Big deal: OSI grows to $730m

Oxford Sciences Innovation (OSI), the university venturing fund of Oxford University, on Friday raised an additional £230m ($290m) from investors including the institution’s endowment fund to bring its total to £580m.
Oxford University Endowment Management participated alongside commercialisation firm IP Group, Wellcome Trust, Woodford Investment Management, Lansdowne and Invesco Asset Management.
Private investors Charles Dunstone and Dennis Hassabis have also taken part in the latest fundraising effort.
Additionally, Temasek and Oman Investment Fund, the respective government venturing arms of Singapore and Oman, as well as unnamed Asia-based technology companies and Europe-based investors have injected cash into the fund, according to the Financial Times.
GV, formerly Google Ventures, the corporate venturing arm of diversified conglomerate Alphabet, provided an extension to £320m in June 2015, though it is not known if the unit returned for this latest effort.
OSI’s fundraising comes at an interesting time for the university sector, which is facing a wide range of challenges as a result of the UK’s decision to leave the EU.
One the one hand, Cambridge University warned last week that applications from European students could nose-dive, and to an extent already have, with the institution having experienced a drop of 17% for undergraduate degrees.
Imperial College London meanwhile noted that “the impact of the loss of EU research funding on the research productivity of the UK’s universities will be substantial, especially given that Imperial wins more than its pro-rata fair share of research funding”.
Then there is also the fact that researchers at British universities are being asked to step down from leadership roles or are ignored entirely for cross-border collaborations. These cooperations represent approximately £1bn worth of funding from the EU through research programs such as Horizon 2020.
None of these realities appear to have had an impact on OSI’s ambitions. The fund, launched in May 2015, was the largest of its kind in the world even before the latest extension.
OSI was created to provide capital to spinouts originating from Oxford University, a major difference between the vehicle and its similarly ambitious peer Imperial Innovations, the commercialisation firm spun out of Imperial College London that backs companies throughout the golden triangle of London, Oxford and Cambridge.
Among OSI’s recent successes are biotechnology developer EnzBond, spun out last week, smart material producer Bodle Technologies, which raised funding in November 2015 before attracting Richard Holliday, former deputy head of technology transfer at the university’s tech transfer office Oxford University Innovation (OUI) as a senior vice-president in July this year.
In May, stem cell drug developer OxStem made headlines when it closed an eye-watering £16.9m seed round from backers featuring Oxford Sciences Innovation.
The fundraising news also comes as Oxford Nanopore Technologies, which has created a portable DNA and RNA sequencer, raised £100m today in a round led by investment fund GT Healthcare, with participation from IP Group and Woodford Investment Management.
Nanopore has now secured a total of £351m in funding, and while OSI did not participate in Nanopore’s round – nor has it backed the company to date – it ilustrates that Oxford spinouts justify significant investment and that there is a pipeline ready to accept capital commitments.
Indeed, with the creation of 22 spinouts and a total of 772 deals in the past year by Oxford University Innovation, there appears to be no danger of the pipeline drying up any time soon.¹
This seems to defy cautious opinions voiced by some in the tech transfer world, such as James Wilkie, chief executive of Birmingham University’s TTO Alta Innovations, who told GUV earlier this year: “The challenge is pipeline. [OSI] may have to look outside the UK. If you look at the number of investable ideas coming out of a UK university, even a really good one, it is not that many.
“OSI is obviously very focused on Oxford spinouts and region, so I am really interested to see how that goes. It is very good and I think the UK is extremely well served for patient capital. I am interested to see if OSI will work with other patient capital funds in the UK or abroad. I suppose they could invest in startups set up by alumni in other countries.”
Linda Naylor, managing director at Oxford University Innovation, countered any such argument, saying: “As with any research commercialisation company, the work we do here at OUI in translating research ideas into technologies with real-world impact is often constrained by access to capital.
“By pulling together a global network of investors, OSI is acting as a beacon to the world’s investment community. The door for cutting-edge technology here at Oxford is open. The innovation output of the university has never been stronger, and the supporting role OSI plays in backing our spinouts is encouraging new entrants to our pipeline of pioneering first-class technologies.”
Of course, OSI does not only help Oxford’s pipeline commercialise more quickly, but such a vast amount of patient capital also enables these companies to grow at a faster rate than they would by relying solely on third-party investors.
Peter Davies, chairman of Oxford Sciences Innovation, said: “Raising this capital reflects our confidence in the breadth and quality of opportunity available to investors in helping Oxford University develop a world-class commercial ecosystem around its unmatched intellectual capital and heritage.
“We are also very excited to be working with new shareholders from across the world, notably from Asia and continental Europe, and grateful to our original supporters, the 10 largest of which have participated in this funding round.”
The future for research emerging out of Oxford University seems brighter than ever, and Global University Venturing will continue to keep a close eye on the institution’s development.
To gain a deeper understanding of the UK’s and the world’s wider university venturing world, join us at the GUV: Fusion event in London in May 2017, which representatives from institutions such as Tsinghua University and Cambridge University are expected to attend, while Russ Cummings, chief executive of Imperial Innovations, has been scheduled as a keynote speaker.
¹ Editor’s note: This article was amended on December 12 2016 to remove an earlier mistake that falsely attributed the spinout creation and licensing deals to OSI instead of OUI. We apologise to our readers.