The German Aerospace Center (DLR – Deutsche Zentrum für Luft- und Raumfahrt) is represented in 16 locations across Germany and has a budget of 888 million euros (as of 2015). Oberpfaffenhofen is located just a few miles west of Munich. With roughly 1,800 employees and 12 scientific bodies and institutes, it is not only one of the largest research centers in Germany, but is also one of the centers most intensely involved with startups.
The scope covered by DLR is tremendous: researching the earth and solar system; providing knowledge about preserving the environment; and developing sustainable technology for aerospace, energy supply, mobility, communication and security.
Application readiness: The DLR aims to make technology market-ready
An additional task is taking the technology that is investigated at the DLR and introducing it to the market. Spin-offs are one option, while another is partnerships and technology transfer to existing companies. This is what led to establishing the Technology Marketing department in 1995 as a point of contact for technology-based startups.
From the concept stage to market launch, professional guidance has already been offered to 15 spin-offs in Oberpfaffenhofen. These spin-offs now have products on the market based on the technology they first developed at the DLR.
We sat down to talk with Robert Klarner, the person who is in charge for Technology Marketing at the DLR in Oberpfaffenhofen.
Klarner began by explaining:
“Our highest priority is to make technology ready for commercial and widespread use. Our key activity to achieve this goal – apart from license contracts, proprietary rights and idea generation – is to support the launching of startups.”
A key medium in doing so are the Helmholtz Enterprise Funds, which grant the research and development center up to 130,000 euros to prepare a spin-off.
In general, the approach to transferring technology in Europe is different than in the US, for example. In the States, the transfer is carried out by investors with large amounts of money. In Germany, in contrast, it is performed by research institutes along with institutional and public players and developers.
“The fact that the state and society invest money in basic and applied research, which then benefits companies and ultimately the competitive capability of the country – that really sets Europe apart from the rest,”
100% focused on business
How do founders exactly benefit from the funds? The spin-off expert summarizes:
“It is a starting point for aspiring founders that forces them to consider the details and seriously think about starting a company. More particularly, it gives them time to improve their chances ahead of time.”
The Helmholtz Enterprise Funds does allow founders roughly ten months to fine-tune their business plans, specify their business models and plan their market entry strategies. During that preparation time, the funds cover their labor costs. Then it is a matter of asserting themselves in a free economy and finding paying customers.
In other words, the DLR helps them prepare, but the founders are on their own after that. Klarner provided the following description:
“We are non-profit, but we are not a charity. What we do not do is subsidize existing companies. For one thing, competition law would not allow us to do that. As soon as they are founded, spin-offs are treated just like every other company – they have to establish themselves in the market. That’s something they have to do on their own.”
Dare to occupy a niche
The “typical spin-off” from the DLR is based on a particular single kind of technology from the research center. These “single product enterprises” are able to acquire the license for their DLR technology under standard market conditions. These enterprises often occupy a niche among the competition. The typical customers come from the industry, which makes them business customers from all kinds of sectors.
The biggest advantage? The technology is usually the founders’ own idea. They have often actively developed and patented the technology, are experts in the subject and know how to implement it. “The founders not only have the know-how, but also the ‘do-how’,” said Klarner. Of course, they also bring their passion and tenacity with them – first when researching and then to drive forward the development of their startup.
In addition to these two characteristics, Klarner named two further factors:
- A willingness to learn,
- and not always trying to be perfect.
That means quickly entering the market, giving things a try, keeping in close contact with the target group and changing the product if needed. It is important and valuable to know how users want to use the product.
With these characteristics and an exciting technology, numerous spin-offs from the DLR have already successfully established themselves in the market. One example is a project that was a spin-off from a research project on “Laser Communication”, a fast and tap-proof communication: ViaLight Communications GmbH. They now have a staff of over 30 employees and a branch in the US.
Another example grew out of research on evaluating real-time satellite and weather radar data using an intelligent algorithm. This research gave rise to a new system for short-term weather forecasting specifically for air traffic, which is now offered by a company called WxFUSION GmbH.
The entrepreneurship gene
Said that, no one is forced to start a company at the DLR. Klarner said:
“The desire to start a company has to come from the researchers. If the developer of a project sees a chance for himself as an entrepreneur and a go-getter – then it turns into a spin-off. That is why we check ahead of time to see if someone has the ‘entrepreneurship gene’ and how the team is set up.”
When it comes to implementing a spin-off, additional factors such as market attractiveness, a unique selling point and the strength of the technology play an important role.
What makes DLR spin-offs so special? The companies actively transfer technology into new application fields. We asked Mr. Klarner what that means exactly:
“It gets particularly interesting when robotic technology from aerospace, for example, is used in medical technology. Or when you transfer satellite data to intelligent traffic systems, and then find a use for it and tap into the markets.”
A good example is tacterion. They licensed sensor technology at the DLR and plan to bring that technology from space robotics to a wide range of “terrestrial” applications in the industry. The startup just recently received an investment in the millions.
The DLR does not just work with its own spin-offs. The DLR as a shareholder, and particularly Robert Klarner as a member of the ESA BIC Bavaria Evaluation Board, also bring startups outside of the DLR together with experts from their in-house institutes to explore joint opportunities with founders.
The best advice for startups
When asked about his ultimate recommendation for startups, Klarner responded:
“Ask yourself clearly as a founder: Would you buy your own product? If the answer is no, why not? You should then systematically eliminate any factors that do not support the product so you can avoid falling on your face five times in a row for the same reason.”
This advice can be applied to many sectors, not just to cosmic ideas from the world of aerospace.