Universities are under increasing pressure to commercialise their research and create spinout companies. Many of them are creating their own investment funds to accelerate this process. There are now more than 200 venture funds attached to an academic institution around the world, according to Global University Venturing research.

Global University Venturing conducted a survey of university venture funds to understand how the market for spinout investing is changing. The results show that momentum is growing for universities to set up their own funds or use third-party venture capital firms to finance spinouts emerging from the world’s top research institutions.

Some universities have had associated investment funds for a long time. The University of Cambridge Venture Fund and the University of Cambridge Discovery Fund, which both run out of Cambridge University’s technology tech transfer office Cambridge Enterprise, started in 1995. Uniseed, the Australian multi-university investment firm has been running since 2000. But the past few years have seen a rapid acceleration of this trend.

Half of respondents to the inaugural Global University Venturing survey were funds launched in the past five years. The relatively young age of a lot of university venture funds means that portfolio sizes can be small — more than a third of respondents indicated that they have only made 10 investments to date.

Some are so new that they are yet to make any investments. Four respondents to the survey launched their funds in 2024: University of Sydney Launch Fund, Michigan University Innovation Capital Fund, Monash PreSeed Fund and UTSA Ventures in the US.

Some funds began with a focus on a single institution but have expanded to cover multiple universities. An example of this is IP Group, whose portfolio has grown to more than 500 companies in the UK, Australasia and the US, having invested more than $2.3bn. IP Group’s journey began in 2001 with a commercialisation deal with the University of Oxford’s chemistry department.

Global University Venturing is tracking university funds globally in a regularly updated list. Check out our roster of 200 venture funds that back university spinouts.

Many university venture funds are small vehicles — just over half of the respondents to the survey declared that they have up to $20m under management. Among these funds are the University of Alberta Innovation Fund in Canada, which was established in 2023 and has $4.7m at its disposal, and the US’s University of Notre Dame’s 1842 Fund, which has $18.35m in assets under management.

Australia’s Monash University launched the Monash PreSeed Fund with $12m in 2024. The university also has the $50m Monash Investment Holdings fund, which was created in 2012.

Funds with larger assets under management are generally more mature funds such as Uniseed, which has $76.6m under management and the University of Cambridge Venture Fund and Discovery Funds, which collectively have $78.3m.

Not all funds that have been around for a long time have big coffers: Libertatis Ergo Holdings, the investment arm of the University of Leiden in the Netherlands, was established in 1996 and has $35m under management.

Bigger funds include Generation Food Rural Partners, managed by Big Idea Ventures, which collaborates with universities in the US to commercialise intellectual property related to food, protein and agriculture. The fund has $53m under management and was established in 2023. TAU Ventures, linked to Tel Aviv University in Israel, was launched in 2018 and has $70m at its disposal.

Atlantic Bridge’s University Bridge Fund, which invests in Irish institutions and is backed by a range of local universities such as Trinity College Dublin and the University of Galway, has $135m under management.

Some of the largest funds are found in the UK: Parkwalk Advisors, which manages investment vehicles on behalf of a wide range of institutions such as the University of Bristol and Imperial College London, has $600m under management. It has made more than 180 investments to date. Oxford Science Enterprises, set up by the University of Oxford in 2015, has $1.1bn under management – making it the world’s biggest university-affiliated fund.

Japan, meanwhile, has one of the most advanced university venture fund ecosystems in Asia, with 85% of its top academic institutions having an investment vehicle to support its spinouts and other startups. Japan is an outlier in Asia, however. Only around 25% of universities across the rest of Asia have an associated investment fund.

Surprisingly, the US, a powerhouse in startup in startups and investment in many other ways, lags behind Europe and Japan when it comes to university research funds. Most research-intensive universities in the US — including globally renowned institutions such as Stanford, Cornell and Yale — do not have their own venture fund to back spinouts. Just 50 out of the 146 universities  that are at the top rank of the Carnegie classification — a scale that measures the amount of doctoral research they produce — have an investment vehicle.

University funds can have a sizeable impact on the rate at which universities can create new spinout companies. Before Oxford Science Enterprises was set up, the University of Oxford created around four spinout companies a year, which increased to around 20 a year following the setting up of the fund in 2015. OSE has invested in more than 80 spinouts to date, of which seven have gone on to exit and two have achieved stock market listings. DNA sequencing company Oxford Nanopore had one of the UK’s most IPOs of recent times when it went public on the London Stock Exchange in 2021 for £3.4bn.

