GCVI Summit 2018
Skip Content

Overview

25 July 2017

University venturing: 2017 first half review

Analysis: January to June 2017

Author: Thierry Heles, editor

Global University Venturing’s last issue before the summer provides an opportunity to look back at the first six months of the year – as the data reveals, it has been a busy period with activity picking up significantly towards the end of the second quarter.

That increased activity, however, appears not to have translated into a boost for the total amount of capital raised compared with the same period last year. Although there were 44 deals in June, they amounted to only $365.3m of transaction value – a drop of nearly $90m from May.

Overall, both the first and second quarters of 2017 underperformed all quarters in 2016, when the lowest figure, the second quarter, was close to $1.4bn.

One factor remains constant – healthcare-related spinouts have made up both the largest number of deals and the biggest combined sums for every quarter since January 2016 – illustrating how important life sciences remains to the university innovation ecosystem, having been responsible for most tech transfer activity for decades before institutions shifted their focus to include other departments.

In the first half of 2017, healthcare-related deals were responsible for the largest total each month apart from May, when IT won out. This temporary boost is perhaps no surprise, as the sector has consistently ranked second in each quarter since tghe second quarter of 2016 – the exception was the first quarter of that year, when IT towered over healthcare with $966m, compared with the latter’s $619m.

There is a caveat here – despite IT receiving more capital, healthcare was still the winner when it came to the number of deals. Indeed, the reason for IT’s high figure that month was the acquisition of Lattice Data, a deep data analytics spinout of Stanford University, which was acquired by consumer technology company Apple for $200m.

How are these deals distributed around the globe? The US is the single largest generator of transactions – with 82 deals and $999.2m in aggregate value, the country is almost unassailable and so far there are no indications that this will change in the short or medium term.

The one to watch, however, is Australia. Global University Venturing has counted a total of 38 deals there between 2013 and 2016. With six deals so far this year, it may look like the country will achieve the same number of investments over the next three years, but several developments this year should give universities down-under a significant boost, not least UK-based commercialisation firm IP Group’s aggressive expansion into the country with $264m in firing power.

Uniseed, the venture fund backed by universities in Melbourne, Sydney, New South Wales (UNSW) and Queensland, as well as research institute Csiro, launched a A$20m ($15m) fund that will make follow-on investments in existing portfolio companies. Uniseed has also yet to invest its third fund fully, launched in late 2015 with A$50m. By March this year, the fund had deployed only A$4m.

All those initiatives add to the Australian government’s A$1bn in funding, announced in April last year but likely to start making a bigger impact over coming years. In addition, Uniseed led the pack with three deals involving universities outside North America, Europe and Asia.

In Europe, German public-private partnership High-Tech Gründerfonds (HTGF) shared first place with Touchstone Innovations, the commercialisation firm spun out of Imperial College London, currently opposing a hostile takeover attempt by peer IP Group. While IP Group may appear lower down the list, the firm acquired Parkwalk Advisors in December 2016 so is actually doing better than the figures suggest.

It is also interesting to note that of the top 10 backers – minus angel investors – of university spinouts in the first half, two are government-backed entities – HTGF and the Scottish Investment Bank, the investment arm of economic development agency Scottish Enterprise.

In the US and Canada, spinout-focused investment firm Osage University Partners led the field with eight deals, followed by commercialisation firm Allied Minds – an intriguing development, as the latter has made headlines so far this year primarily thanks to a crashing stock after it divested from seven spinouts. The appointment of Jill Smith, first as interim CEO in March, then as permanent chief executive in May, and the hiring of Simon Davidson as executive vice-president at the end of June, should set the firm on course for more positive headlines in the second half of this year. Davidson was formerly a managing partner at In-Q-Tel, the non-profit investment affiliate of the US intelligence community.

In Asia, meanwhile, Tsinghua University was responsible for two deals, leading a list of venture capital entities and a couple of corporates.

Stanford University, largely due to the aforementioned acquisition of Lattice Data, saw its spinouts involved in $340.1m worth of deals. Similarly impressive is that Stanford also accounted for the largest number of deals, with 15.

Hearteningly, the triple helix appears to be well and truly alive, with a healthy mix of investors participating in funding rounds for spinouts. The money has to come from somewhere, of course, and institutions were busy raising 23 new funds in the first half of 2017 – not least Tsinghua University, which revealed a $17.4bn commitment to its ecosystem in April. Notwithstanding that outlier, there was a significant uptick in activity in June, when funds totalling $778m were launched – more than any other month. 

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