Ambitious for ambition
Interview: Dr Olga Kozlova (Heriot-Watt University & Converge Challenge)…
Ambitious for ambition
Dr Olga Kozlova is the Enterprise Creation Manager at Heriot-Watt University, supporting spin-out businesses and enterprise activities. She is also the Director of Converge Challenge, a company creation competition for staff and students at universities and research institutes in Scotland, set up to produce the next generation of entrepreneurs, offering hands-on help and practical support – as well as awarding tens of thousands of pounds to start-up companies with the potential to become successful businesses...
It's a long way from studying fungus in Russia to nurturing young businesses in Scotland, but Olga Kozlova has learned something new every step of the way. And she is passing on her knowledge and experience – and her ambition – to the next generation of entrepreneurs now emerging from universities all over Scotland.
After graduating from Kazan State University with a Master of Science Degree in Microbiology, Kozlova came to Scotland in 1999 to do her PhD research in cell biology, but she knew she didn't want to be a scientist all of her life, and three years later set her sights on going into business. Thanks to an RSE Enterprise Fellowship, she started to pursue her dreams and established a company called LUTESS, building tools for researchers to help develop anti-fungal drugs. But despite support from Scottish Enterprise's SMART award, Kozlova soon learned her first business lesson when she struggled to raise enough money to keep LUTESS going – most clients wanted bespoke solutions and development costs were too high to make production viable.
Kozlova had many ups and downs in the search for investment: “I spoke to some investors and it seemed to go well, then they invested in my competitors. On the other hand, sometimes you have to say 'No' to investors – when I walked away from one deal, it was probably the best decision I ever made. Sometimes, the relationship may simply not work on a personal level, and that's why you need to have options.”
LUTESS closed its doors in 2007 and Kozlova spent the next two years as Business Development Manager at Edinburgh Napier University, helping researchers to form links with business and do collaborative research.
For Kozlova, the challenge was to change the view of companies in Scotland, so they didn't see the universities as ivory towers. “Our job was to talk to both and bring them together as partners,” she says, “helping them draw up agreements on funding and timescales.”
After two years at Napier, Kozlova moved on to Heriot-Watt University, as Enterprise Creation Manager, supporting spin-outs, and soon afterwards took on her job at Converge, to help produce the next generation of entrepreneurs. The programme started “with a blank page” as a business plan competition in 2010 and now attracts almost 200 entries a year, awarding total funds of £100,000, including a top prize of £60,000, plus training and mentoring programmes.
One of Kozlova's key roles today is to act as a mentor to budding new entrepreneurs, and she also knows what it is like to be mentored. “You can be lucky with mentors,” says Kozlova, “but more than anything, you have to know how to use them. Too much advice can be confusing.”
So what is Kozlova’s advice to young scientists thinking of forming a business? “A lot of graduates come out of university still excited about science,” she says. “They may also be passionate about innovation, but they have to have a product and a market for their offering. They need to know their customers and also be able to pitch their ideas. The science is important but as far as your investors are concerned, they think – science, so what!”
As well as having brilliant ideas and raising investment, entrepreneurs should be careful to focus on some of the basics of business, and not forget about themselves. “It helps to have a business partner,” says Kozlova. “Starting up a business can be stressful and lonely, and sometimes you have tunnel vision, so having someone who can pull you back is useful.” In addition, she says, start-ups should go out and talk to their potential customers, and make sure that there is demand for what they are doing. As an academic, you can publish exciting research but there may be no market for many years into the future. Market reports only tell you so much, says Kozlova – you usually have to find out for yourself.
Running her own company, Kozlova met many different types of investors, including business angels, venture capitalists and high-net-worth individuals. “You have to understand investors and their investment portfolios,” she advises. “You have to find out what's important to them and how they make their money. When someone gives you money, you should also remember it's their money, too. And never forget, it's just business.”
Before you pitch to investors, make sure that you have a product ready for market, and a market which is ready for the product. Also, says Kozlova, build a team, even if it is only two or three people to start with. Engage with customers as early as you can, and if you also manage to generate sales, you will have much more “traction,” she adds. And don't worry about someone stealing your ideas – at least not to start with.
But even before you reach this stage, she also advises, ask yourself why you want to go into business. Ask yourself if business is for you. And don't be scared of failure.
