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20 July 2018

The shape of things to come

July - August issue editorial by Thierry Heles, editor

Author: Thierry Heles, editor

Futurology is an inherently tricky but fascinating field – get it right and you are hailed a visionary, get it wrong and people will either forget or turn it into a joke. One of the former is science fiction author HG Wells’ prediction of aerial city bombardment in his future-history novel The Shape of Things to Come. One of the latter is a prediction by the New York Times in 1936 that “a rocket will never be able to leave the Earth’s atmosphere”.

Extrapolating future trends from past and present data is so difficult because one invention can have a fundamental impact. When Steve Jobs, late co-founder of consumer electronics group Apple, introduced the iPhone, it took the audience nearly a minute and a half to catch on to the fact that Apple had created an entirely new device and not, as Jobs misled them with his oratory skills, three separate products – an MP3 player, a phone and an internet communicator.

But what has become clear since that day in 2007 is that nobody in that room truly understood the importance of what had just happened. Jobs noted the ability to make phone calls was “the killer app” and the audience’s response to the internet functionality was muted.

But consider this – of those three core functionalities, the internet communicator was the most profound. In fact, the three most valuable venture-backed, private companies in existence today – payment processing company Ant Financial, ride-hailing app developer Uber and the latter’s peer Didi Chuxing – would not exist today if it were not for the iPhone and the subsequent proliferation of smartphones.

With that caveat in mind, let us reiterate a view that Global University Venturing has expressed multiple times over the past year – technology transfer is going to break several records by the end of the decade.

Record number one: most deals in a calendar year.

Last month we broke through the milestone of more than 100 deals in spinouts, almost double the number of investments tracked during June 2017. Last year, GUV tracked 481 deals – the current record – but we are already at 409 this year.

Unless activity all but grinds to a halt in some sort of catastrophic scenario, the record will be broken this third quarter, which has already clocked more than 20 deals at the time of writing.

Record number two: most money invested in a calendar year.

Activity has been ramping up for a while – as reported in our 2013-17 data review in the May issue – and the first half of 2018 has brought us three months in which a total of more than $1bn was invested in spinouts for the first time since January 2016. Although $5.9bn raised in the first half of 2018 is still some way from 2014’s $7.2bn and 2015’s current record of $9.4bn, that amount is also more than halfway to both. If the total value per month drops to between $400m and $500m, as seen for much of last year, that is still an additional $2.4bn to $3bn. Even at the lower end of that scale, at least 2014’s record would be broken easily.

Both of these predictions assume there will not be another blockbuster spinout such as Juno Therapeutics – the immunotherapy firm that went from foundation in late 2013 to raising $310m in two rounds before listing on the stock exchange by the end of 2014 – or Imperial College London’s allergy treatment developer Circassia, which celebrated one of the UK’s biggest biotech initial public offerings in years when it floated in 2014 and raised $332m.

But just as it took only the iPhone to up-end startups in general, it would take only one such breakout success to make the above predictions come true. And there are likely to be technologies in the pipeline at multiple institutions that could turn out to be big money-makers. The increased investment activity should mean we will see them within the next 18 months.

Of course, there is a chance that all of this will turn out to be wrong. Wells made countless predictions in The Shape of Things to Come that did not turn out to be true, while Jobs made several assumptions during his time that turned out to be right. But it is a bet we will confidently take. 

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