MSME DIGEST With Kola Owolabi
Building a start-up around your innovation
In Part Two of this series, we examined the strategy of licensing an innovation to an existing organization with the capability to bring it to market. While licensing is a practical and less risky route for many researchers, there are situations where the innovator may decide to take a more direct path by building a start-up around the innovation.
Creating a start-up is often the most rewarding, but also the most demanding commercialization path. It involves transforming an idea or research output into a fully functioning business that produces and sells products or services to real customers. This approach gives the innovator greater control over the direction of the innovation and a larger share of the potential financial rewards.
However, it also requires a shift in mindset. The researcher or inventor must move from the laboratory or theoretical environment into the uncertain and competitive world of business. This transition demands skills in marketing, finance, operations, and leadership; areas that may be outside the traditional training of many researchers.
Before choosing the start-up route, the innovator should ask a few critical questions:
- Is there a clearly defined market need for this innovation?
- Can the innovation be developed into a product or service within a reasonable time and cost?
- Do I have, or can I attract, the right team to build this business?
- Is the potential return worth the risks involved?
If the answers to these questions, which are best explored in the feasibility study/business plan tool, are positive, building a start-up may be the right path.
A notable example of innovation-driven start-ups is Tesla, Inc.. Although electric cars had existed for years, the company successfully built a business around advanced battery technology, performance, and a strong brand identity. By focusing on both innovation and the business model, the company transformed an existing concept into a global automotive and energy enterprise.
Another example is Microsoft, co-founded by Bill Gates. The company was built around the idea of providing software for the emerging personal computer market. Rather than licensing their early innovations alone, the founders built a company that went on to dominate the global software industry.
These examples highlight an important lesson: innovation alone does not create a successful start-up. What makes the difference is the combination of innovation with a strong business model, market understanding, and effective execution.To build a start-up around an innovation, the following steps are essential:
1. Validate the market need
Engage potential customers early. Confirm that the innovation solves a real and urgent problem.
2. Protect the intellectual property
Secure patents, trademarks, or other forms of protection to safeguard the innovation.
3. Build the right team
A balanced team should include technical, marketing, and financial expertise.
4. Develop a simple business model
Use tools like the Business Model Canvas to define value proposition, target customers, revenue streams, and cost structure.
5. Start small and iterate
Launch a minimum viable product (MVP), test it in the market, gather feedback, and improve continuously.
6. Seek appropriate funding
Funding can come from personal savings, grants, angel investors, venture capital, or strategic partners.
The step-by step implementation model capturing the above points is best represented in a robust business plan. The business plan looks ahead for about five years how the implementation journey will be undertaken amidst the shocks and uncertainties that bedevil every business environment
The start-up route is best suited for innovations that:
- Address a large or growing market.
- Require close control over product development.
- Have the potential to create entirely new industries or disrupt existing ones.
While the journey may be challenging, building a start-up offers innovators the opportunity to shape their ideas into thriving enterprises that create jobs, generate wealth, and contribute meaningfully to economic development.
In the end, whether through licensing, partnerships, or start-ups, the ultimate goal of innovation commercialization remains the same: to transform ideas into solutions that improve lives and create value for society.
Kola Owolabi CEO, David Solomon Consulting Limited is a Fellow of the Nigerian Institute of Management Consultants (FIMC.CMC) The company can be reached via phone or WhatsApp at 08023203198
