GCV Asia Congress 2018
Skip Content

24 May 2017

Universities and corporations say ‘yes’ to venture capital collaboration

Comment from James Mawson, editor-in-chief of Global University Venturing

Author: James Mawson, editor-in-chief

If starting and developing a company out of an idea can take a long time so, it seems, can finding a way to connect corporations and universities that are at the heart of many of these ideas developed by the entrepreneurs.

After all, most entrepreneurs seem to be people using ideas developed while studying or teaching at a research or education institution or who have been working at an existing company.

Five years ago the most common question asked by university technology transfer offices was about how to better connect with corporations to help fund and develop research ideas and hopefully lead to the commercialisation of them through product development and startup creation. Their oft-repeated concern was that while they were trying to understand corporate needs and how to attribute intellectual property and then find funding, corporations had been slow to respond and understand their needs.

In the past five years since Global University Venturing was developed as a sister title to Global Corporate Venturing it has been heartening to see how both sides have moved their understanding and taken more practical steps to help realise what I had back then called “the greatest period of commercial and practical peace-time innovation in history”.

March’s launch of SpyBiotech, an Oxford University spinout using a so-called “biochemical superglue” that can facilitate the rapid development of robust and novel vaccines, is a great example of the steps forward that have been taken.

It is a sign of the relative experience accrued by the tech transfer office and academics that the four academics joining SpyBiotech, Mark Howarth, professor of protein nanotechnology; Sumi Biswas, associate professor of vaccinology; Simon Draper, professor of vaccinology; and Dr Jing Jin, combined, have taken 12 products to phase I and II trials, filed nine patents on vaccines and other technologies and have extensive experience in biotech and industrial collaborations and  partnerships.

The commercialisation of SpyBiotech’s technology and company formation developed by these four academics was supported by Oxford University Innovation (OUI), the research commercialisation company of Oxford University. OUI was able to take this experienced founding team (a separate CEO will be hired shortly) and find supportive investors.

Oxford Sciences Innovation (OSI), the “patient capital” or university venturing fund for Oxford University, led the £4m ($5m) investment in SpyBiotech, with GV (formerly Google Ventures), an independent corporate venturing unit of search engine provider Alphabet, joining in participation.

Founded in 2009, GV had committed to OSI when it raised its first £320m ($485m) in June 2015 (subsequently expanded to £580m last year) and its move to support such a nascent portfolio company is more in line with its roots backing lots of early-stage companies before its later drift into later-stage, larger rounds.

That Google (now Alphabet) was prepared to invest in and work with Oxford  in helping it set up its university venturing fund has built connections and also allowed the fund to be a beacon signaling potentially disruptive portfolio companies that could be of interest to a corporation looking for the next big thing (NBT).

As a discussion of corporate venturers hosted by healthcare company Johnson & Johnson (J&J) and Global Corporate Venturing (GCV) in Silicon Valley last month noted, CEOs are increasingly asking their innovation units to find the NBT for fear of missing out. GCV and consultants Bell Mason Group will this month  publish the qualitative results of dozens of interviews by CVCs at the London Symposium as part of the GCV Powerlist 100.

Given such mandates, it is no surprise that other corporations, such as China-based media and gaming group Tencent, which has also committed to OSI, have followed GV in backing university venturing funds and their spinouts.

For example, also within the UK’s so-called golden triangle of academic centres, Cambridge University and London-based Imperial and University College in February announced the first four drug discovery projects to be backed by the corporate and university-backed Apollo Therapeutics fund (in which J&J is a limited partner).

But while SpyBiotech is an example, the development in this field is increasingly rapid. Oxford University has seen its spinout company rate double (10 to 21) and the seed funding for those startups increase by five-fold (£9.5m to £52.6m) in a single calendar year (2015 to 2016).

And the results are not limited to Oxford’s dreaming spires. In a statement along with its excellent half-year (interim) results, Russ Cummings, CEO of Touchstone Innovations, a UK-listed university-focused investor (and keynote speaker at the GUV:Fusion conference), said: “Our patient and focused approach to investing for the long-term is now showing real results, with a number of substantial transactions endorsing our model – notably the recent PsiOxus Therapeutics’ and Crescendo Biologics’ collaborations worth potentially $936m and $790m, respectively. More recently, Cell Medica and Pulmocide completed material funding rounds and Circassia agreed a $230m collaboration with AstraZeneca.

“We have a dozen companies of material scale and considerable potential. Most of our larger and maturing unlisted companies made significant progress and are approaching key inflexion points. We have great depth to our portfolio, with another 20 portfolio companies or so making significant progress and showing rapid development.

“This not only reflects the fruits of 10 years of investment, but also the more recent acceleration of capital deployment, with 63% of all funds invested by Innovations being made within the last three and a half years. The vast majority of this capital has gone into existing portfolio companies that we know well.

“We are actively involved in discussions about partnerships, licensing and other corporate developments across a number of our larger unlisted portfolio companies. Despite the macro-economic backdrop, we have the people, platform and skills to continue to build on our successful investments for the long-term. Furthermore, our participation in the UCL Technology Fund and Apollo Therapeutics, means we are in a great position to access and invest in some of the best IP coming out of the golden triangle.”

Similarly, the US-based University System of Maryland five years ago set itself a goal of creating more than 300 startup companies within the system by 2020. It has now more than 500 companies and has just set up a planned $25m fund to support.

But success in this field is less about numbers than in impact. As most traditional VCs flee early-stage deals, leaving them to angels and accelerators having long-term, supportive investors, such as university and corporate venturing funds, give probably the best chance that truly groundbreaking ideas can change the world.

Copyright Mawsonia Limited 2010. Please don´t cut articles from www.globaluniversityventuring.com or the PDF and redistribute by email or post to the web without written permission.

  • Linkedin
  • Mail
  • Rssfeed