University funds can also have an outsized impact on the broader national ecosystem. Parkwalk estimates that the spinouts it has backed have created upwards of 10,000 new jobs.  In South Africa, Stellenbosch University raised just $12.6m but has created 32 active spinouts and is one of the main patent filers in the country. Stellenbosch’s  University Technology Fund (UTF) also invests in spinouts from other universities, such as the University of the Western Cape.

Global University Venturing will continue to track university venture funds and their performance. If you would like to add your university venture fund to our annual survey, please contact Global University Venturing editor Kim Moore.

Venture funds are becoming a more common offering at universities around the world. Why do a majority of the top US institutions not have one?

Most research-intensive universities in the US — including globally renowned institutions such as Stanford, Cornell and Yale — do not have their own venture fund to back spinouts.

Just 50 out of the 146 universities that are at the top rank of the Carnegie classification — a scale that measures the amount of doctoral research they produce — have an investment vehicle.

These universities, by and large, produce the most spinouts and typically have infrastructure, like incubators or maker labs, in place to support fledgling startups. Many of the tech transfer offices run entrepreneurs-in-residence programmes to bring in the right expertise to run spinouts.

Venture funds would be a natural addition to this offering so it is surprising that it remains the exception rather than the rule. University venture funds aren’t a new concept: New York University’s NYU Innovation Venture Fund has been around since 2010, the University of Texas’ UT Horizon Fund was created in 2011, Duke University’s Duke Capital Partners was launched in 2015, while MIT’s Engine Ventures was established in 2016. But the practice of setting up a fund has not spread to academic institutions despite these examples.

Geography and easy access to investors isn’t necessarily a reason why a university doesn’t have a fund. Some institutions in well-established ecosystems — such as the Massachusetts Institute of Technology —  have more than one fund, while others in regions less populated by investors — such as the University of Tennessee — have none.

In fact, it is often the universities in regions that have a heavy concentration of investors that have multiple funds. The University of California, Berkeley, the University of Chicago and New York University all have multiple funds.

More funds on the way?

There are some signs that more universities are rolling out funds. In January this year the University of Michigan (UMich), for example, launched the pre-seed Michigan University Innovation Capital Fund (MUICF), with state support. The fund also covers Wayne State University and Michigan State University, as well as other institutions (often making it their first fund, while UMich itself already had others).

Other examples of recently launched funds include Dickson & Main Fund I (University of Arkansas) and Tulane Ventures (a fund specifically aimed at women entrepreneurs at Tulane University).

The University of California, San Diego took the unusual step in June 2023 to directly invest $250,000 in one of its companies, prostheses developer LIMBER Prosthetics and Orthotics. It was the first time any University of California campus had done this and it remains a rarity to see any institution invest off their balance sheet.

Getting the timing right

For some universities, the timing for setting up a fund has not been right until recently.

Bryn Rees, associate vice chancellor for research and innovation at the University of Colorado Boulder (CU Boulder), previously told Global University Venturing that the institution had first considered raising a fund some 15 years ago. But, said Rees, “really the limiting thing was deal flow”. It’s a different story today: the university has increased its pipeline (it is now one of the top five US universities for spinouts, having nearly doubled its annual output from 13 new startups in 2019 to 25 in 2021) and in January 2022 raised an initial $22m towards a $40m target for the Buff Venture Fund.

Rees said that raising the fund later than some of its peers had advantages: “We were able to look at over a dozen types of university-affiliated or university-run venture capital funds, all the different ways that they’re set up, all the different ways that they function. That was a great exercise because there are a lot of ways to do this. And we wanted to make sure we had something that was a fit for us.”

The university landed on a fund managed externally by a specially created VC firm, Buff Gold Ventures.

Columbia may follow UC Berkeley’s model

Harvard University and Columbia University are right at the top end of the 2023 ranking from tech transfer trade association AUTM, each having spun out 27 companies last year (only the University of California has more with 80). But neither, surprisingly, has its own fund. Harvard backed Engine Ventures as part of the $230m Fund II in 2020, preferring to tap into an existing vehicle rather than setting up its own investment vehicle — this made sense as Engine Ventures had already invested in multiple Harvard spinouts by that point.

