The Ecosystem: Europe prepares to follow UK in sharing start-up incubation

An EU promise to support the formation of university incubators has come through, but institutions will have to share, setting up facilities through transnational Alliances for Innovation.

That raises the question of whether shared incubators can work. The record of SETsquared, which brings together six UK universities, suggests it can. Now in its 22nd year, SETsquared was recently ranked as the top UK start-up hub, and third best in Europe.

SETsquared was set up in 2002 by the universities of Bath, Bristol, Southampton and Surrey. Exeter University joined in 2011 and Cardiff University in 2021. The partnership does not substitute for incubation and other innovation services at the partner universities, but brings them together.

“Each of us has some business incubation and acceleration capability, and what we do through SETsquared is to convene them and share best practice,” said Diana Galpin, director of enterprise and knowledge exchange at Southampton University. “Then there are certain aspects of that work that are more effectively done across the six universities, rather than individually, but a lot of the delivery still happens at the local level.”

Each member of SETsquared has a business acceleration centre, most but not all located on the university campus or science park. These provide entrepreneurial training for students and academics, and for non-academic start-ups from each local ecosystem. This support runs through the early stages of establishing a company, seeking initial investment, and on to scaling up.

Attracting investors is one area where collaboration has a distinct advantage. “One university presenting its offer is probably not going to be enough to interest the investor community, whereas if you have six universities working together than that will attract their attention,” said Karen Brooks, programme director at SETsquared.

Each university contributes a modest fee to cover membership, but most of SETsquared’s activities are supported by grants. And while incubation and acceleration are at the core of these activities, the scope of the partnership is much broader.

For example, SETsquared has working groups that bring together staff from the member universities to exchange best practice, discuss training needs and areas for further collaboration. The groups cover student enterprise, business incubation, technology transfer and research commercialisation, R&D collaboration with SMEs and industry, and bid writing for grants and other source of funding.

The resulting collaborative projects are equally diverse. One example is a programme designed to bring together companies and university researchers to bid for government innovation grants.

“We found that we were getting 36% success rates with those grants, when the usual success rate is below 10%,” said Brooks. “That’s because we were strengthening what are essentially bids for product development funding by utilising research from the universities.”

Closer to the goal of start-up creation is the Impact-IP programme, which aims to increase the pace of university commercialisation and spin-out creation. “This will explore if we can harmonise and standardise our approach to spinning out, licensing and commercialisation, and develop guidance and toolkits for our academic communities, so that we can get deals done quickly,” said Galpin. Southampton University is leading the work on this programme, with funding from the government funding agency Research England.

This programme builds on work byTenU, an international collaboration of ten technology transfer offices formed to share effective practices in research commercialisation, on deal terms for university spin-outs.

At present, universities tend to have their own deal templates, all of which are different. “So whenever an investor starts work with a university, they have different discussions and different negotiations on different points,” Galpin said. “If we can harmonise and standardise templates, in discussion with investors, maybe we can have ready-made starting points for practical negotiation.”

Part of this process will involve appointing up to five entrepreneurs-in-residence who will bring their commercial acumen and business experience to the programme.

The results should help the partners, but also find a wider audience beyond. “We hope that when we have developed this for the SETsquared partnership, we can encourage wide adoption of this resource across the sector,” Galpin said.

SETsquared also supports a number of disciplinary programmes that do not necessarily involve all of the partners. “These bids often have SETsquared’s central capabilities written into them, supporting the commercialisation of research that is developed in the project,” said Brooks.

This might be the case where there is a regional focus, such as the GW Shift hydrogen supercluster programme, which involves Exeter, Bristol, Bath, Cardiff, but not Southampton or Surrey. Sometimes these programmes reflect the differing priorities of the partners, but more often they are designed to capture available funding, which increasingly has a regional focus in the UK. Programmes might also involve collaborating with universities that are not part of SETsquared.

