BERLIN, May 26, 2025
Europe produces over €300 billion in research annually, but less than 10% ever becomes commercially viable. That’s not a gap – it’s a graveyard of dead ideas. The problem isn’t that researchers lack innovation, but that the systems around them—built decades ago—are slow, risk-averse, and poorly aligned with what it takes to build successful startups. As a result, many of the continent’s most valuable ideas never leave the lab.
Travis Todd, founder of Silicon Allee and Head of Startups at Fraunhofer Heinrich Hertz Institute, recently laid out this stark reality at GITEX Europe 🎤, one of the world’s largest tech conferences. With nearly two decades in Berlin’s startup ecosystem before stepping into the research world, Travis brings a unique outsider-turned-insider perspective to what he calls “the tragic comedy of academic innovation.”
The Tech Transfer Nightmare
Traditional ‘tech transfer’ is a five-headed monster that eats startups for breakfast. Let’s be brutally honest about what founders face:
- Licensing fees – upfront payments that bleed startups dry before they earn a cent. It’s like asking a toddler to pay rent before they learn to walk.
- Equity demands – institutes often want 25% or more ownership, which is like showing up to a first date wearing a wedding ring.
- Veto rights – because nothing says “agile startup” like needing committee approval to change your logo.
- Board seats – because what fast-moving startup doesn’t need a university administrator who meets quarterly to approve your pivot?
- Time-killers – 6-12 month negotiation periods when speed is everything in the startup world.
The stark reality is this:
🏛️ Universities own the IP but hate risk.
💰 VCs love risk but need clean cap tables and founder agility.
🧑🏽🔬 Researchers have the knowledge but lack business skills.
It’s a perfect storm of misaligned incentives. ⛈️
This Isn’t Just Europe’s Problem
The data backs up the dysfunction. The U.S. Department of Defense has tech transfer success rates below 6% – meaning 94% of brilliant innovations discovered in labs die there. From Auburn to Aachen, the systems are broken globally.
In pharmaceuticals, it’s even bleaker. New drugs take 12 years and $1 billion to develop, with most never making it to market.
The worst part? We’re wasting taxpayer money on research that never benefits society. ☹️
The Perfect Match
So how did this odd couple of German innovation come together?
Silicon Allee has been Berlin’s innovation network since 2011, running hundreds of events with world-renowned speakers while portfolio companies raised over €100 million.
Fraunhofer HHI is the heavyweight research champion – 1000 employees and PhD students, plus two actual Emmy Awards for video compression technology. That video call you had this morning? You can thank HHI for making it possible.
HHI leads in AI, image and video processing, wireless communications, and photonic networks. But despite this incredible research portfolio, they faced the same problem as every research institute – how to get these innovations into the real world.
So, together, they decided to tear up the old playbook and write a new one.
Our Radical Approach
The approach is radical in its simplicity: we only take virtual shares – a side contract with founders that provides equity only when they exit.
What are virtual shares? A contractual promise: instead of owning actual equity, we receive a percentage of the exit proceeds – only if the startup has a successful outcome like an acquisition or IPO. They don’t appear on the cap table, don’t dilute other shareholders, and don’t come with control or governance rights. It’s a clean, VC-friendly way to share in success without adding friction or risk along the way.
So that’s it. No licensing fees, no board seats, no common equity – just clean cap tables and VC-approved terms from day one. We align our success with yours. When you win, we win. And more importantly, when you’re struggling, we’re not adding to your burden.
This approach solves the fundamental incentive problem that plagues traditional tech transfer. We’re betting on your success, not taxing your potential.
Three Paths to Commercialization
The program has created three pathways:
- Matching external startups with HHI technology – Startups come in with decent products and leave with revolutionary ones after integrating cutting-edge research.
- Turning researchers into founders – Brilliant researchers learn to pitch, sell, and build companies while maintaining their academic careers if they choose.
- In-house venture building – Product, business and tech experts explore the IP vault, find billion-dollar ideas, and build businesses with full support.
But the approach isn’t just about removing barriers – it’s about providing real resources. We provide three full-time salaries for up to two years, access to all of Fraunhofer’s resources (labs, hardware, computing clusters), for just 10% virtual equity per year of acceleration. Find out more and apply here.
The Clean Exit
Once a team raises €1 million or more, they graduate with unrestricted licenses to the IP they helped develop. No strings attached. Freedom to grow with no control from Fraunhofer.
Compare this to traditional tech transfer, where even after building a successful company, you’re still tethered to the institution.
Early Validation and Internal Alignment
Since launching last year, our program has received over 400 applications and built a portfolio of five companies – from AI legal tech to children’s music education to ultra low noise signal generators.
Perhaps more importantly, we’ve restructured internal incentives. Working with startups now counts the same as working with industry partners. Departments get budgetary bonuses when startups raise funds or exit. We’ve added startup off-ramps to research projects from the very beginning – often right in grant applications.
This proactive approach is a radical shift from treating commercialization as an afterthought.
What Research Institutions Should Steal From Us 🤠
For research institutions, these principles can transform your commercialization approach:
- Ditch licensing fees – earn through equity instead to keep cap tables clean
- Use virtual shares to spinout companies quickly without complex negotiations
- Create template contracts that work for researchers and VCs
- Fund the gap between research and VC-ready startups with comprehensive support
- Get stuck in early – bring expertise and build with researchers throughout the lifecycle
These five principles can transform any research institution’s approach to commercialization. And they don’t require massive organizational changes – just a willingness to align incentives properly.
Get involved
Whether you’re a researcher with breakthrough technology, a startup seeking deep tech advantages, a corporate partner looking for innovation, or an institution wanting to improve commercialization – this model offers a blueprint for change.
At Silicon Allee at Fraunhofer HHI we host monthly events, such as Deep Tech Night, and our program applications are open in 4 batches / year. Find out more and apply here.
Investors can join our Investment Advisory Committee and help vet the startups who enter our program.
As Travis concluded at GITEX:
Let’s stop wasting taxpayer-funded innovation and start building the deep tech companies of tomorrow. Because a world where 90% of research innovation dies on the vine is a world none of us can afford.”
The €300 billion graveyard doesn’t have to stay buried. With aligned incentives and proper support, Europe’s research powerhouse can become a startup engine.