Chapter 6: Financing Technostarters and Spinouts
6.1 FINANCING A START-UP Financiers of new ventures, the third category of partners of the third generation university, are perhaps the partners the least known to university staﬀ and technostarters. Most technostarters start with thinking about the product they want to create and commercialise. This is what they are good at, and marketing is something they have to learn. We tell them that an aeroplane needs two wings to ﬂy: technology and market. It then needs a pilot – the entrepreneur himself. But the plane will still be grounded unless there is fuel in the tank – ﬁnance. The ﬁnancial world is quite remote from university life and many new enterprises fail to make it because they underestimate or do not understand the role of ﬁnanciers. Financing in the early stages often has the form of equity participation. External ﬁnanciers can help speed up the growth of the ﬁrm, by supplying extra capital and by bringing in experience. It is often better to participate in a rapidly growing enterprise than to muddle through on your own. The crunch is that ﬁnanciers will often claim the right to change the management, thus being able to oust the founders from their management positions. This is very hard on the technopreneurs, but again the question is what do they want: a participation in a healthy enterprise or a nice way of passing the time? Many technostarters develop into good leaders for the more mature stages of the enterprise but there are also many that are...
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