Int Entrep Manag J (2006) 2:173–187

DOI 10.1007/s11365-006-8683-1

Assessing the needs of new technology based firms

(NTBFs): An investigation among spin-off companies
from six European Universities

Paul Kirwan · Peter van der Sijde · Aard Groen


C Springer Science + Business Media, LLC 2006

Abstract New technology based firms (NTBFs) play a major role in the development and
commercialisation of new technologies and the development of national economies. Us-
ing an entrepreneurship-in-networks approach, this paper examines the early stages of the
development of these companies, i.e. from opportunity recognition through opportunity ex-
ploration. Case study data was collected on 22 NTBFs from six European universities. The
findings highlight specific needs related to five functional areas of importance to NTBFs,
namely: R&D, market development and sales, organisation and governance, finance and
administration, and production/operation. These needs are reported for both the pre- and
post-foundation phases and can thus be utilised by both entrepreneurs and support agencies
to guide the development of NTBFs.

Keywords Entrepreneurship . High tech companies . University Spin-off . Networking .

Need assessment

New technology based firms (NTBFs) have a major role to play in the development and
commercialisation of new technologies (Elfring and Hulsink, 2001; Hulsink and Elfring,
2004), which in turn have a major impact on the development of national economies. New
business creation and entrepreneurial “churning” are increasingly recognised as being among
the most important drivers of a country’s economic development and growth (During et al.,
2001; Reynolds and White, 1996). Indeed, technology based ventures contribute dispro-
portionately compared to non-tech based ventures with respect to job and wealth creation
(Kirchhoff, 1994). Madsen et al. (2004) suggest a relationship between a country’s ability
to exploit opportunities created by technological advances (e.g., in information technology,
telecom, bio/life sciences, Microsystems/nano technologies) and its wealth.

P. Kirwan ()· P. van der Sijde · A. Groen

Nikos, University of Twente, P.O. Box 217, 7500 AE Enschede, The Netherlands
e-mail: p.m.kirwan@utwente.nl

P. van der Sijde

e-mail: p.c.vandersijde@utwente.nl
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174 Int Entrep Manag J (2006) 2:173–187

The increased recognition of the importance of NTBFs is reflected in the various

support mechanisms created by national, regional and local government agencies to as-
sist these companies in their development and growth. These support agencies and ini-
tiatives are easily identifiable in practice and in the literature (see e.g., Kirwan et al.,
2005).
NTBFs and their entrepreneurs have to deal with the usual problems associated with
the launching of a new venture, such as accumulating resources, building reputation, find-
ing partners and attracting customers (Autio et al., 1997; Brush et al., 2001; O’Farrell and
Hitchens, 1988). Given that the market for the majority of these firms is international these
problems, although inherent in most newly established ventures, are possibly perceived even
stronger by NTBFs. There are several reasons for this. First, their high tech nature often
implies that significant investments have to be made in R&D, in order to create high quality,
innovative applications that meet international market needs. These resources cannot be used
for other purposes, like marketing or establishing a distribution channel. Furthermore, ini-
tiating global activities often means extensive travelling abroad to obtain information about
specific markets. Such travels take up not only financial resources, but also time. Often the
entrepreneur cannot dedicate sufficient time to this, as he/she has to take care of other issues.
Also, setting up international activities requires knowledge of international markets and an
international network that, usually, has not yet been established at this early stage in the firm’s
development.
These activities all require substantial resources (Diamantopoulos and Inglis, 1988) and
NTBFs are notoriously resource-poor and may lack the necessary time, capital and capa-
bilities to prepare international markets adequately (Doutriaux, 1992). These problems can
be overcome through effective networking e.g. the network provides the entrepreneur with
support, contact and credibility (Ostgaard and Birley, 1996; Welter and Kautonen, 2005) and
early stage high tech firms with limited resources employ “hybrid” structures in order to
obtain leverage from external resources (Saarenketo, 2003).
However, while problems associated with starting a new venture have been outlined
in the literature, what is lacking is a study into the specific needs of these high tech
start-up firms. In a literature search only one limited study (14 interviews with Dutch
techno-starters) Groen et al. (2005) was found; this paper aims to bridge that gap. Us-
ing a specifically created case protocol, some 22 case studies have been collected in 6
European countries by the consortium members of the European Union project Glob-
alStart.1 The subject of these case studies is high technology spin-off companies with
global potential. These case studies were analysed using an ‘entrepreneurship-in-networks’
(EiN) approach to assess the needs of the high tech companies, especially those needs
over the starting phase of the company, i.e. from opportunity recognition to opportunity
exploration.
This research has both theoretical and practical implications. From a theoretical perspec-
tive it deals with an area that has been relatively neglected in the past and from a practical
viewpoint the findings of this research will be informative for organisations providing support
to high tech academic spin-offs.

