AAA Universities experience entrepreneurial step change

Universities experience entrepreneurial step change

The outlook for university venturing around the world continues to be positive after over $4bn was last year committed to more than 30 new funds targeting primarily academic and public research-led innovations. This compares with 32 new funds raising $2.7bn in 2013 and 90 launches in 2014 with an aggregate $5.5bn, according to our sister publication Global University Venturing (GUV).

Although the final deal tally from institutions is still being counted, 2015 could have been a record-breaking year for deals, with potentially more than 700 tracked by GUV, compared with 538 in 2014 and 233 in 2013. And some of these deals, such as Immunocore, an immunotherapy firm which has its origins at Oxford University before raising $320m last year in a round, have in themselves been record-breakers.

Rather than see the returns reaped by third parties, universities are increasingly making large investments. Tsinghua Unigroup, a subsidiary of state-backed Tsinghua Holdings, which is resourced by Tsinghua University, invested $100m in Acadine, a China-based mobile operating system developer.

Zhao Weiguo, chairman of Tsinghua Unigroup, at the time said: “The operating system is the most critical link between users and service providers, and this field is the most important battleground for the entire IT industry worldwide. Yet it has been highly monopolised on the desktop and in the mobile space, and the offerings cannot meet the specialised needs of many vertical sectors. The Acadine team has the international vision and calibre to challenge this monopoly and we fully support them in this endeavour.”

China at the start of last year put in place a $6.5bn government program to support venture capital and university venturing, and Tsinghua’s speakers at the GUV:Fusion conference in London in June said its institution was being used as a pilot for others.

As with Tsinghua, some of last year’s new funds, such as Oxford Sciences Innovation (OSI), which raised £320m ($487m) last summer, could credibly stand against almost any independent venture capital fund in terms of size, although most others started with more modest sums.

Yissum Research Development, the tech transfer arm of Hebrew University of Jerusalem, launched Agrinnovation, a $4m fund to invest in agriculture innovations backed by Australia-based investors Victor Smorgon Group.

Others have taken a while to go from announcement to starting. Just before the new year, University of California (UC) launched a $250m fund to invest in innovation opportunities that emerge from the institution, first announced as UC Ventures in 2014. The university’s office of the chief investment officer is the anchor investor in the funding, committing the $250m of initial funding.

This year there could be further launches around the world, given a virtuous circle has been developing where returns from intellectual property or previous investments are reinvested. Last year, Apple was required by the courts to pay Wisconsin University $234m in damages for infringing one of the university’s processor patents – Apple has said it will appeal.

Carl Gulbrandsen, managing director of Wisconsin Alumni Research Foundation (Warf), the US’s oldest tech transfer and investment fund, said: “This is a case where the hard work of our university researchers and the integrity of patenting and licensing discoveries has prevailed. The jury recognised the seminal computer processing work that took place on our campus. This decision is great news for the inventors, the University of Wisconsin-Madison and for Warf.”

Australian spinouts, for example, could be set for a boom as universities anticipate A$800m ($571.2m) earmarked for university venturing in the first six months of the year. The Commonwealth Scientific and Industrial Research Organisation, Australia’s national science agency, is planning to use cash raised from its A$450m wifi patent to launch a tech-focused investment fund, while top universities are developing a A$200m fund, the same amount as Brandon Capital, which supported several spinouts, including Melbourne’s Hatchtech, before the headlice treatment firm was sold to pharmaceutical firm Dr Reddy’s for $279m.

Dean Moss, CEO of Uniquest, the tech transfer arm of Queensland University, said: “The model of investing in university IP is being validated. That has got everybody in superannuation looking at this and saying: ‘Wow, this is good.’ We have not had this before. The government is saying: ‘This model has been shown to work,’ and it is attracting international attention.”

As with Yissum’s Agrinnovation or OSI, which has search engine provider Google as a limited partner, increasing numbers of corporations are looking to university venturing funds as a source of deals and insights.

Postal firm Australia Post is launching an A$20m investment vehicle targeting e-commerce startups and co-locating the fund at Melbourne University’s Melbourne Accelerator Program. Australia Post also hopes to grow the fund to over A$100m in the coming years.

In another positive signal for the developing industry, there is increased global cooperation between institutions. Russia has connected its universities to global experts, while US-based Johns Hopkins University is investing in a $30m fund along with startup hub Luminox Partners on a new $30m digital healthcare fund focused on Israel.