Columbia University, however, doesn’t have a fund at all. Orin Herskowitz, the university’s senior vice-president of applied innovation and industry partnerships, and executive director of tech transfer office Columbia Technology Ventures says being located in New York City gives founders “fairly robust opportunities to raise money from the private sector, and hence raising our own fund hasn’t been a top priority in terms of providing funding to startups”.

However, he adds, “there are many other reasons that might be relevant for Columbia, so this is still a live discussion” and if it did pursue its own fund, Columbia would be “quite interested in potentially building on models developed by UC Berkeley to do so”. Berkeley uses a unique model of funds that donate a portion of the carry to the university.

Herskowitz notes that while there is no one-size-fits-all solution, possible benefits of any given model include the financial implications of generating a return for the university, marketing the university’s commitment to entrepreneurship and innovation, and attracting and retaining entrepreneurial researchers. He also points out that a fund could play into the university’s social justice mission through “funding for women, underrepresented minorities, entrepreneurs with disabilities” and through a “focus on socially beneficial startups” or “focus on climate”.

For Penn, it’s all a step too far

For some universities, however, the concept of becoming a for-profit business is the problem.

The University of Pennsylvania (Penn), for example, has spun out over 100 startups in the past five years (17 in 2023), and its portfolio of startups raised more than $1.2bn in funding in 2023. Penn is also the number one institution in the US for licensing income (AUTM’s 2023 report puts the figure at $1.3bn in fiscal year 2022, largely thanks to the mRNA vaccine technology licensed to Moderna).

If Penn wanted to, it could use a tiny fraction of this mRNA licensing income to set up a fund using what is essentially free money for the university.  But Michael Poisel, executive director of the university’s spinout unit PCI Ventures, says Penn does not want to be in the for-profit business.

Setting up a fund with an external partner isn’t on the cards, because “in Philadelphia there basically are no venture funds”, Poisel says. Herskowitz notes that this is precisely where a university-run venture fund could be helpful, saying it can overcome the “lack of local expertise in startup creation and commercialisation by adding mentorship, coaching, interim CEO skills for emerging startups”. Bringing in that outside expertise was one of the reasons why the University of Notre Dame established the 1842 Fund with a venture studio attached to it late last year.

Yet Penn is resistant even to a non-profit approach, like a philanthropic fund that you might find in places like Indiana University with its IU Philanthropic Venture Fund. Poisel says although the university has recently been more open about him interacting with alumni, “the attitude at Penn has always been that if we do that we’re taking donations from somewhere else, that it’s a zero-sum game, that if we put money into a fund structure, we’re taking it away from the scholarship fund and so on.”

He adds: “I completely disagree with that opinion. I think anytime you can engage the alumni in the university, it’s a good thing. It gets them more enthusiastic about everything going on at the university and probably increases the amount of money they give. But I’m a minority in that opinion. I don’t think I’m alone, but I’m definitely a minority, and so it hasn’t happened.”

Columbia’s Herskowitz echoes this point, noting that a fund can encourage “donations from current alumni startup founders, when their startups are successful, based on perceived university support” and it can create “tighter bonds with (and enhanced donations from) alumni interested in innovation and entrepreneurship who might find this topic appealing, ideally without cannibalising their existing or planned donations”.

Frustratingly, Penn’s aversion to for-profit enterprises has even stopped alumni setting up a fund themselves. Poisel says that a group of former students had hoped to create a $10m fund specifically for the engineering school, but the school said this did not align with its mission.

Having a fund, Poisel argues, would have a “multiplication effect”: investing a low six-figure sum in an early-stage business could allow that company to build a prototype or undertake preclinical development, and derisking the startup would make it more attractive to external backers.

Poisel fears that Penn may remain stuck in its risk aversion. There was a moment of hope when PCI Ventures was set to receive $10m thanks to its equity stake in Ghost Robotics, a Penn spinout that manufactures four-legged robots for use in uneven terrain, that was acquired for $400m by aerospace and defence company LIG Nex1 in December 2023. Ultimately, the university decided to sweep it up into the bigger books alongside the licensing income from the mRNA vaccine.

