After a slow and steady start to 2019, it looks as though activity in the second quarter of the year has been ramping up with a respectable 230 deals across the three months.
That may be a slight drop on the 254 deals closed in the same period last year but, considering the blockbuster June 2018 that continues to tower over any other month since Global University Venturing launched more than six years ago, is actually a solid figure.
Notably, more than $5bn was invested during the past quarter – almost double the capital raised by spinouts during the first quarter of the year, which was just over $2.6bn. It is also more than the $3.5bn raised during the same period last year, despite fewer companies receiving cash.
The prediction, made by GUV in previous analyses, that 2019 may lead to fewer deals with larger rounds, appears to hold true. It is arguably no surprise, with commercialisation firms such as Allied Minds declaring that they will double down on their existing portfolios rather than spreading their attention too thin.
But actually, there were more deals in each of April, May and June than for 10 out of last year’s 12 months. It remains to be seen whether this calendar year will beat last year’s record, of course. As things stand, GUV tracked 792 deals last year and with 387 during the first half of 2019, there is still some catching up to do. But there can hardly be any doubt that 2019 will, at least, be the second most successful year since 2013 when it comes to the number of deals.
This year has already beaten 2013 (which counted approximately $1.8bn across 209 deals), has seen more money invested than 2017 ($4.9bn) and is close to breaking through 2016’s $5.4bn across 489 deals. (If you are interested in more long-term data, take a look at our six-year analysis published in GUV’s May issue.)
There were a dozen spinouts that raised more than $100m in funding during the past quarter – most of them in April and May, explaining the fact that these two months saw more investment than any month in 2018.
Notable spinouts include Thrive Earlier Detection, a US-based developer of a blood test for cancer that spun out of Johns Hopkins with $110m in series A funding from investors led by venture capital firm Third Rock Ventures in May.
Investors in the series A round included BlueCross BlueShield Venture Partners, the corporate venturing subsidiary of health insurer Blue Cross and Blue Shield Association, and molecular diagnostics company Exact Sciences.
Then there was a $235m funding round for Asklepios BioPharmaceutical, a US-based gene therapy spinout of University of North Carolina at Chapel Hill, co-led by TPG Capital and Vida Ventures. The spinout’s co-founders and board members also committed capital. The company, also known as AskBio, is an interesting beast in that it has launched multiple spinouts itself and two, Chatham Therapeutics and Bamboo Therapeutics, have been acquired by pharmaceutical firms Baxter and Pfizer, respectively.
By far the biggest round during in Q2 belonged to a European company. GetYourGuide, a Germany-based travel activity booking platform spun out of ETH Zurich, raised $484m in series E funding led by SoftBank Vision Fund, the near-$100bn fund managed by SoftBank.
The round, which also featured Singapore state-owned investment firm Temasek, among others, valued GetYourGuide at $2bn, making it ETH’s first unicorn spinout. The deal closed just a few days before ETH Transfer took home the GUV Award for Tech Transfer Unit of the Year.
Strong exits
When it came to exits, the second quarter was also relatively busy and featured a range of acquisitions as well as multiple initial public offerings. Among those going public was Morphic Therapeutic, a US-based biotechnology developer based on research at Harvard University, which initially raised $90m in proceeds before closing the IPO at $104m in early July.
Atreca, a US-based immunotherapeutics developer based on research at Stanford University, raised approximately $125m in an initial public offering that achieved an exit for pharmaceutical firm GlaxoSmithKline. And Personalis, a US-based genome sequencing platform for cancer research also spun out of Stanford, completed a $140m initial public offering on the Nasdaq Global Market.
There were smaller listings, such as OssDsign, a Sweden-based regenerative implant producer backed by Karolinska Development, the investment arm of Karolinska Institute, which sought an additional Skr22.7m ($2.4m) from its listing on the Nasdaq First North exchange after raising $15.8m from the original allotment.
US-based exosome therapeutics developer Codiak BioSciences, which is exploiting technology developed by researchers at the universities of Gothenburg and Texas, also attempted to raise $86.3m in an IPO, but withdrew its plans in July citing unfavourable market conditions.
Most exits came in the form of mergers and acquisitions. Large deals included Tilos Therapeutics, a US-based biopharmaceutical company advancing research from Harvard University and Brigham & Women’s Hospital, which agreed to an acquisition worth up to $773m by pharmaceutical group Merck & Co (known outside the US as Merck Sharp & Dohme).
By far the largest exit however was an acquisition of Tableau, a US-based data visualisation and analytics spinout of Stanford University, which agreed to an acquisition by enterprise software producer Salesforce for $15.7bn. The figure towers over even the blockbuster multi-billion dollar acquisitions during the second quarter of 2018, such as the $8.7bn purchase of Avexis, a US-based neurological disease treatment developer commercialising Ohio State University research, by pharmaceutical firm Novartis. The acquisition of Tableau is expected to close by October 31.
Cash-in-hand
Another reason to be optimistic about 2019 is the fact that university-focused funds continue to raise big cash. Third Rock Ventures, which has incubated countless spinouts and was the lead investor in Thrive Earlier Detection, closed a $770m fifth fund last month.
Columbia University teamed up with investment firm Deerfield Management to launch the commercialisation fund Hudson Heights Innovations with $130m, making it the largest initiative out of Deerfield’s increasingly long list of funds. The firm has partnered University of Illinois at Chicago, Johns Hopkins University, Vanderbilt University, Northwestern University, University of California, San Diego and University of Carolina at Chapel Hill for similar funds.
Cambridge Innovation Capital (CIC), the patient capital fund set up by University of Cambridge, closed £150m ($196m) in additional funding, bringing its total corpus to $360m. The fundraiser was anchored by the university and its endowment fund and was described by CIC as one of the largest private financing rounds held in Europe in 2019.
Mainland Europe, too, was represented with a $72.3m intermediary close for the PSL Innovation Fund, the deep tech-focused vehicle aligned with Université PSL’s innovation ecosystem. Limited partners include the EU-owned European Investment Fund, plant seed supplier Vilmorin & Cie, financial services firm BNP Paribas, marine defence and energy systems supplier Naval Group and insurance provider MGEN.
University venturing in 2019 is in fantastic shape. Will last year’s records be broken? The odds aren’t half bad – even with the Stanford-StartX Fund having halted investments and Woodford Investment Management still in a world of pain.
