The EPFL spin offs are boosted by an efficient ecosystem
16.06.17 - A recent report by the Vice-Presidency for Innovation (VPI) analyzes the efficiency of EPFL's entrepreneurial ecosystem. This report uses the usual indicators such as job creation, fundraising, or the acquisition of companies that are born on campus. There are also new signs such as investments made by successful local spin-offs into others, which are just starting.
Since rapid growth is both the focus and the common denominator of spin-offs, the metrics for companies created by EPFL employees are based on job creation, fund raising, or even the merger and acquisitions (M&A) of the companies, indices which best measure the success of an ecosystem. Compiled in a recent report by the Vice-Presidency for Innovation, these indicators show a rapid increase in the number and size of these young companies and the importance of the emulation created by the success stories of some of them.
5 to 6% of jobs in start-ups
According to a recent report by the Federal Council, Switzerland is one of the countries with the highest proportion of high-growth firms. This is especially true of the Lemanic arc, where they account for 5 to 6% of jobs. In the past three years, more than 60 spin-offs have been created in the fields of health, computing and hardware (robotics, sensors, energy, etc.), almost equally.
A survey carried out last February with EPFL spin-off shows a steady increase in the number of work places created by them over the last 10 years. The companies founded in 2008 currently employ about 400 people, 350 for those initiated in 2009 or fifty for young start-ups started in 2016. Figures that can be explained by the maturity of companies: "It is known that up to 'To a certain size, the companies most advanced in the process create more jobs,' said Hervé Lebret, co-author of the report and head of the start-up unit of the School. This number should continue to grow in the coming years as the number of new businesses continues to increase.
The life of spin-offs is not easy, and even if the idea is good and the entrepreneur is motivated, bringing a technology to the market comes up against many pitfalls. However, the spin-off survival rate at EPFL, as well as ETHZ, as the report points out, is very high: 90% after five years. It is usually rather 50%. An index that is sometimes taken for a mark of success, but which does not particularly impresses Herve Lebret: "In the United States for example, venture capital companies are often less patient with the entrepreneurs they support, and the latter, accustomed to taking risk, prefers to fail fast than to be stubborn. Europeans prefer to talk about perseverance". A longevity which is certainly not foreign to the wide range of advice, networks, opportunities to confront ideas to market players and others. Lausanne and Zurich, with strong systems to help start-ups to overcome the difficult years of development prior to market launch, are cited by the founders of Skype as key players in the European innovation scene.
Fundraising marks a turning point for companies and symbolizes recognition of the commercial value of technology. It reaches $20B to $30B each year in the USA, whereas it rarely goes above the 7 billion mark in Europe. A cultural difference in which EPFL spin-offs play their part: they raised more than 100 million a year since 2009, with 70% in the field of health. These investments did not exceed the 50 million mark previously. It is possible that this inflexion point was generated by the success of Biocartis, a spin-off that raised a record amount of 330 million before its IPO. This success has also prompted start-ups which were not linked to EPFL, to come and settle on the campus and to develop collaborations with laboratories and other local companies.
Mergers and acquisitions, often carried out by large companies to quickly acquire new technologies without going through a costly research and development phase, are the most common exit option for these start-ups. At EPFL, they are nine to have made the leap since 2008, like Lemoptix bought by Intel, Jillion by Dailymotion or PlayfulVision by Second Spectrum. The amounts of these transactions are rarely known, but are counted in millions. "With 8% of M&AS, the gap with major US universities is narrowing, but we are still far from the 25% of MIT or Stanford," says Herve Lebret.
Tangible Sign of Success: One Spin Off Invests in Another
Thanks to these successes, an ecosystem of financial support by the start-ups of the campus itself is being set up. An additional step has just been taken since in early June a spin off, Mindmaze, invested in another: Gait up, specialized in motion analysis sensors. The first, it should be recalled, attracted 100 million francs in 2016 before being promoted to unicorn status - valued at one billion before it even went public. The news of this acquisition is pleasing to those involved in the transfer of technology to the campus, who see this as another tangible sign of the good development of the entrepreneurial ecosystem patiently set up for thirty years.