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28 June 2017

University venturing and the future of higher education

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

Author: James Mawson, editor-in-chief

What does the future of higher education have to do with university venture investing? A show of hands at the GUV:Fusion conference last month seemed to say: “Not a lot.” Only three delegates indicated they saw student and faculty startups and spinouts as having strategic implications for their institutions. The rest of the university venturing funds (UVFs) were more focused on helping these entrepreneurial ideas and startups for their own benefit and as a way of supporting their institutions’ core missions of research and education, as well as socio-economic development.

In the next room, however, attendees at the Global Corporate Venturing Symposium were increasingly claiming their own innovation and venture endeavours had strategic impact, with financial returns an important measure of impact as much as they are compensation beyond the cost of the capital provided to startups.

Part of the divergence seems to be the relative maturity of corporate venturing over its university venturing peers. GUV, in its seminal report on the size of the industry published last month, demonstrated both the rapid growth and size of the industry in terms of university-focused funds and more in-house UVFs.

But despite the longer-term track records of listed firms, such as IP Group and Touchstone Innovations, most vehicles are less than a decade old. GCV has tracked more than 140 corporate venturers with a track record of more than a decade, and some, such as pharmaceutical firm Johnson & Johnson’s unit, stretching back to the early 1970s. A number of CVCs now manage more than 100 portfolio companies, and funds of $1bn-plus help venturing scale up and globalise as an industry.

With pressure on many corporations to develop growth and keep track of potential disruption, venture has increasingly become the tip of the innovation spear – the theme of this year’s GCV Symposium – coordinating with research and development, and mergers and acquisitions, as well as business units and strategy, to provide a joined-up perspective on how to seize opportunities and deal with threats.

This is good, but it seems education establishments are focused initially, perhaps rightly, on how to help their entrepreneurial students and faculty before grappling with what edtech and funding might mean for their missions.

Lesley Millar-Nicholson, director of the technology licensing office (TLO) of Massachusetts Institute of Technology (MIT) since July last year, in her keynote address, referred to MIT president Rafael Reif’s term “innovation orchard”, which set out a new mechanism to address a growing gap in the US innovation system by bringing together university, industry and potentially government partners to create a space that provides startups with know-how, access to technology and equipment, and a funding bridge to scale up their new technologies.

In its March report on the topic, MIT said: “With existing gaps in innovation financing, the aim is to leverage strengths in a region’s innovation system to help startups develop advanced prototypes, then demonstrate, test and bring them to the manufacturing stage. In effect, the orchard would substitute space for capital.”

Millar-Nicholson laid out MIT’s framework through its $150m Engine initiative, launched by the institution though it will operate entirely separately from the end of this year, as well as its TLO and other innovation initiatives (see report).

MIT and other large institutions, such as Stanford, University of California, Illinois, Tsinghua, Kyoto, Oxford, Cambridge, King’s College London, University College London, Imperial College London and Edinburgh, have been at the forefront of understanding how technology and shifting business and society needs have created challenges and opportunities.

Linking the insights gathered from dealing with their own entrepreneurs with strategic implications is an important next step. If the corporate venturing world is any guide, it will also be a move that gives the UVF industry greater reach with senior administrators and potentially more funding.

Once something becomes strategically rather than just tactically important, the pressure and resources provided increase. It will be no surprise if future such surveys produce a greater show of hands. What might be more interesting is the ramifications for the broader venture industry when they do. 

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.

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