More seed capital for Cambridge start-ups

Cambridge Enterprises's Teri Willey: expects similar growth this year.

“We have decided to increase the evergreen pool” of funds, said Teri Willey, director of Cambridge Enterprise, the university’s commercialisation company, in an interview with Science|Business.

The funds, which where established in part through the British government’s Challenge Fund programme in the late 1990s and include donations from the Wellcome Trust and the Sainsbury family’s Gatsby Charitable Foundation, have about £6 million under management at present.

Willey said Cambridge Enterprise has a goal to add to the funds under management by the end of this year, so that they can increase their annual commitments to spin-out companies to at least  £2 million a year.

The Cambridge Enterprise Seed Funds, though tiny by the standards of the international money-management industry, loom large in the European tech-transfer world. Cambridge has been for years the biggest cluster in Europe for technology spin-outs and R&D commercialisation – with such companies as Cambridge Display Technologies, Plastic Logic and Cambridge Consultants among its spin-outs, and with 1,200 tech companies employing 35,000 in the “Silicon Fen” area around the university. In January, Solexa, a DNA-sequencing spin-out from the chemistry department, was sold for $600 million.

The new fund-raising target for the spin-out pools is among several changes under way at Cambridge Enterprise. On 1 December, the organisation switched its legal status from a department of the university to a limited liability company, reporting to a board that for the first time now includes off-campus directors. Though still 100 per cent owned by the university, Cambridge Enterprise as a company can be more flexible and improve its internal operations and returns to the university, Willey said.

In the fiscal year ended 31 July 2006, its turnover rose 45 per cent to £6.26 million from licensing and consulting revenue, of which £5.29 million was returned to Cambridge researchers and departments. In the year before, its licensing and consulting revenues totaled £4.29 million. Its seed funds last year also realised £1.6 million from investments. It evaluated 152 inventions, negotiated 61 licences and options and 82 consultancy contracts, and assisted 28 start-up companies.

New business plan

Willey, a former Chicago tech-transfer specialist, arrived at Cambridge last August. Since then, she said, a review has begun of a new business plan for Cambridge Enterprise; a new finance director, Nicola Anson, was appointed; and modernisation of its internal financial and management systems is under way. She said she expects “similar” revenue growth this year as last.

Among other projects under way, she said, is a review of its existing commercial agreements with industry. Not counting consulting deals, Cambridge Enterprise has in its portfolio 243 active commercial agreements, she said. But of those, 102 are generating revenue. She said she and her team aim to “systematically go through” the portfolio to see whether “there are things we should be doing for those licensees” to generate revenue. The question in her mind: “Can we be more pro-active” about managing the group’s assets? 

She added that, financially, “we’ll look for different ways to grow.” She said that “a number of different groups” have proposed financing methods, including trading cash now in exchange for a share of licensing revenue later. She called such discussions “exploratory;” and that while “we’ll consider different types of growth strategies, selling stock isn’t one of them. We will continue to be owned by the university.”