“That $10m could have changed people’s lives,” Poisel laments. “It was such an incredible missed opportunity.”

It leaves Penn as one of the two-thirds of the country’s most research-intensive universities without a fund.

The number of funds is the same but European ones cover multiple universities — and the US still creates more university spinouts.

More than 40% of Europe’s top universities have a venture fund to invest in their spinouts — including the University of Oxford which boasts the world’s largest university venture fund with more than £850m ($1.1bn) out of which it has invested £775m to date.

In total, 62 out of 150 institutions — ranked by the QS World University Rankings 2025 — have access to a dedicated venture fund, including 16 of the top 20 institutions.

It puts Europe slightly ahead of the US, where 50 of the most research-intensive universities have a fund — just 34%. Most European university funds are associated with the highest-ranked institutions, with only 18 universities in the lower half having a venture fund.

European institutions spun out 677 companies in 2021 (the most recently available figure for the continent), while US universities created 996 spinouts that year. More capital overall is generally available for spinouts in the US — in 2021, US-based companies raised more than $25.5bn, more than half of the nearly $41bn raised that year, and while that was a bumper year, a similar story emerged for other years.

This goes some way to explaining why Europe is lagging despite the fact it has a healthy ecosystem of university venture funds. At the same time, it also explains why European institutions are keen on setting up their own funds.

Multi-university venture funds: common in Europe, rare in the US

There are an equal 54 unique university venture funds in both Europe and the US. One key difference between the US and Europe is that there are 11 multi-university venture funds — funds co-founded by two or more institutions —  among these 150 universities. The US has them — for example, the Engine Ventures is backed by the Massachusetts Institute of Technology and Harvard University and invests in spinouts from both and other institutions, while the Michigan University Innovation Capital Fund covers the 15 institutions in the state of Michigan. Butfunds in the US typically cover just one institution (or multiple campuses within a system, such as the Maryland Momentum Fund).

In Europe, these multi-university venture funds typically involve universities in the same region (such as the north of England-focused Northern Gritstone) or the same country (such as the Atlantic Bridge-managed University Bridge Fund) but some will cover a wider geographic area. VIVES began as a venture fund for UCLouvain in Belgium, but with its third fund of €75m expanded to three other countries, also covering KU Leuven (Belgium), Paris Cité University (France), Wageningen University and Research (Netherlands), and the University of Luxembourg.

Another multi-university venture fund, Qbic, has so far remained focused on the Belgian ecosystem. Having been around since 2012 and currently investing from its third fund — which achieved a final close of €88.5m in July 2023 — Qbic backs spinouts from five universities (Ghent University, Vrije Universiteit Brussel, University of Liège, Hasselt University and University of Antwerp), as well as research institutions Imec and VITO, and eight hospitals.

Cédric Van Nevel, a partner with Qbic, previously joined the Beyond the Breakthrough podcast to explain why his firm is keen to maintain its local strategy: “Our focus is primarily in Belgium because we invest that early, we see that having a proximity, being close to the teams, being easily available also for face-to-face meetings makes our and their lives a lot easier sometimes.”

He added: “Venturing into other countries might make sense in the future, but if so, then probably it would be for the nearer opportunities, say in the south of the Netherlands, north of France, rather than venturing across the Atlantic, for example.”

Theodorus, originally a university venture fund for Université libre de Bruxelles (ULB), has gone further and expanded to North America. When its €42m fourth fund launched in 2018, Theodorus expanded its remit to spinouts from any institutions, focusing on early-stage life sciences and deep tech spinouts broadly. It also attracted investment from Quebec, Canada, and opened an office in Montreal after raising €5m from local pension fund Fonds de solidarité FTQ in 2020.

It’s not just Belgium. Multi-university venture funds exist throughout Europe – the Czech Republic, for example, has the i&i Biotech Fund (its partners include the Czech Academy of Sciences and various subsidiaries and Charles University Innovations Prague, the tech transfer office of Charles University). Its focus on biotech is no random choice: the fund explicitly wants to build on the legacy of Antonín Holý, whose research led to the development of the HIV medication tenofovir. The drug netted the Czech Academy of Sciences a large amount of capital it’s now reinvesting through the i&i Biotech Fund.

