Just as Stanford sits at the center of Silicon Valley’s venture ecosystem, technical universities in Europe are increasingly sharpening their game in training engineers and research scientists for careers as entrepreneurs and generating both ideas and talent for the larger industry.
More and more universities, including Technical University of Delft in the Netherlands, RWTH in Aachen, Germany and the Technical University of Munich (TUM), have launched incubators that give students resources and access to networks to help take their ideas from conceptualization through prototype and eventually to commercial product.
“That might also be one of the reasons you do see this influx of international investors into Europe,” says Oliver Kahl, a partner at Munich-based VC firm MIG Capital. University- and research institute-based incubator programs are a sign of a maturing ecosystem, which has attracted investors from outside Europe to look “more closely at European spinouts of universities and start-ups in general,” he says. TU Delft currently hosts six places where high-tech companies can develop, including YES!Delft, a non-profit incubator created in 2005 to help start-ups and scale-ups become successful companies without taking equity from them.
Setting up entrepreneurs ‘to fail’
For all their capacity as a source of talent and ideas, Europe’s technical universities until recently have been failing their communities, too often “setting up potential entrepreneurs to fail, not succeed,” says Atomico partner Tom Wehmeier. That is reflected in feedback from founders who have been through the experience and are frustrated by bureaucracy, negotiation over IP rights and universities’ “very aggressive terms around equity shares, [often up to 50 percent], and even future royalties upon commercialization,” Wehmeier notes.
As Europe’s VC ecosystem has matured, and with growing awareness of the commercial and strategic value created by successful tech stories, “it’s created a mindset shift where more and more of Europe’s leading universities have started to look at the ways they can strip back some of the barriers that have existed,” he adds.
Wehmeier praised UnternehmerTUM, TUM’s incubator, for its proactive efforts to examine how to best empower and enable rather than hinder founders. Its full-stack approach to providing capital, resources and networks is a “great flagship example that we would often point others towards,” he says, adding that its track record speaks for itself.
TUM’s incubator has become practically a mini venture ecosystem of its own. After launching in 2011, it spawned an independent VC firm, UVC Partners, and launched eight venture labs. The labs are designed to be springboards for deep-tech innovations, providing focused domain expertise in areas such as aerospace, food/agro/biotech, healthcare and robotics/AI.
In 2021, start-ups funded by TUM and UnternehmerTUM raised €3 billion, or roughly 18 percent of Germany’s VC volume by euros that year. Between 70 and 80 start-ups are founded at the incubator each year, including success stories such as Isar Aerospace, Kumovis and Twaice. UnternehmerTUM has produced three unicorns so far: Celonis, which offers software as a service to improve business processes; Lilium, an electric jet maker; and Personio, whose software digitalizes the personnel management processes of small and midsized companies.
UnternehmerTUM began offering lectures on entrepreneurship as early as 1998. Entrepreneurial thinking is important for bringing innovative technologies to market and thus making the economy and society more sustainable, Helmut Schönenberger, the incubator’s co-founder, tells Venture Capital Journal via email. The focus of its support is on B2B tech start-ups.
UnternehmerTUM is also a key contributor to the Munich Urban Colab, a collective where engineering and research students collaborate with representatives of Munich municipal agencies, such as its utilities and transportation subsidiaries, to develop sustainable technology to turn Munich into a “smart city.” Students “experience the entrepreneurial process first-hand,” says Schönenberger. They also benefit from the exchange in the innovation ecosystem at regular networking events and can get involved in venture projects themselves.”
Kahl meets regularly with Colab directors and other incubators at universities in Europe to discuss project-based ideas before they become start-ups. While MIG won’t invest at an early stage, it tracks how start-ups are progressing and might invest down the road. Says Kahl, “It’s really important to be in the loop with what’s going on at these places and be connected to founders at an early stage. That’s one of the prime sources for our dealflow.”