“Portugal needs companies with high growth potential”, Expresso Economia, 03-03-2012

Highlight: Francisco Veloso endorses a new model of innovation

Francisco Veloso “Portugal must improve the conditions for the emergence of more “gazelles” (firms with high growth potential and qualified job creation). These are critical for economic recovery of the country,” argues Francisco Veloso, a professor in Innovation and Entrepreneurship at the Catholic University and also a professor in the Department of Engineering and Public Policy at Carnegie Mellon University. He bases this belief on a recent study of Kauffman Foundation, an American association linked to entrepreneurship, which shows that 6.5 of every 10 jobs created in the U.S. were a result of a new company (with less than 5 years) and a strong growth.

But what is the X factor that makes a company a gazelle? “The important thing is to do something else, something different around,” says Francisco Veloso. “In Portugal the bets are usually on "mouse-companies" (some are born, others die) that almost don’t innovate,” he says. Even so, as report from the Ministry of Economy shows that between 1992 and 2007 were born in Portugal 360 “gazelle-companies” per year, employing an average of 90 people. This potential is not properly explored: “If all companies grow 20% a year, during three years, that would mean three creations of 25,000 jobs. But if we doubled the number of "gazellecompanies", would be 50,000 jobs in three years,” emphasizes Francisco Veloso.

The problem, he warns, is that in recent years the birth of Portuguese “gazelle-companies” “has been declining.” A weak entrepreneurial dynamic that this teacher of Catholic University says can be improved by “changing the logic to support innovation,” namely through the existence of more seed capital. “We must create conditions so that many companies can go into the market and try their luck. Some will succeed and others will stay in the way.” He adds: “Years ago we gave major relevance to the business plan as a tool that required the team to think in the several dimensions of the business, but now it is also crucial experimentation, and you can take advantage of the a global and networked world.” He gives an example: “Today you can make a game, put it on a website and see how many people discharge it, or to use a crowdfunding platform to see if it has interest to the crowd. After a month or two, it is possible to know how many people believe in the idea.”

More centers of excellence

In order to emerge more innovative and competitive Portuguese companies in the international market, Francisco Veloso considers that it is essential that some of the
Portuguese universities become scientific centers of excellence and inducing business innovation. “If you compare our universities with the top of Sweden (a country with a population similar to the Portuguese) we find that there are between 3 and 5 % of doctorates, whereas in the Scandinavian country there are more than 10% of faculty with this degree. We are far from this idea of concentration of knowledge,” notes Francisco Veloso. He further arguesthat “Portugal must focus its efforts on excellence and in who is able to compete and to stand up internationally. We have to end with the Portuguese complex that no one can stand out from each other.” The teacher of Catholic University welcomes the fact that the mentality of the Portuguese faculty is changing. “It is no longer a problem or misinterpreted that faculty are also entrepreneurs and earn money. There is now in universities a certain emphasis on the creation of spin-offs that will have a demonstration effect.”

Incubate or accelerate?

Being in a space of incubation can be useful in the beginning because it lowers the cost of trial, but does not make much difference,” says Veloso, arguing that it is more advantageous for start-ups to start from an accelerator. “It allows the entrepreneur to accelerate the learning process and put you in contact with potential investors or customers.” Francisco Veloso believes that the emergence of successful entrepreneurs who create fund to support entrepreneurship (i.e. Pthena of António Murta), is positive, but says more cases are needed to bridge the gap in seed capital in Portugal. Arguing that entrepreneurship is not innate, the teacher believes that business opportunities are born from ideas that are often rejected within large organizations. “Many people only become entrepreneurs when those ideas are unable to proceed otherwise.” And gives the classic example: “The founders of Intel worked for Fairchild and only left because the board decided that this company would work only in the memories and did not believe in the potential of the semiconductors. It is something that happens often.”

So what is higher education in entrepreneurship for? The Catholic University professor admits that “does not replace the creativity of people, but that helps them to design a better structure of the project and to better use their talents.”

Francisco Veloso interrupted a comfortable position as an university professor at Carnegie Mellon and returned to Portugal in 2009 to lead ZON Innovation and Entrepreneurship at Catholic Lisbon School of Business. He embodies a happy example of a Portuguese skilled in the Diaspora who decides to return to his country to face a challenge: to create an international reference in Lisbon in the areas of entrepreneurship and innovation. After graduating in Physic Engineering at Instituto Superior Técnico (1992), and a Master at ISEG, he became an “immigrant” in the USA when received a grant from Foundation of Science and Technology (JNICT at the time). He took the opportunity, got his doctorate at MIT and followed an academic career at Carnegie Mellon University.

March, 2012