Oxford University’s tech transfer unit Isis Innovation was also named as a consultant in a £50m UK-China tech transfer fund launched as part of Chinese President Xi Jinping’s trip to the UK last year.

Tom Hockaday, CEO of Isis, who is stepping down this year, said: “The fund will provide an important new source of finance for UK technology businesses, enabling existing businesses to grow through access to the funding and the Chinese market, and also enabling those businesses to invest their resources into research and development in the UK. World-class research as the basis for new products and services in world-scale markets will provide opportunities for the next generation of UK businesses, working collaboratively and competitively in China.”

The goal for these top groups is, as Hockaday said, “world-class research” for “world-scale markets” and here US institutions retain a healthy lead.

Stanford University was been named the world’s most innovative university, according to a ranking, conducted by news provider Reuters, using patents rather than spinouts. The Silicon Valley-based institution beat Massachusetts Institute of Technology (MIT) and Harvard, second and third respectively, and other Ivy League peers in a table dominated by US institutions at the top. Only one non-US university, the Korea Advanced Institute of Science & Technology, made the top 10.

Imperial College London, placed 11th, is the highest-ranked university in Europe, with Belgium’s KU Leuven at 16 and Cambridge University at 25.

The Harvard Impact Study said its 375,000 living alumni had created more than 146,000 for-profit and non-profit ventures employing 20 million people and with aggregate annual revenues of $3.9 trillion – greater than the gross domestic product of Germany, the world’s fourth-largest economy.

Meanwhile, MIT’s impact report found its 130,000 alumni had created 4.6 million jobs in 30,200 active companies posting aggregate annual revenue of $1.9 trillion – more than the gross domestic product of Russia, the world’s 10th-largest economy.

Edward Roberts, the professor at the MIT Sloan School of Management who led the study, a follow-up to a previous report he prepared in 2009, said in news provider BetaBoston’s article: “We are seeing a more rapid rate of growth than we have ever seen before in the formation and start up of new companies by MIT alumni.”


Adios, Global University Venturing

Editor-at-large Gregg Bayes-Brown bids farewell to the title

The trick, of course, to any sort of article detailing big life changes is to find some top-quality quasi-in-spirational nonsense to preface it with. After long consideration of potential quotes, ranging from the cliché Bob Dylan quote “Times, they are a-changing” to Fight Club’s morbid “On a long enough timescale, the survival rate for everyone drops to zero”, I copped out and decided to rip off my favourite author, Douglas Adams. It has worked out okay for most of my career, so might as well keep it up until someone notices:

Nothing travels faster than the speed of light, with the possible exception of bad news, which obeys its own special laws.

Yes, for those of you who are not aware, I have departed Global University Venturing after a wonderful three years at the title.

It has been a genuine pleasure to work with and learn from all the university innovators, incubator leaders, investment guys, forward-thinking corporates and passionate entrepreneurs who are working hard to turn incompressible academic papers into genuine real-world technologies that drag humanity, kicking and screaming, into the future. Even the lawyers were a good laugh, and I mean that sincerely.

And that has been one of the underlying joys of reporting on this sector. Everyone is working towards the common goal of enhancing life on this planet. That is an ambition worth dedicating yourself to. Unlike many other sectors, while money plays a major role, it is normally seen as a nuisance getting in the way of a good idea. And, as an avid Star Trek fan, I respect that. Subsequently, there is a strong sense of camaraderie, a drive that is universal across countries and continents, and the uniting thought that the world would be a much better place if only it rained pots of proof-of-concept funding.

This also mirrors one of the big frustrations I have felt as an observer. During my tenure, I have seen amazing stuff. There has been research that could wipe out malaria, spinouts that could cure cancer, professors at top universities presenting anti-ageing pills, technology that could evolve into some sort of dystopian cybernetic overlord – all of which could be of huge benefit to mankind, yet it all languishes in development with other technologies because of underfunding.

One look at the returns from innovations and it is mindboggling that money is not being dumped on it by the truckload. US space agency Nasa is often said to win a $7 return on every dollar spent, but the Higher Education Innovation Fund returns £10 on every quid shoved into it. And yet the government would rather scrape a few measly fivers off disabled people while cutting corporate tax for multinationals that don’t pay a penny anyway – and it calls itself forward-thinking. It is like taking someone to the Louvre and having them show their appreciation of the Mona Lisa by headbutting it.