Sweden has the Trio Impact Invest fund, supporting spinouts from Karolinska Institute, KTH Royal Institute of Technology and Stockholm University. The Carma Fund, co-launched by Goethe University Frankfurt and its tech transfer office Innovectis, covers German and Austrian life science spinouts thanks to the involvement of commercialisation firm Ascenion, whose partners include more than 30 universities, life science research institutions and hospitals in the two countries. The Netherlands has UNIIQ, a €28.8m early-stage investment fund backed by TU Delft, Erasmus University Medical Center, Leiden University and Erasmus University.

It’s not just about cash

The UK has multiple multi-university venture funds too, including Midlands Mindforge (which is still in the process of raising its first close), the Northern Accelerator Seed Fund (which invests relatively small sums, having backed nine spinouts with a total of £1.8m), and Northern Gritstone, founded by the universities of Leeds, Manchester and Sheffield, and with £312m at its disposal.

Some of these funds try to do more than just offer funding. The Northern Accelerator Seed Fund, for example, is part of the broader Northern Accelerator initiative — involving Durham, Newcastle, Northumbria, Sunderland, Teesside and York universities — that aims to stimulate the creation of more spinouts through programmes such as training academics in impact and entrepreneurship and finding executives for spinout teams.

Northern Gritstone, too, is becoming more than just an investor. The north of England-focused investment company, founded by the universities of Leeds, Manchester and Sheffield, saw the first cohort from its accelerator programme, NG Studios, graduate in June. Miles Kirby, the chief executive of accelerator Deeptech Labs who helped create NG Studios, sees it as a way for the region to take its destiny into its own hands. Referring to the lack of scale and ambition in the north of England as a “self-fulfilling prophecy”, he says founders who dream small and ask for little money will never get the kind of cash that would allow them to build large businesses.

It’s one area where Europeans have taken a lesson from the US, with Northern Gritstone chief executive Duncan Johnson saying he came up with the idea for NG Studios after a visit to The Engine. The problem in the UK, he argues, is that spinouts and technology transfer can be too obscure a process. He says: “I still feel, at many levels — even in Cambridge, even in London — that sometimes, it’s a bit of a closed door rather than what you see at MIT: an open door, very transparent at what’s going on. For us to really energise and drive this tech ecosystem, this science innovation industrial policy we have as a country, we’ve got to keep opening doors, and keeping doors open, and making it very transparent.”

Japan’s sophisticated network of university investment funds make it an outlier among other Asian countries.

Japan has one of the most advanced university venture fund ecosystems in Asia, with 85% of its top academic institutions having an investment vehicle to support its spinouts and other startups.

Japan is an outlier among Asian countries for its sophisticated network of university venture funds, however. Less than a quarter of the top universities in Asia have access to a dedicated venture fund, making the world’s most populous continent the one with the fewest university-affiliated investment vehicles.

Earlier Global University Venturing research found that a third of the most research-intensive universities in the US have a fund. At the same time, more than 40% of European institutions and more than half of Australian campuses have funds.

University venture funds offer critical financing to spinouts, which can struggle to receive VC funding at such as early stage. Universities that have a fund tend to have a higher spinout rate than those that don’t.

Out of the 34 funds affiliated with a top Asian university — as listed by the QS World University Rankings — a majority are concentrated in West Asia, specifically Japan.

Nearly all of Japan’s top universities have a fund

A total of 13 Japanese universities appear in the list, out of which 11 have a fund. Because the University of Tokyo has two funds, Japan accounts for nearly a third of all the university-affiliated investment units in Asia. The assets under management range dramatically in size, from the $4.6m Hiroshima University and Hiroshima Prefecture University Venture Support Investment to University of Tokyo Edge Capital Partners (UTEC), which has raised $594m so far.

Apart from UTEC, the University of Tokyo also has the University of Tokyo Innovation Platform (UTokyo IPC), which has $420m under management. This gives the university a combined capital resource of just over $1bn. That’s just inching close to the University of Oxford’s investment fund Oxford Science Enterprise, which has $1.1bn, and is currently the world’s largest university venture fund.

Notably, UTEC also invests internationally. This makes it part of a rare breed of university venture funds that have looked beyond their immediate region. In fact, thus far only Theodorus, set up by Université libre de Bruxelles in Belgium, has also invested on another continent, setting up an office in Montreal, Canada.