Partnership work

While SETsquared connects the partners, it does not merge their technology transfer systems, although some sharing happens independently in members such as Bath and Bristol that are close together.

“What we are trying to do with SETsquared is to add value to our local ecosystems,” Galpin said. “We identify what we need and we share the best of what each of us is doing, to try to make sure that all of our ecosystems grow.”

It is important that the universities are on the same page when it comes to the core goals. “Our partners don’t always have the same priorities, but they have a level of commonality in what they are trying to achieve,” said Brooks. “The challenge when you are trying to create one of these collaborations is to get everyone aligned on the central activities, alongside what they do individually.”

Commitment to the partnership needs to come from the top. “You need the input of senior leadership within the universities, as well as the practitioners who are doing this on a day-to-day basis,” Brooks said.

For Galpin, there are similarities and difference between the partners which help make SETsquared work. The most important similarity is the commitment to accelerating innovation and supporting spin-out companies. “It’s a common ambition that holds us together.”

But the partnership is agnostic when it comes to the kind of research underpinning this innovation. “We’ve all got a degree of research intensity, but different research strengths and a lot of complementarity,” she said.

The partnership can also accommodate differences in the number of spin-outs and size of technology transfer offices. “If we have more demand and need at a local level, we resource that at a local level,” Galpin said.

Flexibility within the partnership is one of the reasons it has endured for so long. “We all contribute in different ways, and take slightly different benefits from the partnership, but we are quite comfortable with that,” she said.

Keeping that balance, and ensuring that no partner feels short-changed, is one of the challenges. Another is to ensure that harmonisation is liberating for the partners, rather than turning into a restriction. “Having that flexibility can be a challenge,” Galpin said.

Model for Europe

SETsquared collaborates in Europe as a member of Euroincnet, a network of academic and regional incubators and accelerators. With this cross-border experience in mind, Brooks can see certain challenges in building international shared incubators.

“You need to find some commonality between the institutions, which we have in the UK, to ensure that there is a way of collaborating together, and it is not just best practice sharing,” she said.

For example, in Euroincnet there are different approaches to business incubation. “Some of us are doing early-stage incubation and scale-up, while others are only doing pre-seed incubation, and that makes it more challenging because you are not as closely aligned.”

Galpin agrees, warning that any attempt to make this kind of collaboration too big or too broad might result in it becoming ineffective. The essential is to agree on a focus. “If the partners have very different ambitions and objectives, then it is not going to be easy to set two or three priorities for the collaborative endeavour,” she said.

Resources also need to be found to support these activities. “In the UK we are talking about publicly funded organisations, whereas funding structures in Europe can be different and that can present some challenges,” said Brooks.

And while cultural differences between institutions in different countries might be challenging, it is the local contexts that require the most attention. “You have to be mindful of the different communities and appetites for investment that there are across borders, quite aside from how you get agreement on the legal elements,” Galpin said.

Elsewhere in the Ecosystem…

• German medical technology start-up Protembis is to receive €20 million in venture debt finance from the European Investment Bank. The money will support further development of a system that promises to reduce risk of brain injury in patients undergoing catheter-based heart treatment. The company, founded in Aachen in 2013, is currently completing clinical trials.
   
• The European Commission has approved €80 million in Dutch state aid for Djewels, a project aiming to generate renewable hydrogen using an alkaline electrolyser with high current density electrodes, high-pressure hydrogen output and a small footprint. The electrolyser will have a capacity of 20 megawatts. If successful, part of the funding will be clawed back by the Dutch state and the technical know-how shared.
   
• Oxford Semantic Technologies, a 2017 spin-out from Oxford University, has been acquired by Samsung Electronics for an undisclosed sum. The company specialises in knowledge representation and semantic reasoning, approaches used in artificial intelligence applications for finance, manufacturing and e-commerce.
   
• Ireland has joined the Europe Start-up Nations Alliance, which helps with implementation of the EU Start-up Nations Standard. The standard sets out eight areas of policy to support the formation and growth of start-ups.