Turning technology into business

R&D continuously generates innovative technologies and solutions. But all too often insufficient business knowledge prevents their commercial exploitation. But TRAIN-IT’s hands-on business planning training and coaching resulted in 36 start-ups and a wealth of success stories.

The major obstacle facing would-be start-ups is the business plan, which in today’s post-Internet bubble world has to be not just good, but great in order to convince banks and venture capital firms to supply vital growth capital.

The goal of IST-project TRAIN-IT is not only to turn the technology into business, but the technologists into businessmen in order to reach their potential. An example of this is CubeOptics, a German start-up that participated in an earlier TRAIN-IT programme in March 1999, and went on to raise 10 million euros in funding from venture capital firms The Carlyle Group, Sevin Rosen Funds, Star Ventures and Target Partners. In 2003, CubeOptics was selected by Tornado Insider as being one of the 25 most innovative high-tech start-up companies in Europe.

Building on these successes TRAIN-IT conducted 15 business plan-training courses that covered issues ranging from financing strategies to intellectual property rights. 156 participants from 22 countries took part in the six-day courses, and the project has recently published a report highlighting 16 of these start-up success stories that is now available from IZET, the sole TRAIN-IT contractor. Some of the notable cases include:

Condias

Matthias Fryda and Thorsten Matthee attended a TRAIN-IT course in 2000, when they were research team leaders at Fraunhofer IST Institute for Surface Engineering and Thin Films and had been involved in several ESPRIT projects. Afterwards, they were able to raise 2.5 million euros in venture capital and public funds and co-founded Condias in 2001. A production plant was opened together with Solid Energy in June 2002, and Condias went on to win the Schmidt-Roemhild Technology Prize 2003 for its pioneering capacity of their diamond electrodes to disintegrate toxic substances in water. Employment is forecast to grow from 8 employees to 25 by 2006. “The full TRAIN-IT support enabled us to accelerate our business planning and realisation and move forward at optimal speed,” say co-founders Fryda and Matthee.

Wornex

Italy’s Wornex, meanwhile, was spun out as a for-profit company in 2001 from non-profit Nexus IBA, participant in the IST project DEMOS, after TRAIN-IT assisted Alfredo Cotroneo in adopting a business model to sell its WorldDirector technology. Self-financed through product sales, Wornex has served over 300 domains so far with WorldDirector’s networking enhancing solution, with 90 per cent of their customers coming from outside Italy. The customer list includes Swiss banks and financial institutions, companies needing B2B and B2C e-commerce applications, online event management for large corporations, media company portals and firms offering multimedia streaming. Profitable since day one and an IST Prize nominee for 2003, Wornex plans to increase employment from three to 10 over the next three years and annual revenue from 500,000 euros to 3.5 million euros.

Efm-systems

Gerd Bauer, another IST project participant, was even more ambitious after taking part in a TRAIN-IT course in February 2001, founding two start-ups. Mikrosystemhaus Bauer was founded in May 2001 as an engineering office developing microtechnological modules and miniaturised systems. Efm-systems followed in April 2002 as a distribution company marketing and selling the products of Mikrosystemhaus Bauer as well as other companies. The efm-systems innovative production model, which includes a catalogue that offers a diverse 30-part microtechnological toolkit, won efm-systems second prize in the start-up competition of the state of Baden Württemberg in May 2003. With plans relying only on organic growth – revenue is forecast at 300,000 for 2004 – Bauer and efm-systems are on the way to becoming a niche market leader.

Gentleware

Some start-ups, however, participate in TRAIN-IT specifically to help them gain access to venture capital. This was the case for Marko Boger, who had a background in reviewing IST projects. Boger sought TRAIN-IT assistance in writing a new business plan for his Unified Modelling Language (UML) software specialist company, Gentleware, a spin-off from Hamburg University Boger founded in 2000. This led to 1.6 million euros in funding from venture capital firm Dr Techno Nord. Today, Gentleware’s product Poseidon for UML has been installed over 500,000 times, and the 24-strong team sees a bright future with annual revenue of 550,000 euros and a quarterly growth rate of 60 per cent.

Along with these start-ups, the TRAIN-IT publication includes 12 additional profiles of successful cases, featuring Greek IST Prize nominees ESTeam, which was involved in the IST project MUMIS and Austrian university spin-off ConfigWorks, that evolved out of the IST project CAWICOMS. ConfigWorks was awarded the international TOPCALL Innovation Prize and the Innovation Prize of the state of Carinthia in 2003, as well as nominated for the Austrian state Prize for Innovation in 2004 for its e-sales advisor systems. Other start-ups highlighted are seeking investors, such as German e-government software start-up Mimori Technology Group, based on the IST project SABRINA. Hungary’s Axetel Consulting, which is commercialising new open source software developed in the IST project EUPKI, is seeking funding to move marketing and sales for the open source security firm into Western Europe.

Besides the 36 start-ups and spin-offs that have come out of TRAIN-IT courses, there have been also been 58 business plans written by participants. The consortium expects these figures to grow to 69 start-ups and 114 business plans by 2005, as participants in the later courses follow through or find backers for their ideas. These results reflect an anticipated rate of 85 per cent regarding business plan completion and realisation. 90 per cent of the successful business cases took advantage of the TRAIN-IT follow up support, reflecting the sustained effect of the project’s training and follow up.

“The TRAIN-IT course has established itself as a best practice training methodology to stimulate and support the commercial exploitation of IST results. Hands-on support for technology-oriented entrepreneurs is the key to turning technology into business and pushing forward the European economy,” says project manager Helga Bechmann. “The very positive outcome of the TRAIN-IT activity proves the benefits of such a concerted support action.”

Contact:
Helga Bechmann
Director
Gesellschaft für Technologieförderung Itzehoe mbH
IZET Innovationszentrum Itzehoe
Fraunhoferstrasse 3
D-25524 Itzehoe
Germany
Tel: +49 4821-778520
Fax: +49 4821-778500
Email: bechmann@izet.de
Source: Based on information from TRAIN-IT