GUV Summit 2014

Investors, tech transfer experts, industry leaders and heads of spin-out companies all gathered at the Crystal in East London last month for the second annual GUV Summit.

“Innovation through collaboration” may have been the theme of this year’s summit, but there was another emerging theme that was picked up by several speakers and panels throughout the two days: patience. Indeed, spin-out investments are a long game, as it can take an average of 18 years before an investor sees a significant return on their investment.

Tuesday morning saw Mawsonia’s editor-in-chief James Mawson welcome guests with an overview of the industry before handing the stage over to Shelley Harrison of Coller Capital, who is also an executive-in-residence at New York University’s Centre for Urban Science and Progress (Cusp). Harrison noted the importance of collaboration, saying that while we “think we are getting smarter and smarter” that is merely a technological advance, not a moral one. Cusp is now collecting data from shopping centre Columbus Circle to analyse and apply to the construction of a highly efficient Hudson City.

Harrison stayed on stage for the following panel, which included fellow speakers Alison Campbell, Knowledge Transfer Ireland, Regina Summer, Swedish Network for Technology Transfer and Support (Snitts), and Tony Raven, Cambridge Enterprise and PraxisUnico.

The panellists pointed out several significant traits about the technology transfer, with Summer remarking that in Sweden so-called innovation centres are being funded by the government rather than third parties or universities themselves and researchers having the professor’s privilege – that is, their research belongs to them. Through these centres, a total of 266 contracts with companies have been established to date, and the country plans on pushing ahead with this licensing model.

In the UK, a total of 17 universities meanwhile have established direct access to venture capital funding, through organisations such as IP Group, SetSquared and Mercia Fund Management. In the US, the University of California system recently changed its policy on direct investments and launched the $250m UC Ventures fund, while GlaxoSmithKline is opening an office in Boston to support the research ecosystem and engage in scientific partnerships. As Tony Raven insists, the benefit of these collaborations and the benefit of commercialisation need to be to society, with the financial reward to the university incidental.

Elsewhere, the panel on “Investment in the Future”, led by James Mawson and featuring Peter Keen, Cambridge Innovation Capital, Enrico D’Angelo, Parkwalk Advisors, and Gonçalo de Vasconcelos, Syndicate Room.

Here, most importantly to outside investors, Keen noted that on top of spin-out investments being a long game, it is also important to realise that as an outside investor you should only join a company’s series A round if you know you can stick around for a potentially bigger series C round, or later, as it is only the most recent investors who tend to profit the most from an exit, due to stock dilution. This fear of dilution was also a recurring theme during Tom Whitehouse’s, London Environmental Investment Forum, and Stephen Brooke’s, Ombu Goup, discussion on cleantech.

The importance of a series A round was given a slightly different analysis by John Spindler, Capital Enterprise, during a panel on how governments can support tech transfer when he remarked that it takes a lot of funding to even get to that stage. To convince investors during a series A, a company needs metrics – which it typically will not be able to afford until it has secured the funding. The UK specifically is facing a problem here: while there is a community of angels, they simply do not have enough cash, a problem mainly for life sciences spin-outs which require big pre-seed investments.

Some of Keen’s thoughts were mirrored in “Melding Academia and Industry”, led by Global Corporate Venturing editor Toby Lewis and including Jackie Maguire, Coller IP, Andy McCartney, Microsoft Ventures, Andy Shannon, Startupbootcamp, and Andy Hill, Intelligent Ultrasound.

Hill illustrates how he encountered unexpected costs at Intelligent Ultrasound, and found it problematic asking his investors for more money. His situation was aggravated by the reality that there was no mentor to guide him through the spin-out process. It took him 18 months before he could afford taking out a salary.

McCartney echoed the worries, saying the ecosystem needs more collaboration and different actors need to work better together to set up incubators and accelerators. It is time to move beyond a world where we look at actors as “Microsoft gives you laptops, Google gives you server space.”