How Converge Challenge works
Converge Challenge is designed to help Scotland grow as a “can-do” competitive economy, says Kozlova, by providing the right support at the right time to the innovators of the future. Successful candidates get help in a number of ways, including practical advice on how to measure demand for their products. At business training held every year, there are also lessons in how to pitch your ideas – including the classic 60-second elevator pitch. “We take people with ideas and expose them to the commercial world,” Kozlova explains. “We also help with basic marketing techniques like using social media.”
Converge also “encourages people to get out of the lab,” says Kozlova. “They have to go out to the scary world of business and talk about money.”
Thirty projects are selected for the Converge Challenge shortlist (out of 186 entries in 2015), and the candidates all go for three days of training to learn how to “engage with their market,” write their business plan and make presentations. The Top 30 projects then produce their business plan and ten of them are chosen to go through to the Final, when they pitch to a panel of business “gurus” who vote for the winners.
For projects which are still at an earlier stage, the Converge Challenge KickStart Awards provide £2,000 in cash for a new business venture, with £1,500 each for the two runners-up. Successful candidates are also fast-tracked to the following year’s Converge Challenge Top 30 shortlist. Converge has also set up Social Enterprise awards, in partnership with Firstport, with a first prize of £5,000 and two runner-up prizes of £3,000.
The winners of the £60,000 top prize in Converge Challenge get more than just money, however, they also get business support including access to lawyers, accountants and IP (intellectual property) advisors, plus advice on branding and design. Not everyone can win a top award, but according to Kozlova, all entrants value the experience and the Top 30 also get training and business advice. “They also interact with other people,” Kozlova continues, “and get the opportunity to build their own networks. Some of them are also inspired to do better in future.” About a fifth of entrants also pull out early, or decide that business is not for them. Or it may be too early for some, adds Kozlova.
Converge Challenge also works with other partners in Scotland such as Scottish Enterprise, Enterprise Campus, the RSE, the Scottish Institute for Enterprise and Scottish EDGE to provide appropriate business support, and the entrepreneur “ecosystem” is becoming much stronger in Scotland, Kozlova believes, with more collaboration than ever before.
Many business ideas need long-term support, especially in areas such as life sciences, where patent protection and clinical studies are such critical issues, but over the last few years, one of the changes in the business world is the rise and fall of companies developing apps – a market that can change so fast your product could be out-of-date before you even manage to release it. Data analytics is also becoming big business, says Kozlova, and this shows through in companies such as Shot Scope Technologies, a finalist in 2014, which has since secured £415,000 in funding, led by business angel syndicate Equity Gap, plus £50,000 from Scottish Edge, for its innovative “golf performance tracking technology.”
Overall, entrants are becoming much better prepared, says Kozlova, but for all budding businesses, there is less and less money around and it's harder to get. “After 2008, the banks disappeared,” says Kozlova, “and the venture capitalists moved further afield, looking for investments of at least £10–15 million.” The business angels are filling the gap, she continues, and crowd-funding also provides a solution for many young entrepreneurs – in some cases, customers also become your investors.
Investors need an exit, says Kozlova, but the funding climate also needs to change: “We need more gross capital – longer-term investors who buy out the business angels and inject a few million to enable the entrepreneurs to continue to grow the business internationally, as well as get a return on investment.”
So what does the future hold for Kozlova and Converge Challenge? The Scottish Funding Council and eight research-intensive universities (Aberdeen, Dundee, Edinburgh, Glasgow, Heriot-Watt, St Andrews, Stirling and Strathclyde) have already guaranteed funding through until 2018, and the emphasis will be much more on quality and strengthening the business ecosystem. “We want to work more strategically,” Kozlova says, “and focus on the people with the best chance of success.” Another recent change is sending out roadshows to engage with the business community all over Scotland.
As well as her work at Converge, Kozlova is also now involved with the Young Academy of Scotland as a member of its Industry Working Group, and the Business Innovation Forum set up by the RSE. “It’s good so many people want to be involved,” she says, “and want to change the world.”
And what does Scottish business need to do to be more successful in future? “We need more companies with the potential to grow – companies of scale,” says Kozlova. “We need to get the pipeline going, aim higher and aspire more. We have some great examples of success but we are not consistent enough. We need role models in a wider range of sectors. We need more opportunities for undergraduates and post-graduates. And we need to be much more ambitious.”
Converge Challenge: Impact
> 450 entrepreneurs have entered the competition over the last five years
> 48 entrepreneurs trained in the programme have formed companies – a success rate of 40%
> 80 per cent of these companies have secured funding worth an estimated £14 million and employ about 140 people