University College London (UCL) has established a £50 million fund to invest in intellectual property developed on its campus.
The fund will provide money for academics to do initial proof of concept work, licensing projects and forming start-ups.
Although UCL research has in the past formed the basis of 67 companies, this is the first time the university, which ranks number one on the UK in terms of the excellence of its R&D, has had its own dedicated fund.
The two cornerstone investors, the European Investment Fund (EIF) and Imperial Innovations, the listed technology commercialisation arm of Imperial College London, are each putting £24.75 million into the fund, which will have an initial investment horizon of five years.
The fund will be managed on the university's behalf by London’s Albion Ventures, a private venture capital firm.
Celia Caulcott, the vice-provost of enterprise at UCL said, “From engineering, we’re expecting to see spinout deals; from life sciences, more licencing agreements.”
Albion Ventures will work in collaboration with UCL Business (UCLB), the university’s existing technology transfer unit, which provides business and legal advice, licensing and administrative support, but not funding.
According to Spinout UK, UCL’s technology transfer wing has a relatively good spinout rate, launching 67 companies since 2000.
Recent UCLB graduates include gene therapy company Freeline, cancer immunotherapy treatment developer Autolus, and remote sensor and monitoring start-up Senceive.
Despite a strong track record of discovery in European labs, university spinouts struggle to raise early-stage capital because much research is considered to be too new, and therefore high-risk for investors. As a result, few companies go on to achieve the scale of their equivalents in the US.
In recognition of these obstacles, UCL’s fund is the latest in a growing group of specialist university investment vehicles backing start-ups.
Oxford University launched Oxford Sciences Innovation last March with Isis Innovation, the university’s tech commercialisation arm, a giant £300 million venture believed to be one of the biggest of its kind in the world.
Before that, in 2013, Cambridge created its own £50 million fund to help spinout companies.
IP Group, which has agreements to commercialise the research of UK 16 universities, floated on the London Stock Exchange in 2003, while Imperial Innovations joined the market in 2006.
If you look at their value of their shares today, “you’ll see a clear recognition of the value of IP in the UK,” said Caulcott.
Growing EIF interest in universities
EIF is becoming an increasingly high profile investor in university intellectual property. “When EIF puts in money, the fund has its cornerstone investor, so the additional [money] comes easily after that,” said Tatiana Issaeva, a former EIF investment manager who is in the process of starting her own venture fund in Luxembourg.
The EIF has ploughed cash into seed funds such as the UK’s IP Group and UMIP Premier Fund, and Sweden’s Chalmers Innovation Seed Fund and Karolinska Development.
It invested €111 million in six deals in 2014. “Last year the sum was €180 million for ten deals,” said Piyush Unalkat, the EIF’s head of technology transfer investments.
One recipient of EIF money is the Centre for Drug Design and Discovery (CD3), a platform run by Belgium’s KU Leuven which develops potential new medicines to a stage where the pharmaceutical and biotech industry are interested in either licensing products or teaming up with the university’s scientists.CD3 was established in 2008 with €8 million from EIF, with an additional investment of €16 million following in 2010. In this time its academics have signed lucrative licencing agreements with big pharmaceutical companies including AstraZeneca, Pfizer and Janssen.