1 The authors would like to acknowledge the participation of the GlobalStart consortium members in con-

ducting the case studies. The GlobalStart consortium consists of: Brno University of Technology (Czech
Republic), Katholieke University Leuven (Belgium), Universidad Miguel Hernández (Spain), University of
Salamanca (Spain), University of Tartu (Estonia), University of Twente (the Netherlands), Wales Spinout
Programme (Wales, United Kingdom) and the University of Warwick (England, United Kingdom). For further
information on the GlobalStart project see www.globalstartups.org.
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Entrepreneurship-in-networks approach

Entrepreneurship can be seen as the process in which actors interact in such a way that
opportunities are recognised, preparatory steps are taken in order to exploit the recognised
opportunity, and, subsequently value is created (Shane and Venkataraman, 2000, 2001; Singh,
2001). Van der Veen and Wakkee (2004) used this process approach to structure their re-
view of more than 100 articles. In the first stage of the entrepreneurial process, opportunity
recognition, the discovery and evaluation of opportunities are the key elements. Initial ideas
are developed into fully-fledged business opportunities. The second step is to match nec-
essary resources and perceived market needs in order to enable exchange with the market.
This preparation leads to the translation of the business opportunity into a concrete business
concept. The opportunity exploitation results in value creation when the concrete offering is
absorbed by the market in the third stage of the process.
The entrepreneurial process, as depicted in these three stages, is not a linear process.
Changing circumstances may require the entrepreneur to alter or come back to decisions
made in an earlier stage. The course of action is influenced by the environment and sensitive
to a range of variables. And although this model of the entrepreneurial process is opportunity-
based, the entrepreneur is the driving force throughout the process. Yet, the entrepreneur is
not an independent actor. Rather, we regard the entrepreneur as being embedded in a social
context; the entrepreneur needs to interact with other actors to exchange information and
resources to exploit the opportunity and create value.
Recognising that the entrepreneurial process includes multiple-actors and multiple levels
of aggregation, where actors interact and construct new technologies into new business,
a multidimensional framework inspired by the work of Parsons on social systems theory
(e.g., Parsons, 1951, 1977; Groen, 1994; Groen et al., 2002) is used here. A basic axiom is
that entrepreneurs act purposefully in interaction with other actors (see also Granovetter,
1985, 1992). Originally, a social system was defined by Parsons as follows:

“. . . a social system consists in a plurality of individual actors interacting with each other in a situation
which has at least a physical or environmental aspect, actors who are motivated in terms of a tendency
to the “optimisation of gratification” and whose relation to their situations, including each other, is
defined and mediated in terms of culturally structured and shared symbols” (Parsons, 1964, pp. 5–6).

Four mechanisms are embedded in this definition: (1) interaction between actors; (2) striving
for goal attainment; (3) optimisation of processes; and (4) maintaining patterns of culturally
structured and shared symbols. Each of these mechanisms produces its own type of processes,
with its own specific type of capital needed.
Each mechanism can be related to a specific “capital.” Striving for goal attainment (mech-
anism 2) is associated with the scope dimension, and deals with strategic goals strived for and
the strategic capital needed. Optimisation of processes (mechanism 3) refers to the efficient
organisation of entrepreneurial processes and is in that sense related to the scale dimension
with money as the basic resource, i.e. economic capital. Skills and values, related to pattern
maintenance and institutionalisation of shared symbol (mechanism 4), are embodied in cul-
tural and human capital, as they can be found in organisations, values, knowledge, skills,
experience, and technology. Interactions between actors (mechanism 1), finally, is related to
the social network capital.
The central assumption in this theoretical framework is that enterprises will need suffi-
cient ‘capital’ to be sustainable over time, implying that starting entrepreneurs need to have
sufficient capital in all four areas to establish a viable enterprise.
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176 Int Entrep Manag J (2006) 2:173–187

