GUV’s annual review shows the ecosystem is in outstanding shape despite of all the doom and gloom in many financial papers.
Over the course of 2019, internationally respected newspapers such as the Financial Times and the Wall Street Journal led with headlines such as “Braced for the global downturn” and “Warning signs point to a global slowdown” time and again. Even the 2019 GCV Symposium, run in parallel to GUV: Fusion in London, chose the theme of “navigating through turbulence”.
But it seems they all forgot to tell universities that there is a downturn coming, because spinout activity came tantalisingly close to 1,000 investments and exits for the first time since GUV launched in 2013.
In fact, with 886 investments worth a total of $13bn – up from 730 deals and $9.9bn in 2018 – and another 67 exits worth a combined $20.8bn – up from 63 and $14.7bn in 2018 – finding any such pessimism in the tech transfer offices around the world seems like it would be an impossible task.
More than that, there was a real sense of excitement about the year just gone and the one ahead with everyone who GUV spoke to ahead of its annual review. Case in point: Andrea Young, fund manager of University of Edinburgh’s venture arm Old College Capital (OCC), told GUV that “demand for Old College Capital investment was strong in 2019 and that healthy pipeline continues for the year ahead.
Above: Andrea Young
She continued: “Our recent co-investments include exciting circular economy pioneers: Carbogenics creates green energy and locks away carbon from low-grade waste including disposable coffee cups, and MiAlgae aims to revolutionise the fish and animal feed sectors with its omega-3-rich micro-algae product.
“The Edinburgh ecosystem continues to thrive and develop: new investment partners are looking to co-invest with OCC, and there is notable growth in larger and later-stage deals for University of Edinburgh companies.
“As we enter the new decade, OCC looks forward to playing a growing role in the Edinburgh and South East Scotland City Region Deal, with the university holding an unprecedented position in helping deliver the next generation of data-centric companies.”
Such optimism really is justified, despite all the doom and gloom you may encounter elsewhere. Take a look at how investments progressed throughout the year: there may have been peaks in the second and third quarter when it came to the amounts invested, but the fourth quarter was responsible for 251 deals – more than any other quarter.
Among the highlights was Parvus Therapeutics, a Canada-based biopharmaceutical spinout of University of Calgary, that signed a collaboration and licensing deal with biotechnology developer Genentech worth more than $800m, and Biontech, a Germany-based immuno-oncology drug developer, spun out of Johannes Gutenberg University Mainz that closed a $325m series B round in July only to quickly follow that up with a $150m initial public offering in December (also making it one of the year’s biggest exits, as you can see below).
That makes it a phenomenal success for Germany and proves once again that it’s not just the US and the UK that are worthy contenders in the tech transfer space.
Another region worth watching is Australia, where activity has been ramping up, according to Peter Devine, chief executive of multi-university venture fund Uniseed. Devine said: “Uniseed has continued to make great progress in 2019, with three portfolio companies inking commercial deals with major companies in just the fourth year of its latest fund, as well as closing three new investments and executing two further term sheets on other potential new investments. Existing portfolio companies continue to make great progress, with many of these now growing revenue or progressing in human clinical trials.
Above: Peter Devine
“The trend of Australian research organisations setting up incubators and accelerators is starting to bear fruit, with better developed and more customer focussed opportunities being reviewed by Uniseed. There are now many more players in Australian university venturing relative to just a few years ago, with new funds set up to focus on this sector, along with increased interest from high net worth investors and family offices.
“In terms of technology, AI, machine learning and big data plays are starting to have an impact, and in the health sciences, immunotherapies in cancer are becoming an important treatment regime, along with gene therapy which has recently had some approvals that help provide clarity on the regulatory pathway.”
But of course, the traditional hotspot of the US continues to do well, too. Lesley Millar-Nicholson, director of Massachusetts Institute of Technology (MIT)’s commercialisation unit, Technology Licensing Office (TLO), noted that the office “had a successful 2019 with several policy changes to benefit MIT inventors including a change that allows inventors with equity in a licensee startup company to share in proceeds received by MIT for equity positions and the implementation of a new simple equity only software license agreement for non-patentable software.
“In addition, MIT saw many of its established startups continue to progress, several raising seed and series A funding, in total raising over $1bn. The TLO also participated in a joint pitch event of MIT and Columbia University startups in New York City to a large group of venture capitalists and entrepreneurs, resulting in an expanded network for all teams.”
There are some exciting changes coming Millar Nicholson’s way in the year ahead, she noted: “Under the leadership of associate provost Krystyn Van Vliet, the Office of Strategic Alliances and Tech Transfer (OSATT), was launched with full rollout expected in spring 2020. OSATT integrates the established offices of TLO and Office of Corporate Relations and adds three new teams; Catalyst, Strategic Transactions and Alliance Management.
“OSATT develops agreements that facilitate MIT projects, programs, and consortia with industrial, non-profit, and international sponsors, partners, and collaborators.”
