University Spin-Offs (5): Angels in our Midst?

Angel in stone at Notre Dame

This is part of my Series on University Entrepreneurship.

 Angel Investors are the absolute life-blood of start-ups and early-stage investing in this country.  Angels are the ones who get involved with entrepreneurs at the earliest, highest risk stages of a venture, bringing that essential capital- as well as a high degree of support and enthusiasm. Let me take this one step further:

Angels are also the life-blood of university spin-offs.

It is actually a common misconception that university spin-offs emerge from the academy with venture-backing. Despite an enormous amount of bluster and braggadocio in the industry, this is actually the exception as opposed to the rule. The overwhelming majority of university spin-offs emerge from the academy ab-initio with angel funding (if they actually have funding of some kind). It's the hope that after a year or more of development, some percentage of such companies will be ready for a traditional institutional venture-round of financing.

Is it true that sometimes there is such an appealing mix of well-baked and extraordinary technology and the availability of a committed team that a company will spin-out of the academy with institutional venture financing? Yes, it does happen and that's terrific. But again, most of this heavy lifting is done by angels and/or angel/entrepreneurs at this nascent stage.

The emphasis on venture financing one encounters at various tech transfer conferences and public discourse on the matter thus misses this essential point and may be a contributing factor to the fact that many tech transfer offices do not recognize the importance of Angels to this ecosystem. 

As someone who has been on both sides of the table, my view is that when those in tech transfer offices run into legitimate and respected people who happen to be Angels, we ought to respect their time and enthusiasm. They are most often folks who have run successful businesses before, love being helpful and want to stay active in the arena of company building. 

For Part Six in this Series, click here

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