Cultural Economic
Capital Capital

Opportunity Opportunity Opportunity

Recognition Exploration Exaploitation

Strategic Social
Capital Capital

Fig. 1 The entrepreneurship-in-networks approach (Adapted from Van der Veen and Wakkee, 2004)

Proposition development

From the central assumption of the EiN approach, it can be seen that start-up entrepreneurs
need to acquire a ‘certain’ level of capital to be sustainable over time, therefore it can also
be said that starting enterprises need to cover these four dimensions in order to establish a
viable enterprise. This concept is similar to Klofsten’s (1992, 1998) business platform, where
starting enterprises need to reach the ‘highest’ level on eight core cornerstones to establish
a viable enterprise. From previous research into the starting processes of NTBFs and their
networking activities (Kirwan et al., 2005; Wakkee, 2004), it can be seen that these firms
often rely on a relationship with a key partner or partners (multiple) key partner(s)2 that
provide the firm with both desirable capitals and/or access to these capitals. This leads to the
first proposition:

Proposition 1. The initial capital contributions of the starting entrepreneur and the key
partner(s) will provide a sufficient core base of capitals to establish the venture.

However, the EiN approach is a dynamic process, so having reached a base level the firm
continues to grow and as it does so new capitals are required to address the firm’s growth
and development needs. The existing ‘base’ capital will continue to grow through everyday
business activities; however, these are not always sufficient to cover the development of the
company. This leads to the second proposition:

Proposition 2. Post foundation companies have needs in those areas where specific capitals
are lacking.

Methodology

Following a specifically created protocol a series of case studies was conducted among the
consortium members of the European Union project GlobalStart. The case studies explored

2 Key partner(s): In her dissertation Wakkee (2004) proposes that the presence of a domestic or international

partner with international contacts is a critical success factor for global start-up firms. In this paper we refer
to that partner as the “key partner,” i.e. that partner who contributes most to the development of the firm.
Yli-Renko et al. (2001) studied the effects of key customer relationships examining the effect of the largest
customer, i.e. the one that accounts for the highest proportion of sales revenue, on knowledge acquisition
and knowledge exploitation. In this paper the key partner relationship is viewed in similar terms, however, its
relevance is focused on the acquisition of further “capitals.”
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Table 1 Overview of the case companies

Industry

Consortium partner Nano/MST Biotech Laser Telecom software & IT

Catholic university of leuven (Belgium) 2 3 0 1

Spinout wales (Wales) 0 0 0 3
University De Salamanca (Spain) 0 1 0 0
University of Tartu (Estonia) 0 3 1 1
University of twente (Netherlands) 2 0 0 2
University of warwick (England) 0 1 1 1
Total (22) 4 8 2 8

the specific problems encountered during the development of the firm, from pre-venture to
the present day, and the key factors which have helped them succeed based upon available
university and regional support. The method employed was interviews with the founding
entrepreneurs, supported by document analysis of secondary sources. The current analysis
includes 22 technology firms representing different industry sectors based in 6 different
countries (Table 1).
The consortium members selected their case studies based on the expert opinion of the
directors of their respective technology transfer offices.3 These people are deemed as being
best placed to judge the global potential of the companies as they have regular contact with the
spin-off companies. All of the interviews were reported in English and in a universal manner.
The analysis of the case studies was conducted by a central source, which communicated
with the individual partners the need to collect further data to ensure the homogeneity and
comparability of the case studies.

Results

To assess the needs of the companies, the case studies were analysed with respect to
five critical functional areas: research and development; production/operation; market
development/sales; organisation and governance; finance/administration. The specific needs
identified in each area were then related to the capital requirement which they address; these
results are reported in Tables 2–6.
Identified needs from the case studies

The analysis of the cases focuses on five functional areas of relevance to starting entrepreneurs
menioned above. The following section gives a general overview of the needs as related to
each of these functional areas.