This has meant Millar-Nicholson assumed the director’s role for the Catalyst team to provide the early-stage engagement and support for faculty-centric development and execution of industrial, non-profit, and international sponsors agreements.
She added: “Finally, TLO undertook several operational initiatives to improve and enhance administrative efficiency and employee satisfaction including the ongoing development of a new IP management database, creating guidelines for engagement with outside law firms for patent activity, launching a staff flexwork program to support a variety of employee work arrangements, completing and adopting e-disclosures for faculty, and archiving nearly 8,000 technology files to create space for an office-wide renovation.”
Above: Lesley Millar-Nicholson
In the UK, too, there was much reason to celebrate at institutions such as University of Cambridge (not only for the delicious-looking cake the tech transfer office, Cambridge Enterprise, had baked to celebrate its GUV Award for the Seed Funds team in May)
Tony Raven, chief executive of Cambridge Enterprise, told GUV: “It was a very positive year, full of contrasts that nicely illustrate the diversity of opportunities with which we are involved.
“On the one hand, we supported the first commercial steps of cutting-edge technologies such as quantum spinouts Nu Quantum and Riverlane as well as Polyprox Therapeutics, which is developing a new class of drugs to tackle difficult to drug cancers.
“On the other hand, the long-term nature of our work was illustrated twice over with two 25-year-old cases. Granta Design, a spinout that we have supported for 25 years was acquired in 2019 by US-based Ansys. And our 25-year-old license to Castep, which predicts materials properties starting from quantum mechanics, was renegotiated to support the business model of Dassault Systèmes following its acquisition of licensee Accelrys.”
Raven continued: “Meanwhile, Versed AI, a spinout from Theoretical and Applied Linguistics using natural language processing and machine learning for business supply chain mapping, won our popular Postdoc Business Plan Competition against stiff competition.
“Over the year we supported 11 new spinouts and 4 portfolio companies with seed investments totalling £6.4m ($8.4m). Five-year-old Cytora – a spinout applying AI to the insurance industry – raised a $32m series B round. And 2020 looks even more exciting with a queue of new spinouts already lined up for investment.”
Raven was similarly thrilled about the year ahead for the UK as a whole, saying: “The wider environment for university technology transfer is undergoing significant change in order to meet the challenges of the UK’s Industrial Strategy, with its target of raising of R&D investment from 1.7% to 2.4% of GDP.
“In the past year we have seen the implementation of the Knowledge Exchange Framework (KEF), intended to increase the efficiency and effectiveness of public funding for knowledge exchange (KE); the KE Concordat, to give universities a clarity of mission and accessibility for partners; the KE metrics consultation, to review the measures by which government assesses and rewards KE activity, and the excellent independent Rees Review on University-Investor Links.”
Raven also found comfort in the UK election result, which produced a majority Conservative government in December and sent shockwaves through left-leaning communities, of which academia is usually one. He explained: “The end-of-year UK election returning a majority government has removed much of the political uncertainty of the past few years and promises five years of stable KE policies, with the exciting prospects of ambitious aspirations combined with significant support to look forward to.”
Above: Tony Raven
Another UK institution that celebrated a fascinating exit in 2019 was University of Birmingham, where James Wilkie, chief executive of tech transfer office University of Birmingham Enterprise, was able to highlight the rather unusual news that biopharmaceutical company Invex Therapeutics floated down-under. He said: “Invex floated on the Australian stock market raising £6.3m at IPO. Although we have had other shares of an IPO in the past this was our first based entirely on intellectual property from University of Birmingham.”
It wasn’t the only highlight for Wilkie and his team. He reflected: “We continued to set new records internally for the number of inventions identified, patents filed, licence deals done and income, finishing 2019 with company profits above budget.
“We made strong progress with investors interested in supporting a new £50m to £300m early stage fund for the UK Midlands. This is part of a joint project with seven other UK universities that simplifies access to our collective intellectual property.”
Investments kept pouring in too, he said. “In 2019, our spinouts raised £16m to fund their operations and an independent survey from Beauhurst ranked us seventh university in the UK for spinout investment in 2018.
“We started three new spinouts based on university inventions and also helped 150 academics and local entrepreneurs develop their ideas for a new business.”
Above: David Wilkie
A final highlight was the continuing expansion of incubator BioHub. “We opened the new floor in our BioHub building in February and it was fully let by September,” Wilkie said. “This brings the total number of tenants on Birmingham Research Park to more than 60, giving a very healthy ecosystem that attracts more than 20,000 visitors annually.”
Speaking of exits, the true leader here was the acquisition of Tableau Software, the data visualisation spinout of Stanford University, which agreed to a $15.7bn all-stock acquisition by cloud computing firm Salesforce in June, six years after completing a $254m initial public offering on the New York Stock Exchange. The amount is more than the total of exits generated in 2018 and makes everything else on our graph (incidentally, created with Tableau) look like mere pennies. When has more than $1bn (September) ever looked so small?