Hill added that technology transfer is too often perceived as a hurdle to clear, which researchers would rather not. This view recurred on the second day of the summit, when founder of Cambridge spin-out Enval, Carlos Ludlow-Palafox, noted in his conversation with Roger Ashby how academics at Cambridge did not support his ambition to turn his research into practical applications rather than write research papers on his findings.

Jackie Maguire meanwhile pointed out that in this case, emerging economies have a major advantage on the Western world, as they are starting out from a blank canvas without any legacy policies and rules.

While McCartney insisted on the importance of identifying promising students and investing in their startup ideas, angel investor Sherry Coutu CBE, in her talk, took it one step further and explained that high school students already need to be the focus.

By 2020, the UK alone will require one million additional Stem jobs, while the EU will need an additional four million app developers by 2018. Already, 990,000 jobs in the UK today cannot be filled because employees do not have the right skills, and Coutu notes that universities need to do a much better job of reaching out to their future undergraduates.

One university which has cracked the fast growth is Amity University, whose chancellor Atul Chauhan followed Coutu. The university is highly driven by research and is expanding at an unseen pace: established ten years ago through the Amity Foundation, the university now has seven campuses in India and three abroad, including one in London – all of them are focused on research. In the past four years, the university has filed 542 patents, the most of any Indian university. Its goal is to establish a further 21 campuses across India within the next decade, and have one in each state.

Following a showcase of spin-out companies, including Edinburgh’s pureLifi the progress of which we have been monitoring closely at GUV, the first day’s talks finished with a keynote by Sir George Buckley, former chief executive of 3M.

Sir George’s biggest challenge to innovation-averse corporations and organisations was a simple wake-up call: IBM managed to grow to being a huge company, but also a weak one because it failed to keep innovating. Responding to the fear that investing in innovation only to see it fail, he said that not investing at all is giving up before trying – the very reason why the UK’s engineering sector is crumbling. Other speakers agreed, as Simon Gibson, Wesley Clover Corporation, would later challenge the audience: “name a British network equipment supplier”.

For universities, he saw a paradigm shift that “the student has now become the customer”. Finally, picking up on the same idea as Andy Hill and Carlos Ludlow-Palafox, he also clarified that the purpose of any research is to let other people use it and expand on it, not to make it unintelligible to everyone else.

Interesting international numbers meanwhile were revealed by Ali Amin, University Business Incubator (UBI) Index, du
ring his panel when he announced that according to UBI’s research  the best incubators across the world are fairly evenly spread across Oceania (13%), Eurasia (37%), North America (23%), South America (22%) with only Africa left to catch up (5%).

One tech transfer organisation that has been doing a lot to foster this global ecosystem is Isis Innovation, as Tom Hockaday, the organisation’s managing director, pointed out during his discussion with Timothy Barnes, University College London.

Isis has established a network with offices in cities including Adelaide, Hong Kong, Kyoto, Mexico, Madrid which are all promoting Oxford University research and attracting investors. Concurrently, these offices also give Oxford’s spin-outs direct access to international markets they would not otherwise have been able to enter.

Barnes meanwhile illustrated that University College London (UCL) has an annual turnover $1.5bn, with a fifth of that being industry enabled, including a total of 36 partnership agreements with Cisco. When it comes to international collaboration, the university has a significant relationship with China, educating more Chinese students than any other institution outside the People’s Republic.

Finally, Janice Denoncourt, Nottingham Trent University, spoke at length about intellectual property law and how it is affecting spin-out creation. Indeed, IP rights are often treated as an optional module at British universities and looked down on, rather than seen as a necessary and important component of a wider, complex process.

The failure to recognise IP as valuable has also led to British banks disregarding it when spin-outs seek debt financing, a loss to the companies and to the banks.

Denoncourt however showed herself optimistic about the future, a view that was held by many – and perhaps all – delegates at the summit.