3 The Twente case companies were taken from the list of TOP (www.utwente.nl/top) companies formed after
the 1st of January 2000. This gave a possible sample of 56 firms. Following discussions with the two directors
of the TOP programme this list was reduced to 11 firms, which because of their technology/product offerings
and their knowledge of the companies and their business plans, the directors deemed to have global potential.
To further assist in the selection process the authors used the 12 propositions as to what constitutes a global
start up (see Wakkee et al., 2004) to further examine the global potential of these firms; this was completed
using company websites and other available public information. As this published information did not in all
cases provide sufficient to assess the global potential of the firms it was decided to carry out preliminary
telephone interviews to ascertain the necessary information. Following these interviews four companies with
global potential were chosen for in-depth study.
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Table 2 Specific research & development needs related to the ‘capitals’

Specific needs identified Capital addressed

Performing of technological due diligence (assessing how unique the Cultural

company’s technology is in the world/on the market)
Creating an appropriate IP strategy (global) Strategic
Developing a balanced innovation strategy (including R&D roadmap, Strategic
balanced portfolio of short, medium and long term R&D objectives)
Identifying and providing access to specialised R&D equipment and facilities Cultural
Identifying and relating to (global) networks of “world-class” scientists, Social
experts, technical and/or industrial partners

Table 3 Specific market development/sales needs related to the ‘capitals’

Specific needs identified Capital addressed

Screening and selecting target markets/market segments (market intelligence) Strategic

Identifying lead customers Strategic
Defining and implementing the appropriate marketing mix for targeted market Strategic
segments: products, price, distribution and promotion
Developing an appropriate sales strategy and structure Strategic
(including aftersales and service)
Developing adequate contractual arrangements related to Strategic
IP/liabilities, (with customers and distributors)

Research and development

For early stage high tech firms, knowledge is possibly the single most important resource
(Arenius and Autio, 2002). Acquisition of valuable know-how, learning and keeping up to
date with the newest evolutions in the field are essential ingredients for success in these
firms. It is important, therefore, that the founding team consists of people who are authorities
in their fields of research as they provide scientific excellence, reputation and networks of
scientific and technical partners to the firm. The majority of the case study companies are
based on university knowledge or knowledge gained by the founder(s) while working at a
university research group. For some of the case companies, especially in the biotech firms, the
global network of “world-class” scientists, partners, etc. are already in situ as the founding

Table 4 Specific production/operation needs related to the ‘capitals’

Specific needs identified Capital addressed

Assisting/supporting the “make or buy” production decision Strategic

Setting-up production facilities abroad Strategic
Setting-up logistic infrastructure Strategic
Selecting the appropriate location of facilities (taking into account local Strategic
legislation related to industry, environment, etc and local support/incentive schemes)
Identifying and selecting relevant partners for outsourcing Strategic
Developing adequate contractual arrangements related to IP/liabilities Strategic
(with production partners)

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Table 5 Specific organisation and governance needs related to the ‘capitals’

Specific needs identified Capital addressed

Formation of a Board of Directors with international management experience Cultural

Formation and development of a senior management team with Cultural
international experience
Recruiting and selecting “foreign” employees Cultural
Developing adequate HR administrative procedures and arrangements Cultural
(incl. tax/legal aspects)
Identifying and developing appropriate arrangements (VAT, legal issues, etc) Cultural
Developing management capabilities Cultural

Table 6 Specific finance/administration needs related to the ‘capitals’

Specific needs identified Capital addressed

Identifying, selecting and convincing investment/finance partners during the Economic

–pre-seed phase
–seed phase
–growth phase
Identifying and accessing grants/subsidies for export, R&D, etc Economic
Identifying, developing and installing accounting/administrative/legal Cultural
procedures pertaining to (global) activities
(VAT, legal, import/export regulation, etc)

entrepreneurs are these experts. From the cases the other identified needs related to logistical
and strategic implementation of research and development issues (see Table 2).