In fact, the second largest exit of the year is barely a fraction of the Tableau deal: biotechnology producer Vertex Pharmaceuticals agreed to purchase Semma Therapeutics, a US-based diabetes treatment developer spun out of Harvard University, in a $950m all-cash deal, also providing an exit to pharmaceutical firm Novartis, among others.
Spinout-focused investment firm Osage University Partners (OUP) was also among those to score an exit, when Precision BioSciences, a US-based genome editing technology spinout of Duke University, raised more than $126m in its initial public offering in late March only to close the offering at more than $145m in early April when underwriters took up the overallotment option in full.
Kirsten Leute, senior vice-president of university relations at OUP, however put the spotlight on the opposite side of the investment spectrum and – considering the potential impact – it is easy to see why. She said: “One of the areas I am excited about is our work with Equalize 2020, a pitch presentation competition and summit for women academic entrepreneurs in June of 2020 at Washington University in St. Louis. We’ll have 12 presentations from academics across the US, plus panels and networking around increasing participation and opportunities for women academics in the innovation world.”
Leute added: “This isn’t just a focus for this year – we anticipate the 2020s will bring a large shift in the rate of participation by women academics in the startup and innovation space.”
OUP is certainly well prepared to tackle such a challenge, not only for Leute’s ambition but also in terms of cold, hard cash: the firm was one of 115 in the ecosystem that raised a fund last year. Equipped with $273m, Osage’s third fund will look to back 40 to 50 companies, many of which will, hopefully, involve women or minority founders.
Similarly ready to pour money into more companies is IU Ventures, the innovation and fund management arm of Indiana University known as Indiana University Research and Technology Corporation until August 2019, which wasted no time following its rebranding exercise to announce an intriguing initiative in the IU Angel Network.
Tony Armstrong, president and chief executive of IU Ventures, explained the angel network’s origin: “As we’ve been talking with our alumni about the Philanthropic Fund, many have expressed an interest in making personal investments in some of the opportunities we’re coming across. We’ll be sharing the first investment opportunities with the IU Angel Network in a few weeks, and we’re anxious to continue to grow the network.”
This isn’t the only initiative that’s been in the works, Armstrong continued: “We’re also creating an IU Founders Network to help connect IU alumni who are starting or growing companies.
“We’ve heard from our alums that they’d love to interact, mentor, commiserate and learn from other alumni who are working as startup CEOs and so we’re going to facilitate those interactions. We’re contemplating an IU Funders Network as well that will connect our alumni who are capital providers.
“We’re also establishing what I call ‘nodes’ of our alumni in cities across the country. The networks we’ve created will then be able to get together in the node cities and meet and share. We’re finding many of the deals we’re reviewing and sharing through these nodes.”
David Grimm, investment director of the University of College London (UCL) Technology Fund, was also excited about many of the early-stage initiatives, telling GUV: “We had a great showcase event in June when our founding teams wowed attendees with their cutting-edge work and I look forward to our 2020 event on May 12 at Crick Institute.”
“2019 was a fantastic year for the UCL Technology Fund,” Grimm said. “We saw some great companies and projects join the portfolio including Phasecraft, a world class quantum computing business; Odin Vision, a team using computer vision to aid doctors to spot the signs of cancer early; and Quell Therapeutics, which is aiming to treat autoimmune and graft-versus-host disease using a cell-therapy approach.
“We also saw our existing portfolio hit some exciting milestones with Echopoint graduating from our initial proof-of-concept investment raising £3m to take their revolutionary optical sensing technology through clinical trials and both PanAngium, an ocular biologics company, and Glialign, focused on cell therapies and medical devices for nerve repair, progressing to seed stage.”
Grimm added: “Last year also saw the UCL Technology Fund launch The Deck, an innovation space at the heart of UCL’s brand new Centre for Artificial Intelligence. We’re already seeing some brilliant prospects emerging from the work there.
Looking ahead, Grimm teased: “With 2020 upon us we’ll continue backing the best innovation from a world class university and expect to have some exciting news to share shortly that cements our partnership with UCL for the long term.”
It is perhaps unsurprising to hear, year after year, thought leaders in the ecosystem being excited about their recent successes and the opportunities ahead – these are the people at the cutting-edge of human knowledge, people who are making the future happen on a daily basis. It might not necessarily take an optimist to take on such a job, but it seems almost impossible not to turn into one along the way.
And while it may not be surprising, it is truly heartwarming and a real privilege to report on these achievements. If these are the stories you’d like to hear more about, watch out for the Leadership Series, which GUV will launch in partnership with Global Corporate Venturing in the coming weeks on our Global Venturing Review podcast. We bet if you’re reading this, you’ll be just as excited about learning more about your peers as we are – and if you’d like to share your own stories, don’t hesitate to reach out to editor Thierry Heles at email@example.com.