Phi Beta Capitalism

What do Google, Yahoo and Sun Microsystems have in common? Like hundreds of Silicon Valley firms, they all trace their roots to Stanford University. The wealth, jobs and economic dynamism thus created have not been lost on wanna-be Stanfords around the world.

From Sweden to Singapore, universities and governments are outdoing each other to foster student and faculty entrepreneurship. They've been spurred by recent reports from the OECD and others detailing the boost universities can give to economic growth. Singapore last year announced plans to spend some $7 billion by 2010 to finance biomedical research and university spinoffs. In Britain, a national campaign has raised the number of university spinoffs and start-ups from 430 in 2000 to 787 in 2004, the most recent year for which numbers are available. In Sweden, universities such as the Karolinska Institute now operate venture funds that seed campus start-ups. European business schools, in turn, have been rejiggering courses to focus more on how to create and grow new companies, not just traditional management. At INSEAD in France, for example, a "resident entrepreneur" now passes on his experience in venture finance and start-up management.

The payback comes in many ways. Schools known for spawning new companies have a leg up in the competition for foreign students, says Wolfgang Herrmann, president of the Technical University of Munich. At Warwick University in Britain, spinoff income and license fees have tripled revenues from commercial activity since the 1980s to 60 percent of the total budget, says Stephen Hagen, head of the public university's venture-financing arm. Less elite British colleges are finding niches in, for example, corporate and vocational training, or encouraging professors to moonlight as consultants. That can make or break a university facing tight budgets.

Entrepreneurship remains, however, an alien import in many European and Asian universities with long traditions as ivory towers. "Ten years ago the first thing I had to do was convince our own professors that entrepreneurship wasn't evil," says Herrmann. "For most students the idea of creating a company never even crossed their minds." Today TUM leads German colleges in start-ups and spinoffs, thanks to such measures as requiring all engineering students to take courses in entrepreneurship training, unthinkable even a decade ago. "We're in the middle of a process of cultural change," Warwick's Hagen says. "But the likes of MIT and Stanford are still light-years ahead."

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