Market development/sales

The case studies revealed that marketing, and especially international marketing, is a problem
area for the start up companies (see Table 3). Developing adequate sales and marketing
strategies can be problematic for all start up firms. The firm must be able to see possibilities
on the market related to customers’ needs and desires and have the capacity to exploit them
within the firm’s current context (Klofsten, 1998). This is especially true for high tech firms
whose domestic market is limited because of their technology offering; therefore these firms
need to gather information on both foreign and domestic markets, customers and competitors.
Rialp-Criado et al. (2002) claim that market knowledge and market commitment are important
ingredients for a new venture’s success. Oviatt and McDougall (1995) have suggested that
one way in which new ventures might overcome the liability of smallness and newness is
by being the first to market with a distinctively valuable product or service; there is ample
evidence of this in the case companies.

Production/operation

Little is written or known about the production decision of NTBFs in the international
entrepreneurship literature. The literature suggests that internationalisation is more focused
on commercialisation of products and services rather than production (Burgell and Murray,
2000). From the cases it can be seen that production requirements differ among start-ups
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depending on the technology used. Many companies spend their early years focused solely
on research, product development and testing, with no requirement (yet) for large production
facilities. The data shows several companies with manufacturing requirements in their early
stages and that these companies have employed several different solutions to tackle their needs
with respect to both technical and product development and design and also with regards
to manufacturing decisions. Some of the methods employed by the case companies include
outsourcing to partner companies; licensing the technology in; contracting university staff;
and, entering into OEM (original equipment manufacturing) agreements with international
companies. Some of the more specific problems relating to these decisions are outlined in
Table 4.

Organisation and governance

Many early stage high tech firms, especially university spin-offs are started by techni-
cally skilled and motivated researchers, who are generally young and lack business and
management experience (Luostarinen and Gabrielsson, 2002). In the case findings, the en-
trepreneurs, especially the first time starters and academic entrepreneurs, expressed that
they had some deficiencies in dealing with organisational issues, and also especially the
academic entrepreneurs intimated that they were lacking with respect to some managerial
capabilities. To make up for this the entrepreneurial team should consist of people with
complementary expertise across the various functions required in the venture (Rialp-Criado
et al., 2002; Oviatt and McDougall, 1995). Another way in which early stage high tech
companies supplement their lack of managerial and organisational skills is through the
support of advisory boards (Luostarinen and Gabrielsson, 2002) and boards of directors.
Boards of directors have been shown to assist start up companies with their organisational
development, providing credibility to the company as well as providing advice and coun-
sel, and playing stewardship and monitoring roles (Hambrick and D’Aveni, 1992; Keasy
et al., 1994; Deakins and Boussouara, 2000). Many of the case studies provide examples
of the arrival of new management members with complementary capabilities to those al-
ready existing in the firm. The case studies also clearly illustrate the evolutionary nature of
boards of directors as new members are added and the ventures experience new organisa-
tional challenges. The specific needs relating to organisation and governance are illustrated in
Table 5.

Finance/administration

New ventures traditionally begin with limited financial resources. Also, in the early stages,
and especially for high tech firms which require heavy research and development investments,
revenue flows from sales are often weak or nonexistent. Therefore, attracting sufficient fi-
nancial resources is a prerequisite. A distinction can be made between three types of capital
required at different stages in the firms’ development. Pre-seed capital is the capital required
at the very early stage, i.e. before the foundation of the company; seed capital is required to
perform further research and development and to develop the product after the establishment
of the company; while growth capital is required for the production and/or the commercial-
isation of the company’s product and/or services. All of the cases highlight the need for
funding at all stages of the company’s development and illustrate that the case companies
look for funding from all available avenues, both public and private, e.g. international, re-
gional and local venture capitalists; government backed funds; university funds, e.g. through
technology transfer offices; national enterprise organizations; private equity; and, grants and
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loans. Several companies also emphasised the need for having at least one cash generating
product or service to help overcome the lack of funding at seed phase. The specific needs
with respect to financing are outlined in Table 6.

