Start-ups still in vogue despite gloom

The burst of the dot.com bubble has not dampened enthusiasm for taking risks, says Grace McCann

Amid the current economic gloom, a cheery press release from the DTI this summer reported that entrepreneurship is thriving. There were nearly 24,000 more companies operating in the UK in 2001 than in 2000, it said, with growth in all sectors, despite the blip in the number of dotcoms. Such an increase is equivalent to 60 businesses starting up every day.

Entrepreneurship has been a growth area for as long as business schools have been around, with most courses now offering modules in the subject. Incubator units offering support to business school start-ups are increasingly part of the picture. And so called "technology transfer" companies (which create businesses from the fruits of faculty research) are being formed at many universities.

But provision inevitably both generates and responds to entrepreneurial spirit in the marketplace, and many business schools were caught up in the dotcom frenzy. Peter Hiscocks is the director of a recently set up Entrepreneurship unit, Cambridge Entrepreneurship Centre, attached to Cambridge University's business school, the Judge Institute. He and his colleagues have witnessed significant fluctuations in entrepreneurial interest among MBAs in the last few years. When the centre was launched three years ago, there was "a huge flurry of MBAs excited about setting up their own dotcom," he says. "But the internet ideas we got were in many ways a lot of fluff – I'm not sure that any of them are still in existence." The following year interest in entrepreneurship from MBAs at Judge dropped to a very low level, Hiscocks notes. Now it is picking up again.

At Manchester Business School the scene has been more stable, perhaps because of the type of entrepreneurship courses available. The main MBA has always had an entrepreneurial element - a new business idea project, but Manchester's specialist offering, the Entrepreneurship MBA, is all about running a small business. It attracts students in their early to mid-thirties who are jinvolved in the running of small to medium sized firms. We get some academic entrepreneurs, and people from family businesses with a succession problem, where a son is looking to go into his father's company", says Professor Ray Oakey, director of the course.

Three MBA students from Imperial College have recently set up their own business after entering a business plan competition. They were able to turn to the college's own technology transfer company for ideas, and have now formed a company to market technology to "switch off" specific genes using a natural mechanism. The team turned to the college's own technology transfer company for potentially successful ideas. Gene Expression Technologies Ltd is both offering its technology, known as GeneICE, to pharmaceutical companies for use in drug development, and using it to develop gene therapies which might be used in cancer treatment. The trio have science backgrounds, which is perhaps what enabled them to buck an emerging trend of collaboration between MBA students and scientists. It's something Professor Sue Birley, director of the entrepreneurship centre at Imperial, is happy to see. "We are encouraging the MBAs to get involved across the college because that way they find much more substantive potential businesses."

Like Professor Birley, Peter Hiscocks is working to foster collaborations between MBAs and engineers and scientists. The current crop of entrepreneurial MBAs at Judge are interested in working with scientists. In the past, he admits, it has been tricky getting the mix going. "We tried all sort of games like getting them to work in teams and giving them dance cards so that they had to work with other people." The answer eventually emerged. "We needed a catalyst and we found it – beer!"

Social events can also oil the wheels at business schools when it comes to promoting networking between entrepreneurs and potential investors.Despite the recent slowing of the economy, seasoned entrepreneurs told delegates at this year's Entrepreneurship summer school in Cambridge that now is a good time to start a hi-tech business. Shai Vyakarnam, programme director at CEC, agrees: "Technically it's a good time to start a business when you're on a downturn as you pick up a wave as it comes. The problem is it's also a very difficult time to raise money."

Jamie Hunt coordinates the website of Imperial's entrepreneurship centre on which, via message boards, MBAs can find business ideas emerging from other Imperial departments. "Good technical ideas are always likely to be more interesting to an investor than service ideas, because you're asking them to invest in something physical," he says. He adds, however, that patented products such as GeneICE are particularly attractive, because the intellectual property is protected.