One of UTEC’s first international investments was the $46m series A raise for Oxford Quantum Circuits, a quantum computing spinout of the University of Oxford, in 2022. But UTEC also invests closer to home: for example, it backed a $7.2m round for Singapore-based AI-powered vehicle routing technology developer SWAT Mobility earlier this year.

UTEC isn’t short of opportunities in its home country, however: although the local tech transfer association, UNITT, does not appear to have surveyed tech transfer activity since 2018, third-party research suggests there were at least 2,905 spinouts in the country by 2020.

It is worth highlighting, too, that UTEC is one of the oldest, continuously running university venture funds in the world. It was set up in 2004, a decade before the Japanese government began to bolster university spinout investment and allocated cash to four institutions to set up funds: the University of Tokyo (leading to the creation of UTokyo IPC), Osaka University, Kyoto University and Tohoku University. Today, Osaka University Venture Capital has $162m under management, Kyoto University Innovation Capital has $245m and Tohoku University Venture Partners has $122m.

Japanese university funds are prolific investors. According to an analysis by Global University Venturing in 2022, UTEC is the second most active backer of spinouts globally and UTokyo IPC came in at 11th place.

China and South Korea are catching up

Seven South Korean universities have a fund. In addition, South Korea is the home of POSCO Venture Capital, a fund set up by POSCO, a South Korean steel manufacturer, which also set up Pohang University of Science and Technology (also known as POSTECH). The only other fund that straddles the line between a university and a corporate in this way is UM6P Ventures, the investment fund of Mohammed VI Polytechnic University in Morocco that is owned by phosphate rock miner OCP Group.

In China there appear to be six institutions with a dedicated investment vehicle. However, given the difficulty in finding information about Chinese institutions, there are a few caveats. For example, Beihang University’s investment fund, BUAA Holdings, reportedly invested in September 2023 — its first in six years. However, BUAA Holdings’ website appears to be offline and it is unclear if the fund is still active or what structure it employs.

It is similarly unclear whether Tsinghua University’s Tsinghua Technology Transfer Fund is still operational — it appears not to have made an investment since 2021, according to deals database PitchBook, though its website is still active and LinkedIn shows managers listing the fund as their current employer. Global University Venturing’s enquiries to Tsinghua University went unanswered.

Tsinghua University also has a sprawling network of affiliates and subsidiaries via asset management firm Tsinghua Holdings. The firm is state-owned and the complex legal structure makes it difficult to identify any given unit as a university venture fund for the purposes of this analysis.

India has few university funds

India has one of the world’s highest counts of unicorns with a combined value of nearly $350bn, according to Forbes, but the country’s universities do not tend to have funds to invest in their spinouts.

The Indian Institute of Technology, Delhi makes equity and debt investments through its Foundation for Innovation and Technology Transfer, though there doesn’t appear to be a dedicated fund. The Indian Institute of Technology, Bombay, meanwhile, has made investments through SINE IITB IOE Scale up, but it’s unclear if the money has been fully deployed. The other nine universities on the list do not appear to be making equity investments in their spinouts.

Australia has one of the world’s most mature university investment ecosystems, thanks to large pensions funds, Uniseed and royalties from wifi.

Stellenbosch’s university venture fund, the first of its kind in Africa, has been a “huge paradigm shift” in the ecosystem.

Tech transfer offices like to select the cream of the crop for their spinouts, but usually, their work doesn’t involve looking after cows. Yet that used to be the case for the Innovation and Commercialisation division of Stellenbosch University in South Africa. Anita Nel, chief director of innovation and business development, jokes that she is still persona non-grata in the Faculty of Agriculture because the 120 cows were “just bleeding money” and she made the call to end that activity.

The unusual responsibility illustrates that this is a tech transfer office that is open to trying new things. So, it is perhaps no surprise that Stellenbosch launched the first African university venture fund focused solely on spinouts in 2020. Stellenbosch found a willing partner in the nearby University of Cape Town, although the fund, University Technology Fund (UTF), has also invested in spinouts from other universities, such as the University of the Western Cape.

