How scientists become successful entrepreneurs 

Interview with Klaus Lehmann, Partner

Successful industrial technology start-ups – Klaus Lehmann has helped scientists and researchers to found successful start-ups on behalf of the High-Tech-Gründerfonds since 2014. Now the industrial technology expert has been appointed partner of the HTGF. In an interview he explains what start-ups from the world of science and academia need to bear in mind and why the HTGF is great partner for them in particular.

Robotics, lasers, sensory, VR in mechanical engineering and energy: You have supported industrial technology start-ups for the HTGF for 14 years now. There are a lot of academic and scientific entrepreneurs, aren´t there?

Yes, and the great thing about this is that starting a company has now become an important career path for scientists and researchers. At one time, they would either have stayed at university or gone to a huge industrial corporation. Now starting your own business is a new, third career path, which is the new norm for scientists and academics. Added to this is the fact that German industry has evolved. There is now a greater degree of openness towards new technologies.

Are you impressed by the start-up strategies in the German industry?

It took a while, and it took a few shockwaves to go through the economy first, with players like Airbnb and Tesla disrupting entire sectors. But now Germany’s industrial companies have come to understand how fast technology can develop and that they must open themselves up to this in order to stay relevant. Thankfully, for many, collaboration with start-ups has now long been an inherent part of corporate in-house innovation strategy.

And Germany’s universities? As an industrial technology expert you deal a lot with academics and scientists, while at the same time fostering partnerships with universities and research institutes on behalf of the HTGF. Are they keeping up with the fast pace of development?

It varies. On the one hand there are unfortunately still a lot of universities, which may know about entrepreneurship but offer inadequate support to this end. Even as far as the overall picture is concerned, Germany lags behind considerably in comparison to the rest of Europe when it comes to the number spin-offs from science. On the other hand, there are about 20 universities and research institutes here in Germany that I would refer to as role models and which use targeted spin for their scientific research.

Which are these for you?

These include the Dresden University of Technology, RWTH Aachen University, the Karlsruhe Institute of Technology or Berlin Institute of Technology. The Technical University of Munich has even launched its own organization, “UnternehmerTUM”, with more 100 people and a sole focus on entrepreneurship.

What characterizes entrepreneurs from the world of science and academia? Specialist knowledge aside, are they adequately equipped to get a start-up off the ground?

People from a research background often have a mindset which is different from that of the classic business graduate. But that doesn’t necessarily have to be an obstacle. But of course, anyone who wants to launch a start-up has to have the courage and willingness to engage in entrepreneurship. Here at the HTGF we see ourselves as a partner that can offer assistance here when it comes to planning and implementing the right strategic steps.

What would be your recommendation to academics and scientists, who want to start their own business?

You have to think about the customer! Because one common problem in purely scientific development processes is that often, the market dynamic is not considered until it’s too late. Researchers spend years immersed in developing a solution only to then suddenly be confronted with one key issue: technology needs a problem; the approach for a start-up should be the opposite: a problem needs technology. That’s why I advise all academics and scientists who are planning on setting up their own business to think along the lines of customer perspectives ahead of time, to approach potential customers and to actively test their solution.

“Researchers spend years immersed in developing a solution”– those sound like very long projects, even for you.

If you compare that with fast-moving e-commerce start-ups then, yes. In industrial technology we have very different development and time-to-market cycles. The customers have much more complex sales cycles. While you might be able to buy a SaaS license for EUR 100 a month, the costs of products in our portfolios can quickly amount to EUR 600,000. The reverse is also true: where a market launch is a success, the impact is enormous!

And do you provide the start-ups with support for the duration of this extended time period, too?

If we believe in the technology and the potential product-market fit, then we are fully on board as a long-term partner and supporter, guiding the entire development process.

At what stage should entrepreneurs from an academic or science background get in touch with you?

Sometime researchers approach us alone, without a team, with just one rudimentary prototype – and we invest anyway, because we share the founder’s vision and we want to help build the team and the company from the ground up.  Over the past 15 years we have invested in almost 600 start-ups and, in the process, have amassed a vast amount of experience and developed an acute sense of pinpointing where potential lies.

Can you give us any examples of projects you have been involved in on a long-term basis?

Definitely “Next Kraftwerke”, it’s one of our most successful portfolio companies. The founders developed a solution for merging lots of small energy producers to form one huge virtual power plant. The idea was to bring their output to the energy exchange on the one hand and, at the same time, to compensate for fluctuations on the national electricity grid on the other. Their development from university start-up to European market leader is a great example of industrial tech and our long-term commitment.

Can you explain that in more detail?

We have supported the company for more than ten years and we are friends with the founders. In the first three years of receiving funding they hardly generated any sales. Now the company has grown from two founders to 150 members of staff; sales have now reached EUR 700 million. Next Kraftwerke is now the European market leader in the field of virtual power plants.

Thanks for the interview, Klaus!