A similar story can be told of the investment community – in particular corporations. It is easy, if not lazy, for corporations to come in and sweep up an innovation just as it hits the market. But what about all those great ideas that never see the light of day because they are starved of funding? In discussing the building of bridges between academia and industry, corporates often come with this long list of demands, including but not restricted to:

•  Change your culture.

•  Adopt a more entrepreneurial outlook.

•  Give us easier IP access.

•  Hire more business people.

•  Give us better access to your students.

•  Always think of the bottom line.

It goes on. And while some universities do need to listen to corporates, others are bending over backwards to accommodate and yet are getting nowhere fast. Corporates need to realise this is a two-way street. If you want innovation and you want to find out what is going on at universities, you need to fuel it. The evolution of university technologies demands support, and yet corporates shy away from the early stage.

To both corporates and governments, I say stop talking innovation and start doing it. It is not a buzzword. It does not grow on trees. It is not the product of some wizard conjuring unicorns out of thin air. What it requires is hard work and dedication. What it thrives on is sufficient resources and experts. What it needs, despite its nonchalant approach to the issue, is money.

There are already plenty of great opportunities in the work of universities. Some of those don’t make it because the idea is rubbish, but plenty of good ones simply run out of cash, or don’t get the right advice, or the team is junk. Investment in innovation’s infrastructure changes that. Combining small bits of corporate and government loose change with proof-of-concept (POC), early-stage or POC-venture hybrids might well see a few write-offs, but will also see a greater number of companies and technologies reach the stage where they can be scaled up. There is the old maxim of you reap what you sow, and at present, what is being sown is bugger all compared with where it needs to be.

Universities, too, need to up their game. All too often, I have encountered tech transfer departments out of touch and underresourced, or entrepreneurially-minded students betrayed by a vice-chancellor’s inability to realise what millennium it is, or academics who believe the best use of their potential technology is to remain in paper form clogging up some dusty shelf in an unused basement several levels underground protected by Mayan temple death traps.

While it is all very nice to see your institution slowly edge its way up the Times Higher rankings, by concentrating on stacking papers and student applications at the cost of innovation, universities fail their students, their faculty, their local ecosystem, corporations and, most importantly, the taxpayer who is underwriting all of this and frankly deserves better.

Some universities are doing a great job, but others need to get their act together. Take a look at SetSquared. Five universities pooling resources and subsequently incubating more than 1,000 companies which have raised in excess of £1bn ($1.5bn), created 9,000 jobs and added £3.8bn to the UK economy in just over a decade. What other universities have achieved this, and why are there not more SetSquared-style partnerships springing up? How about a single combined portal for all universities – at least in the UK – sharing all their technology opportunities so companies from the very small to the multinationals know where to go when they need some technology? On that same principle, why not an increased sharing of technologies combined to make a whole greater than the sum of their parts?

A move towards an innovation-led economy is all but assured here in the UK and many other western counties. But how much is achieved is dependent on numerous players in the game. There needs to be a ditching of blinkered me-first thinking, bold moves towards greater collaboration and embracing new ideas and philosophies. Above all else, these players need to stop living in the sheltered isolation of the here and now, think about what could be possible, and make it so.

At the very least, there needs to be a will to communicate, which brings me back to GUV.

I am hugely proud of the impact GUV has had on university innovation worldwide. Flying the banner and telling the stories of all the people who dedicate themselves to getting this technology out there has been a real pleasure over the past three years. From when we came into being, I have seen a substantial increase of activity, as universities have evolved what they can offer, and there have been greater successes for their companies. Student entrepreneurship has soared to the point where it is near untrackable. From when started saying “collaborate” and “get your funds together”, we have seen a marked increase in initiatives where universities work together, and a huge rise in the number and size of university venturing funds, capped by Oxford’s £320m fund last summer.

It has been an incredible three and a bit years with Mawsonia. I would like to take this opportunity to thank the Mawsonia team, in particular editor-in-chief James Mawson, head of GCV Analytics Toby Lewis, managing director Tim Lafferty, and production manager Keith Baldock, for giving me the chance to cover this sector, providing me with the mentoring and support to move from journalist to editor-at-large, and for the time of my professional life working with the team. I would also like to thank all our readers for enjoying and sharing our content, our subscribers for being an integral part of keeping us on the road, and the various supporters who have helped develop and elevate the title.

Thanks for being a part of GUV, and I hope that this is just the beginning of stories from the university innovation sector.

Editor’s note: This is an edited version of a LinkedIn post. Global University Venturing will be edited by Thierry Heles and retain its close links with both its sister titles, Global Corporate Venturing and Global Government Venturing

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