From university research to student-driven spin-off: the case of Biodata

The hero of this story is Emil, the founder of a company called Biodata. The business idea originated when Emil was a bachelor’s student at the university.

Emil had always liked mathematics and science and had done well at them at school. After high school, he searched for some years for his own thing and studied different fields, such as programming, physics, and mathematics, until he finally found his own discipline in electrical
engineering. In his bachelor’s thesis, he studied how muscle electrical curve measurements
could be transferred into a wearable device that could be used to control home automation.
He was very excited about creating something new and useful. The professor of the laboratory noticed Emil’s great enthusiasm and offered him the opportunity to get involved in a research project on the commercialization of specific sensor technology. So Emil became a research assistant shortly before graduating with a Bachelor of Engineering.
The RtB project in which he was involved was a collaborative project between two universities and a national research centre. The aim of the project was to develop a wearable device and a sensor to monitor health and wellness. The research group from the university consisted of the professor, who was also a supervisor of Emil’s thesis work, one senior researcher, who had researched sensor technology for several years, and two other graduate students: Anton and Emma.
Emil was very dedicated and motivated to study sensor technology, and thus his professor gave him an opportunity to take the lead in the development of the technology. Originally, the
plan was to obtain the sensors for the tests from another, foreign, research team, but because of some unexpected difficulties, this did not happen. Consequently, the research group was advised to buy a set of very expensive sensors from abroad. As this was not a sustainable option in economic terms, the research group decided to buy half-made sensor technology and
develop it further by themselves. Emil explains that this decision proved to be a success: ‘The price to build a sensor had traditionally been high—up to 400 euro—but now we were able to manufacture special sensors at a unit price of approximately one euro. Our research team immediately applied patents for this novel and promising technology.

The research group was thrilled about their technical invention, and they were sure that it
would also have commercial value. A big challenge was that they all had a technical background, and they did not have any business expertise. RtB funding offered them an excellent opportunity to test the applicability of the invented technology and to identify different business models for a possible spin-off company.
The fact that they needed to carry out basic research in the frame of the RtB project somewhat delayed the further development of the sensor-based application. In addition, the unexpected cost for paying for the half-made sensors decreased the budget that could have been
used for further testing and customer validation. However, they managed to build the first
version of the device during the RtB project.
One of the aims of the RtB project was to identify different commercialization paths for the
device. A group of experts from the business school of the university were hired for the RtB
project to conduct a commercialization plan. The business school experts saw the potential
of this new type of sensor that was significantly more accurate in energy measurement than
the competing applications. Together with encouraging test results and the patents that
were applied for, they saw that a competitive advantage could be achieved. Experts from the
business school ended up concluding that, with the help of this competitive advantage and
the existing intellectual property rights (IPR), partnership with a large established company
that manufactures gadgets for monitoring health and well-being would be the most attractive
commercialization path. As another option, the commercialization study identified that
beyond the health monitoring segment, there was demand for technologically improved and
cheaper sensors in industrial markets—for example, in combustion engine measurements or
in measurements of power plants, battery operations, and in various condition monitoring.
What supported this option was the fact that the university held two previous patents, which
could be used, if necessary, for these types of industrial applications.
As the finalizing of the first version of the device was delayed, the business school experts
needed to conduct the commercialization study with incomplete research data. In addition,
the research group and the business experts had slightly different opinions about how to
develop the business idea further. Emil explains the situation from his point of view:
It was a pity that [the business experts] had not been involved with the development of
the invention beforehand. Probably for these reasons, the results of the commercialization
study finally steered us in a slightly different direction than we, the technical research team,
saw to be potential of the innovation.
However, the concluding remarks of the RtB project and the business study were that the
technical know-how that they had, together with the accumulated IPR, would enable them to
apply for a few different business models in case the manufacturing of sensors or devices did
not turn out to be a sensible option.
While working on the RtB project, Emil, Anton, and Emma finished their master’s studies.
As they had gained a lot of new knowledge during their studies and from working on the
project, they thought that the technology was advanced enough, and they were fully ready to
do business. In addition, as good test results were obtained during the project, Emil, Anton,
and Emma formed the initial founding team and decided to establish Biodata.
As the project was over, and the business school experts, the professor, and senior researcher
from the laboratory had moved on to continue their academic work, the founding team of Biodata was a little lost: what to do next? No new funding was sought at this stage. Instead, the
team decided to develop the technology further alongside complementary research projects
that were running in the research laboratory during that time.