Summary of the needs

The tables highlight the needs of the spin-off companies with respect to the five functional
areas of importance to NTBFs. When matched to the capitals it can be seen that the needs
address all four of the capitals. In three of the five functional areas there is a direct link
to a specific capital: production/operation and market development/sales relate directly to
strategic needs and organisation and governance relate to cultural needs. With respect to
finance/administration and research and development there is evidence of multiple capital
requirements: finance/administration highlights economic and cultural needs, while research
and development has the most diverse requirements with strategic, cultural, and social needs
reported.
Form the case data it appears that social needs are under reported, with only one prob-
lem area highlighted, namely identifying and relating to (global) networks of “world-class”
scientists, experts, technical and/or industrial partners. However, from previous research it is
clear that these firms are embedded in social networks and through their relationships with
their key partner(s) have access to both local and international networks, which are necessary
for acquiring the required capitals (Kirwan et al., 2005).

Needs and the four capitals: Testing the propositions

To test the propositions the following methods were employed. Table 7 reports on the capital
contributions as identified in the cases. The first three columns, i.e. capital contribution of the
founding entrepreneur(s), capital contribution of the key partner(s), and desirable resources
introduced by contacts of the key partner(s) all relate to the pre start up phase and can be
used to test the first proposition. The fourth column, capital contributions of other partners
post founding, identifies those needs that arise as the company develops, which cannot be
met by the capital contribution of the founding entrepreneur(s) and the key partner(s).
Table 7 shows that in every case the entrepreneur(s) at least contribute cultural and social
capital; these are the knowledge and experiences gained throughout their careers and their
personal networks.4 Proposition 1 states that the initial capital contributions of the starting
entrepreneur(s) and the key partner(s) will provide a core base to establish the venture. In
15 of the 22 cases it can be seen that the starting entrepreneur(s) and their key partner(s)
provide a contribution to each of the capitals which proved sufficient to launch the venture.
However, in seven of the cases there is evidence of the absence of a specific capital in the
pre venture phase: in five of the cases economic capital is lacking and in one of these there
is also a want for cultural capital and in the other two cases there is a deficiency in strategic
capital. This would suggest that there is no support for the proposition and that the central
assumption of the entrepreneurship in networks approach is flawed.
With respect to the cases where strategic capital was lacking it can be seen that strate-
gic input came post foundation from, amongst others, participation in a university spinout

4 Personal Network: Here the personal network of the entrepreneur includes all those family, friends, and
acquaintances with whom the entrepreneur relates to primarily on a social level (Szarka, 1990) and those
network contacts the entrepreneur has from his educational and work experience prior to starting the enterprise.
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 Table 7 Capital contributions pre and post foundation
182

Pre venture phase Post foundation

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Capital contribution Capital contribution What’s missing? Capital contributions
of the founding of the Key Desirable resources of other partners
#∗ entrepreneur Partner (KP) introduced by the KP∗∗ (post founding)

