Editorial note: This post is part of a series of posts in collaboration with Lappeenranta University of Technology to promote their expertise and tools in commercialising research based innovations.
In our series with Lappeenranta University of Technology, we look at how the university has helped researchers and entrepreneurs spinoff research based innovation into startups. While these innovations are not exactly in the digital space, it shows that there are tremendous opportunities elsewhere as well. AXCO-Motors is one of these companies, building tailor-made generators and motors for different industries, but mostly focusing on the wind and hydro energy industries.
Asko Parviainen, the MD of the company as well as a co-founder, wrote his PhD in Lappeenranta University of Technology during 2000 and 2005 when the opportunity for setting up a company came up. One of the alternatives was to look for a place to work at as an employee, but eventually the road as an entrepreneur won and they went on to found AXCO-Motors. Asko Parviainen co-founded the company together with Ari Piispanen.
The company was setup in 2004 and operations began in 2005. In the beginning, the IPRs were transferred to the company under an agreement. Back then the patents were of low commercial quality and AXCO-Motors went on to apply for more patents and IP protection as they developed their solutions further.
AXCO-Motors is a venture that has required a lot of external backing due to the nature of its business. To help get the company going, the founders sought funding from independent investors as well as Finnvera. In 2007, the company further diversified its ownership by selling the VeraVenture shares to a new angel investor.
Parviainen also told us that he would suggest researchers and entrepreneurs to look into realising as much customer potential as possible before actually setting up the company. There is nothing worse than going into a market with an offering no one is willing to pay for. This is very much in line with Steve Blank's customer development approach where customers are put into the centre and companies continuously iterate their value hypothesis to find the best fit.
Another point Parviainen wanted to raise in our interview is the fact that researchers who turn entrepreneurs (or those that come from outside to work on these innovations) should plan carefully the full amount of funding needed to get the products to the market.
It's easy to also realise that these are partly the challenges AXCO-Motors ran into when going to market. They assumed clients wanted the product they were building until they actually began selling it. This has since then changed for the better and their products are mostly going to the wind and hydro energy industries.
AXCO-Motors isn't competing with the likes of The Switch, another LUT spinoff, as they focus mostly on customised solutions. Nevertheless, it does prove a point that strong academic talent (as in the case of Lappeenranta University of Technology) seems to create a cluster of companies working in the same sector.
The company has received multiple recognitions for its work, for example the 2009 Innosuomi award presented by the President of Finland.