun out for investment.

The corporate venture capital directors also identified misunderstanding of the commercial process as the biggest challenge facing academics seeking funding, and found that academics sometimes mistake lack of competition for actual market opportunity – a confusion that universities can use their guidance to help prevent.

The article’s authors are: Margaret G. McCammon, formerly business development consultant at Cambridge Judge and currently portfolio manager for entrepreneurship and innovation at the Michigan Economic Development Corporation; Edwina Pio, professor of diversity at Auckland University of Technology School of Business and Law; Shima Barakat, research and teaching fellow at CfEL; and Shai Vyakarnam, CfEL director.