1 Cultural, Social Social, Economic Strategic Economic

2 Cultural, Social Strategic, Social, Cultural Social, Economic Social, Economic, Strategic
3 Cultural, Social, Economic Strategic, Economic, Social, Cultural Economic Economic
4 Cultural, Social Cultural, Strategic Economic Economic
5 Cultural, Social Strategic, Social, Cultural Economic, Strategic
6 Cultural, Social, Economic Strategic, Social, Cultural Economic
7 Cultural, Social, Economic Social, Strategic, Cultural, Economic Cultural, Economic
8 Cultural, Social, Economic, Strategic Cultural, Social, Financial Economic, Cultural
9 Cultural, Social, Economic, Strategic Cultural, Social, Financial Strategic, Economic
10 Cultural, Social, Economic Cultural Strategic Economic, Strategic, Cultural
11 Cultural, Social Cultural, Economic, Social, Strategic Economic Strategic, Economic
12 Cultural, Social, Economic Cultural, Strategic, Social Economic
13 Cultural, Social Social, Strategic, Cultural Economic Strategic, Social, Cultural, Economic
14 Cultural, Social, Economic Cultural, Strategic, Social Economic Strategic, Social
15 Cultural, Social, Economic Cultural, Strategic, Social Economic Economic, Strategic, Social
16 Cultural, Social, Economic Strategic, Social Cultural, Economic Economic, Strategic Cultural
17 Cultural, Social, Economic Cultural, Economic, Strategic, Social Cultural, Economic, Strategic
18 Cultural, Social, Economic Cultural, Social, Strategic, Economic Economic, Strategic
19 Cultural, Social, Economic, N/A Strategic Strategic, Economic, Social
20 Cultural, Social N/A Strategic Strategic, Economic, Social
21 Cultural, Social Cultural, Economic, Strategic Economic Strategic
22 Cultural, Social Cultural, Social Economic, Strategic Strategic, Cultural, Economic
∗ Companies were assigned numbers to protect the confidentiality of the case companies.
∗∗ The ‘what’s missing’ section is reported in italics and reports on the capital not present at the pre-venture phase. The desirable resources introduced by
the key partner reports those resources gathered through contacts initiated by the key partner in the pre venture phase.
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programme. Further, with relation to the five cases where the economic capital was missing,
analysis of the cases reveals that economic capital was present at founding and it was even
referred to as the start capital. In these cases the founding entrepreneurs were continuing
their work in research groups during the pre venture phase. These firms were financed from
a variety of sources, including venture capital funds (in three of the five cases the founding
entrepreneurs were among the shareholders as, they did not have enough economic capital
to start the venture) hence the official foundation occurred only once this outside finance
was secured. The economic capital is reported therefore in the foundation rather than the pre
venture phase. In the instance where there was a deficiency in cultural capital, this related to
a transfer of intellectual property (IP) from the university, which occurred once the economic
capital was secured and the company founded.
These results suggest that a refinement of the proposition is necessary as the initial capital
contributions of the starting entrepreneur(s) and the key partner(s) provide a sufficient core
base to attract the necessary capitals to establish the venture.
Proposition 2 states that post foundation companies have needs in those areas where
specific capitals are lacking. As the company develops, so too does its store of capi-
tals. New responses in strategy, development and implementation have to be addressed
(Karagozoglu and Lindell, 1998), which require increased management capabilities such as
skills, attitude, knowledge and behaviour. Increased management capabilities were seen to
be realised through the recruitment of additional staff, and the appointment of new board
members provided strategic support. The firms can further develop their own store of capitals
through training, coaching and networking (Kirwan et al., 2005). However, the case compa-
nies do not produce enough capitals to be self-sufficient and in all cases there is evidence of
other partners meeting the needs of the company at different stages after foundation.
In 20 of the cases there is evidence of the need for economic capital post foundation. This
comes from a wide variety of sources including, for example, both government supported and
commercial venture capital funds, existing shareholders and research subsidies. This striking
need for economic capital is to be expected as most of the firms were still in a development
phase at foundation and were not generating income from sales.
The second most reported need post foundation were strategic needs. This is not surpris-
ing as most of the starting entrepreneurs had academic backgrounds and generally lacked
business and management experience, supporting the earlier observation of Luostarinen and
Gabrielsson (2002). These needs were again met by a variety of sources including network-
ing organisations, relationships with established industrial partners, government agencies
and continuing cooperation with the university as a key partner.
Cultural capital is reported as a need in only seven of the cases. Cultural needs are
most often addressed with the recruitment of new staff and six of the firms report hiring
in experienced staff, from new CEOs to technical staff, at different stages of development
to improve the know-how within the company. A pertinent reason why cultural capital is
underreported as a need is because the firms under observation are high tech firms that,
for the most part, conduct their own research and technological development. One of the
cases does outsource its technical development to the university, while another relies on
development teams from outside the company.
Social needs are again the least reported, only arising in six of the cases. Firms report
joining networking organisations and taking part in European projects to gain access to
potential customers and knowledge which they do not possess themselves. As mentioned
earlier, one of the possible reasons why social needs are underreported is because these
firms are already embedded in networks and their key partner(s) have provided access to the
capitals or contact with organisations that have been able to provide the necessary capitals.
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Another reason could be that because network development is organic the entrepreneurs do
not report it as a need or even perceive it to be a need. The network evolves through everyday
business dealings and only when a specific contact outside the network is required does the
entrepreneurial team, realise that a need is present.
All in all these findings provide support for the second proposition. It is quite clear that
post foundation companies have needs in those areas where specific capitals are lacking.