Emil, Anton, and Emma started to practise the skills that they felt were important in the
start-up process—for instance, pitching and preparing presentation materials. During the
whole start-up process, the university was very supportive and encouraged them to establish
their own business. All of them were still working at the university on research projects. Emil
shows gratitude to their supervisor, who gave them permission to spend their working hours
developing the technology and business idea. ‘Of course, only if we took care of our other
research duties, too,’ Emil adds.
In addition, the university supported the start-up journey of these enthusiastic students in
various ways. For example, a 4-week intensive prototype-building challenge organized by the
prototyping laboratory of the university coincidentally started at an appropriate time for them
and offered the team the possibility to develop an improved version of the sensor application.
The founding team could build and test different components and versions there and discuss
the technology with other students and faculty staff. In addition to developing the technology,
they learned the importance of trial and error. Emil describes this experience: ‘We discovered
our weaknesses, and most importantly our resources and skills that help us to move forward
and on which we can build. These experiences made the meaning of the idea of “fail fast, fail
often” very clear to us.’
Further, the support that the founding team received from the students’ ES was of vital
importance. The team participated in a 7-week accelerator programme organized by the ES.
The programme consisted of weekly workshops in which professional coaches offered the
team personal mentoring and opportunities to pitch their business idea to potential investors.
The programme also covered small business expenses such as components, marketing, and
travelling. Through mentoring, the team was also introduced to an experienced entrepreneur,
Tomas, who had close ties with the university as he was a graduate of the university. In addition, he had previously worked as a chief executive officer (CEO) of a university-based spin-off
company.
The programme organized by the ES was an eye-opening experience for the founding team.
During the programme, they learned the technical skills and conceptual side of pitching and
eventually understood the importance of networking and finding the most suitable candidates
for new partners or future employees. Emil describes the effect that the programme had on
him:
Among other things, I learned that valuing one’s own skills should not lead to underestimating other people’s skills in other areas. For example, at first, I underestimated the
value that businesspeople bring—it is not only about commercial slogans, but you need to
understand the customer needs and where the money comes from. 

Emil thinks that it is important to get over these stereotypes when building a business. Building
a business is not just about gathering information but also about looking critically at one’s own
prejudices and ways of thinking. Entrepreneurship requires a wide range of skills, and people
create something new together.
The university’s support services were a great help in the start-up endeavour, too. Experts
at the TTO helped Biodata with filing the patent applications, and professionals at the university’s accelerator helped them to tie contacts with potential investors and external advisers. As
the patent holder, the university covered all the costs related to patenting. By contacting the
investors suggested by the accelerator, they also received a few invitations to pitching sessions.
Further, the accelerator made contacts with potential external advisers through the Boardio
network,1
a global pool of candidates with skills and availability for advisory and board
positions. The Biodata team had preliminary discussions with the experts from the Boardio
network, but they felt that there was a kind of mismatch in personal chemistries and a lack of
common interests. For these reasons, the cooperation did not take off.
Although all the assistance and encouragement that the founding team received from the
university was extremely important, they understood that there were several systems and processes in the university to support entrepreneurs going forward, and no one could do things
on their behalf. As Emil puts it:
I must say that this venturing process requires a lot of volunteer work and bootstrapping.
We must go to events ourselves, get to know new people, develop the technology and the
business ideas forward. If you don’t push yourself forward, then development stops right
away. It is up to the entrepreneurs to find the right things and put together a successful
business. One must look at what is around and reachable.

Since the establishment of Biodata, Emil, Anton, and Emma had participated in various
events targeted at technology-based start-ups, at which they could pitch their business idea
to mentors and potential investors. These events offered them the possibility to discuss with
the representatives of companies who manufactured gadgets for activity measurements.
Unfortunately, these discussions did not lead to further collaboration. ‘Maybe because we
were somehow insecure and hesitant to initiate collaboration with established companies,’
Emil thinks. The team felt that they did not know how to run the actual cooperation with
companies that were well established and operated in the same field as them. Neither did all
the pitches held for various private equity investors yield any results. According to Emil, the
visit to the main start-up event in Finland, Slush, was like a slap in the face. Contrary to all their
expectations, at Slush they did not receive encouraging feedback, and neither did their unique
technology raise interest among the investors, potential customers, or collaborative partners.
Emil reflects on this disappointing event in the following way: ‘This was a wake-up call and
a clear message to our team that although our technology had great potential, we did not have
the skills to commercialize and sell it. We really had to widen the focus from technology to
customers.’