The fund raised R230m ($12.6m) from Stellenbosch and Cape Town universities, public-private partnership SA SME Fund, investment management firm Tamela, and public bodies Technology Innovation Agency and Small Enterprise Funding Agency.

A lack of corporate VCs puts the onus on universities

Stellenbosch University has 32 active spinouts, which may not sound like a lot by international standards, but the institution is one of the main patent filers in the country, Nel says, and the focus on spinouts began only around 10 to 15 years ago.

By 2020, there was a real need for the UTF to fill a gap that local corporates weren’t able to fill. “Industry in our country is not that well developed that they can take up the university’s new innovations or that they want to invest in such early-stage technologies,” Nel says on a recent episode of the Beyond the Breakthrough podcast. “Our strategy was more to ring-fence these innovations in a spinout company and get funding so that you can then further develop it. Then you can either service the global market or hopefully get sold for quite a large amount of money.”

Corporates in other countries that might be interested in licensing technologies are a double-edged sword, Nel adds. If the university did that, “then all the value is basically created offshore” she says, including “all the employment”.

Spinouts from the university span a large array of sectors, such as nanofiber producer SNC (with applications in everything from the medical cosmetic to carbon capture industries); SharkSafe, which has developed a kelp-based barrier to keep sharks from swimming near beaches without harming the animals; and Phagoflux, which has developed sensor technology to monitor autophagy (the self-cleaning process of cells, with dysfunction common in diseases like diabetes and cancer). Phagoflux had to go all the way to Germany for a corporate partner as there are no pharmaceutical firms in Africa.

A changing VC landscape

It isn’t just UTF money that has tipped the scales in favour of spinouts. The fact that there is now specific money available has led to an increase in spinout activity as more and more researchers realise there’s a real opportunity, Nel says.

The venture capital landscape has also grown, says Brandon Paschal, deputy director of spinout companies and funds, who leads the incubator. “I think there’s more investors, period, and more diverse investors, period,” he says. There were only a handful of VC firms until the late 2000s, but “it’s exploded substantially since then” and the industry is no longer dominated solely by white men. “You’re seeing lots of women, lots of not-white women leading funds,” Paschal adds. Indeed, one of the investors in the UTF, Tamela, is a black-owned firm.

A university incubator increasingly focused on spinouts

Many of Stellenbosch’s spinouts are supported by the university incubator LaunchLab, which is also open to student startups and alumni-founded companies so long as they fit into deep tech verticals such as “agriculture, health, green tech [like] energy, renewables, waste management,” says Paschal.

The LaunchLab was set up in 2015 and has grown considerably since then. Last year, incubator portfolio companies generated R650m in revenue. Investment raised by LaunchLab-incubated companies has reached more than R700m.

The UTF has dramatically shifted where the money is going, although the LaunchLab also abandoned its earlier attempts to be an incubator for every technology even where the university had no expertise, like fintech. Spinouts may not have an obvious way to generate a return as they aren’t “as sexy as a food delivery app,” Paschal quips. Before the UTF was created, only 22% of the money raised by LaunchLab portfolio companies went to these university research-based companies. But since 2020, “68% of the investment into companies we’ve incubated was into Stellenbosch University spinouts,” Paschal says.

A second fund

The success of the first University Technology Fund means Stellenbosch has been preparing a second one, with a few key differences. The first UTF operated across four stages – grants for pre-seed spinouts, a first seed round for technology development and pre-commercialisation support, a second seed stage for the first formal VC investment and series A rounds. “We had a few companies moving through all four stages,” Nel says, which “showed the model worked, but it was an experimental model”.

The University Technology Fund 2 will not have these first two stages and will focus purely on commercial opportunities rather than trying to get spinouts ready for equity investment. Stellenbosch University has allocated funding to replace the grant funding from the first UTF. It was “a huge paradigm shift in the university,” Nel says, as it realised that spinouts were an opportunity worth pursuing. The fund will also invest nationally, although other universities were hesitant at first to sign up and Nel recalls she initially “felt very lonely at meetings when I spoke”. Thankfully, that changed eventually.

Stellenbosch is also building a lab in its incubator to allow spinouts to undertake commercial research outside of the immediate university setting, where “the academic project always wins”, Nel says. She concludes: “I think it will add tremendously to the work that’s happening.”