Conclusion

This article set out to examine the starting needs of NTBFs, specifically high technology
spin-off companies with global potential, in their early development stages, i.e. from oppor-
tunity recognition to opportunity exploitation. The needs of these firms were first assessed
with respect to five critical functional areas: research and development; production/operation;
market development/sales; organisation and governance; finance/administration. These needs
are summarised in Tables 2–6 where their relationship with the four capital areas of the EiN
approach is shown. Needs in strategic, economic and cultural capital were well reported
across the five functional areas, with social needs appearing to be underreported. This can be
attributed to several factors including the presence of established international networks of
the start-up entrepreneurs, through their previous work and life experiences, their relation-
ships with key partner(s) providing access to both local and international networks, and the
organic nature of network development, i.e. sometimes the problem is not identified until a
particular contact from outside the network is required.
Using an EiN approach two further propositions were examined relating to the accu-
mulation of resources by NTBFs during their pre-venture (i.e. opportunity recognition and
opportunity preparation) and post venture (i.e. opportunity exploration) phases. The cen-
tral assumption of the EiN framework is that enterprises will need sufficient ‘capital’ to be
sustainable over time, implying that start-up entrepreneurs need to have sufficient capital
in all four areas to establish a viable enterprise. The first proposition stated, therefore, that
the initial capital contributions of the starting entrepreneur(s) and the key partner(s) will
provide a core base to establish the venture. Based on the case analysis it was found that the
founding entrepreneur(s) and their relationships with key partner(s) did not provide sufficient
resources to start the firm suggesting the following refinement to the proposition—‘the initial
capital contributions of the starting entrepreneur(s) and the key partner(s) provide a sufficient
core base to attract the necessary capitals to establish the venture.’
There was strong support for the second proposition, i.e. post foundation companies have
needs in those areas where specific capitals are lacking. This result shows that although
NTBFs continue to develop their own store of capitals post foundation, these are insufficient
to be self sustainable and again the firms rely on relationships with other partners for their
continuing development. NTBFs need to maintain and develop relationships with national
and international organisations which provide access to stores of capitals or partners who
can provide contact with such actors. These findings highlight the importance of networking
activities for NTBFs, an area which has been under researched in both the entrepreneurship
and international entrepreneurship literatures.
The article has implications for both theory and practice. From a theoretical perspective
little was previously known about the actual needs of NTBFs. The article has addressed
these needs with respect to five critical areas to the firm across its early development stages,
thus it adds to the body of knowledge in this area. However, the article also contributes
to the development of the theoretical framework, i.e. the EiN approach, as it illustrates the
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Int Entrep Manag J (2006) 2:173–187 185

applicability of the framework for use in empirical research. From a practical perspective this
article benefits both start-up entrepreneurs and support agencies, by providing a checklist for
assessing needs at various stages of development. It also raises awareness of the importance
of network partners for developing such firms and as such should encourage entrepreneurs
to engage in active network development and support organisations to increase their network
ties to provide optimal support.
The study is not without its limitations, however, and one of them is that it includes just
a subset of NTBFs, i.e. university spin-offs and two corporate spin-offs, whose parent com-
panies originated from a university environment. Given the strong links with the university
inherent in these firms it may be that the nature and importance of the relationship with
the key partner, especially if it is a university research group or TTO, may be exaggerated.
Further research is needed on a wider sample of firms to establish if this relationship holds
for other types of NTBFs.
Further research could also be conducted with respect to the needs of other start-up firms.
Many of the needs highlighted are not specific to NTBFs and perhaps the study needs to be
replicated with a group of non-technology based new firms to see which needs are shared,
and what differences there are pre- and post- foundation and with respect to the range of
organisations helping meet these needs. The highlighted importance of networking as a means
for acquiring capitals also warrants further research. This research should longitudinally
investigate the network development of different types of firms from multiple industries, over
the course of the entrepreneurial process, in order to discover whether there are differences in
the network development and if so how these differences impact on performance and overall
success.

Acknowledgments The authors specifically acknowledge the contribution of Bart van Looy, Cathy Lecocq
and Edwin Zimmermann of the Catholic University of Leuven (Belgium) with regard to their input to
Deliverable 1.3 ‘Plan for Global Start-up Support’ of the GlobalStart project.

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