As a result, the team realized that they needed to learn and search for new skills. They found
that even though they had tried their best, the development of a real business idea had fallen
short. The direction had to be revised, and a new kind of expertise had to be brought in.
Along the way, many different people had been involved in developing Biodata in various
roles. Emil had kind of a champion role, and he also took responsibility for technical development together with Emma, while Anton focused on data analytics. In addition, they had a few
students doing their theses for them. Now it was clear to them that changes had to be made,
and know-how on those areas that the team did not yet have had to be obtained. Emil negotiated on ownership shares and division of labour with Anton, Emma, and everyone else who
had been involved in developing the technology. It was sometimes quite hard, but there were
no arguments; it was clear to everyone involved that at this point they had to make a choice:
whether they were in or out—‘hang-around’ members were not needed. Especially Anton had
strong feelings of ownership towards Biodata, but at the same time he acknowledged that if
he wanted to concentrate fully on his PhD studies related to a quite different topic, it would
be better to let Biodata go. After further consideration, only Emil and Emma remained on the
team.
After that, Emil and Emma searched for new active team members. Consequently, Otto and
Tomas, who both came from outside the university, joined the team. They both had skills that
complemented Emil’s and Emma’s technological backgrounds. Otto was a senior software
developer with strong experience in data analytics focusing on customer value creation. Tomas
was already familiar to Emil and Emma from the time of the ES accelerator programme. He
had prior experience in establishing a university-based spin-off that was sold, shortly after its
establishment, to a large international company. So currently, Emil, Emma, Tomas, and Otto
make up Biodata. Tomas acts as a part-time CEO, and Emil shares some of the tasks with
Thomas.

Until now, the idea had been to commercialize a special sensor that could be used in many
different applications and sell this technology for equipment manufacturers. When Otto came
on board, he analysed some data and explained to the team what added value the product
would bring—not in technical terms, but for the final user/customer of the product. Thanks
to him and Tomas, business development took a slightly different direction and stepped up to
a new level. The goal was to stand out. Instead of testing small sensors attached to the clothes
or a wristwatch and making measurements to provide information on a person’s physical vibe
(eating, sleeping, moving) among regular consumers, the team saw that elderly care would be
a potential area of application and decided to pilot among them.
With the unique technology that they had developed, they could monitor all the important
factors related to physical well-being—for example, health status, fever, inflammations, and
calorie consumption. Now, instead of just the technological issues, they started to think more
of the importance of the user-friendliness of the device and creating a simple user interface.
Customer experience is certainly crucial in business. Perhaps fully understanding this would
help them shift their focus from technology development more to value creation for customers. 

Biodata is now starting a pilot project with the local central hospital to test how the sensor
works in the field of elderly care. This project is complemented with a collaborative research
project with another Finnish university that aims at monitoring the lifestyle improvement of
people with obesity. Even if elderly care is now the primary target market for Biodata, this
parallel research project offers Biodata complementary data on how the application works in
measuring the impact of lifestyle changes among other customer segments.
Although the commercialization of the technology started 4 years ago, it is only now becoming available for piloting with first customers. ‘If we had the right people and skills already in
the beginning, the company might have been able to move forward at least a year faster,’ Emil
says. Anyhow, if the manufacturing of the sensor starts, the development of both sensor and
production technologies is estimated to be a 5-year project worth €10 million.
Biodata does not have any investors yet. According to Emil, the most important thing to be
solved is IPR. Biodata has many patents that the university holds. Emil hopes that they will be
able to make a deal with the university to get ownership for the patents they need. However,
Emil is a bit worried about the situation: ‘While the university is sympathetic to us, it may be
that in the eyes of an investor patents owned by someone else are a risk.’
Currently, the Biodata team has a clear idea of what they are aiming for next, even though
they have not written a complete business plan. ‘Currently our business plan is written in
PowerPoint slides highlighting the critical incidents and unclear issues,’ Emil admits. He
explains that they all believe in trying and failing fast, and learning from it. Therefore, they
do not want to spend too much time on polishing the business plan. Emil summarizes his
entrepreneurial journey:
What have I learned during the years of developing the business idea? The most important
developments have taken place in my own thinking and acting. It is important to keep
learning continuously. Only that way could I understand and master new kinds of roles and
new points of view which are essential.
Emil is not sure what keeps them driving forward. Maybe an interest in seeing how the technology works in the pilots and how things end up eventually. ‘Along the way there have been
several stages where the business idea could have been abandoned, but the idea has survived,
and we still have it—alive and kicking,’ Emil says and smiles.
Everyone involved in the company’s operations wanted to see the company get off to a good
start, succeed, and generate profit for the participants. Emil has started his PhD studies, and
he hopes that this does not limit what he is going to do in the future. Emil thinks that he must
make decisions about himself and the company:
Will I pursue a scientific career, or will I work as the chief technology officer of Biodata in
the future? Or will I eventually become the company’s CEO and replace Tomas? And how
should company ownership be divided; do we need new owners to finance growth already
at this point?

Plenty of open questions to think about, and Emil does not have clear answers yet.