Start up: digital DIY makes for good business

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Although the predicted cuts in public sector funding are yet to translate into substantial job losses, the UK government is already searching for ways that the private sector can plug the employment gap.

In November last year, for example, David Cameron gave a speech in which he unveiled plans to turn London’s East End into what he described as “one of the world’s great technology centres”, suggesting that it could eventually rival California’s Silicon Valley. The Government, said Mr Cameron, is committed to ensuring the UK can become “the most attractive place in the world” for innovative firms to start up. But what are the country’s top business schools, the constant champions of the value of entrepreneurship, doing to help turn this dream into a reality?

It is now almost impossible to find a business school that doesn’t provide courses on entrepreneurship as part of its MBA programme, or that doesn’t encourage students to develop business plans for new ventures. However, a growing number are now taking the entrepreneurship project a crucial step further. Instead of just focusing on classroom-based instruction, they are also providing practical and continuing help to graduates’ fledgling companies through dedicated “incubators”.

Three of the UK’s most high-profile schools – Manchester, Lancaster and Liverpool – seem to have decided that the new Silicon Valley should be built in the North-West rather than London and have consequently come together to partner with an innovative incubator for high-tech firms. Based at what they describe as a neutral campus at Daresbury, near Warrington in Cheshire, the facility provides small science and technology companies with a potent mix of research facilities, knowledge exchange and business know-how to get them through their initial stages of development. Partner Manchester Business School goes as far as providing participating companies with consultancy from its masters students. As Jonathan Aylen of the school’s Institute of Innovation Research puts it: “Students can often view a problem from a new perspective. They also have the time to research and analyse the situation, providing additional resources to time-starved entrepreneurs.”

Other institutions, such as Nottingham University Business School, are investing heavily in providing facilities for students to get their own high-tech companies off the ground. Participants in the school’s MBA programme get the opportunity to use the facilities of the university’s Institute for Enterprise and Innovation, an incubator for new ventures providing everything from guidance and mentoring to such basics as a business address and professional office space. “We got free space for a year followed by a subsidised rent deal, which was invaluable in our early development phase,” says Nick Barker, Nottingham MBA. Founded in 2009, his web monitoring company, Aware Monitoring, has already won the city’s New Enterprise of the Year Award and now operates internationally with clients around the world. Servicing this level of business has called for rapid expansion and Nick has now recruited a staff of five – something that he believes was facilitated by the credibility of a business school qualification.

“The MBA is very good to get employees on board with the start-up,” he explains. “They have more confidence in your abilities and the commitment to what you are trying to do.”

Barker also sees the benefits of sharing what he describes as a tech eco-system. “It was highly motivating to be working alongside other start-ups – the enthusiasm and level of commitment are infectious; there’s always someone to give you helpful tips or a shoulder to cry on when things don’t go as smoothly as you might like. Some of those new ventures have even gone on to become our customers. I’ve been gearing up to start my own business for nearly 20 years, but it’s been the combination of the academic input of the MBA and the practical support of the Institute which have made all the difference.”

Warwick Business School’s Enterprise Hub, which has been operating since August 2007, follows a similar incubator model and also provides participants with links to angel investors to help circumvent the current shortage of funding for small companies. However, like so many of its peers, the school draws the line at providing funding itself and is adamant that its key role is to provide knowledge and guidance rather than hard finance. “The Warwick Enterprise Hub is far more academic in its approach than any investor would be,” says the Hub’s director, Roger Mumby-Croft.” Our focus is on useful knowledge transfer from the business school to the entrepreneur, rather than supplying capital with the ultimate aim of realising a successful investment.”

Although business school incubators have become highly fashionable in recent years, the $64,000 question is, of course, whether they really make a difference to the new ventures that use them. Michel Coster, who runs one of Europe’s oldest incubators at the French business school, EM Lyon, points out that, while the national average for startup companies in France is a rather daunting 50 per cent success rate, organisations nurtured by EM Lyon scored a much more impressive 85 per cent.

More specifically, over the past few years only one project passing through the incubator has ended in failure. According to Coster, the reason for the high success rate is the natural fit between business school and the new generation of entrepreneurs who often have strong technical backgrounds and a wealth of ideas, but little real commercial experience. “By giving them exposure to our own academics and to alumni who have already built and run their own companies we can provide the support and business insight that can turn a bright idea into a thriving business.” Coster’s argument seems to be borne out on the other side of the Atlantic by the experience of one of the world’s top technically-oriented business schools. According to the MIT Entrepreneurship Center in Massachusetts, alumni of its parent school are behind more than 26,000 active companies employing over three million people and generating a combined turnover equivalent to the 11th biggest economy in the world.

Mr Cameron must be green with envy.