Global University Venturing looks at the investment and exit figures of 2018 and talks to some of the thought leaders that made it a record-breaking twelve months.

When Global University Venturing predicted in its July 2018 editorial that the year would lead to two new records, there was an assumption that the first one – most deals in a calendar year – would easily be broken unless everything would grind to a halt. The second prediction – most money invested in a calendar year – was arguably a more ambitious forecast.
Little did we know that both predictions would be blown out of the water – with 759 deals tracked over the past 12 months, 2018 now towers over the entire period that GUV has been reporting on the sector. And that figure may very well increase further as quarterly reports from more tech transfer offices trickle in.
While it would have been reasonable to assume the year would track more than 500 or even 600 deals – the total stood at 409 at the end of June – to clock 271 more than 2017 is phenomenal.
Healthcare and IT continue to dominate, but the industrial, services and energy sectors have also come out strong. We will have to wait to see whether institutions such as University of Oxford launching a dedicated fund to invest in social sciences will have a noticeable impact on this ratio going forward.
Matt Perkins, chief executive of Oxford University Innovation (OUI), said: “2018 was a great year for OUI, setting both records in spinout generation – 24 companies – and external investment – £546.9m in 2018, over £2bn since 2011.
“We also relaunched the OUI incubator and instigated the social enterprise program, both of which have been warmly welcomed by the Oxford innovation community. We intend to continue building, brick by brick, on this success with our Oxford cluster partners to create a world-leading innovation ecosystem with University of Oxford at its heart.”
Jim Wilkinson, chief financial officer of Oxford Sciences Innovation (OSI), Oxford’s university venture fund, was equally optimistic about the momentum achieved. He told GUV: “2018 was another good year for OSI, where the focus moved from creating new spinouts to developing existing portfolio companies. Several large investors were attracted to invest in series A fundraisings, proving the quality of our key portfolio companies. 2019 will see us continue to work hard to bring top investors and management teams into Oxford to develop and build the ecosystem.”
The same enthusiasm was palpable when GUV spoke to Victor Christou, chief executive of Cambridge Innovation Capital, University of Cambridge’s affiliate patient capital fund, who said: “2018 was a year of marked progress for Cambridge Innovation Capital with over £110m ($140m) having been invested since foundation.

“A number of our portfolio companies received further funding from us in the year to continue their development and scale up to commercial maturity. Notably, we participated in robotic surgery system developer CMR Surgical’s award-winning $100m series B funding, the largest fundraising for a medical device company in Europe.
“We also supported our portfolio through a number of significant milestones, including genomics company Congenica being named as Clinical Decision Support Service partner for the delivery of the NHS Genomic Medicine Service, Inivata receiving reimbursement in the US for its first ctDNA liquid biopsy test in advanced lung cancer, Microbiotica agreeing a major collaboration with Genentech in inflammatory bowel disease and tech companies Audio Analytic, PragmatIC and Origami Energy all signing notable commercial partnership deals.
“In addition, we provided seed capital for Audiotelligence, a spinout delivering real-time audio processing technology for the enhancement of automatic speech recognition systems and scale-up capital to Swim.AI, an edge computing company founded in Silicon Valley that has opened an R&D centre in Cambridge, UK, to take advantage of the depth of artificial intelligence (AI) expertise here.”
Christou added: “I expect 2019 to be a transformative year for Cambridge Innovation Capital as our portfolio continues to mature and gain increasing commercial traction in their respective markets. I see the Cambridge cluster continuing to develop and increase in prominence as a globally important innovation ecosystem. In 2019 Cambridge Innovation Capital will continue to aspire to back the biggest and best companies emerging from this hotbed of innovation and I anticipate a busy but fruitful year.”
Christou’s peer Tony Raven, chief executive of the university’s tech transfer office Cambridge Enterprise, was equally upbeat. “Cambridge Enterprise had a totally unexpected surprise in 2018 when it came top globally in GUV’s annual data review for investment raised by its spinout companies 2013-17. This is a tribute to the innovativeness of our researchers and the companies they create. The data review also showed that UK universities occupy five of the top 10 places. These findings should help lay to rest the persistent myths about UK university technology transfer.
“In 2018 Cambridge Enterprise saw an increasing flow of exciting new spinouts with a new record of £7.5m of seed investment, up 50% on the previous year. There was also a significant growth in the portfolio value. Our big exit for the year was ophthalmic gene therapy company Quethera, bought by pharmaceutical firm Astellas for £109m three years after being seed funded by Cambridge Enterprise. And protein analysis company Fluidic Analytics raised a further $31m led by Draper Esprit and was named third in the top 10 innovations of 2018 by life sciences magazine the Scientist to top out a fantastic year all round.”
The optimism was not reserved for leaders in the Oxbridge powerhouses. In Sweden, Linnéa Lindau, chief executive of Chalmers Ventures, the university venture fund of Chalmers University of Technology, said: “Chalmers Ventures has had a great 2018. During the year we have worked with 20 new startups and done more than 50 investments – a number that makes Chalmers Ventures’ investment organisation one of Sweden’s top investors in tech startups. There was a total of 71 active portfolio startups in Chalmers Ventures at the beginning of 2019.
“Chalmers Ventures’ parent company, Chalmers University of Technology, has made entrepreneurship one of its main strategies. A new concept – Entrepreneurship by Chalmers – will be an umbrella brand showcasing all entrepreneurial movements throughout the Chalmers group, an exciting action step in making Chalmers a leading entrepreneurial university.”
Lindau also picked up on the international recognition her organisation received, including her own 19th place in the Global University Venturing Powerlist. She added: “Chalmers Ventures was awarded number one in the Nordics, number three in Europe and number 12 globally at the UBI incubator rankings 2018-19.
“2019 has many new things planned. Two of Chalmers Ventures programs, the pre-accelerator Encubation, and the popular Startup Camp have been updated to boost an even greater dealflow into the accelerator. A big aim for 2019 is equality in tech, an important subject where Chalmers Ventures wishes to be an active part of the solution to give equal opportunities to both women and men in tech startups and tech investments.”

In France, too, the past year was one of successes. Laurent Baly, president of French regional tech transfer organisation Satt Sud-Est, said: “Since 2012, the Satts have enabled the creation of 256 deeptech startups, of which 161 have raised €371m ($420m). In this dynamic, Satt Sud-Est can congratulate itself on supporting nine young innovative companies in France’s South and Corsica regions which have already raised €8.5m and created 45 jobs in areas of expertise ranging from an alternative to the phytosanitary agents of the vine for crop protection technology developer UV Boosting, to the geomarketing of real estate for planning software developer LKSpatialist.
“Satt Sud-Est is part of a reinforced networking approach with the ecosystem set up between regional structures, incubators and state-owned investment bank BPIFrance, to ensure the transformation of projects and young companies into success stories. Our contribution, in partnership with incubators, is to provide project leaders with tools and skills in terms of intellectual property strategy, development and legal-licensing, as well as our knowledge of the markets or connecting them with investors. The sale of one of these startups, for €26m, is a perfect example.
“2018 was a great year, with transfers made, for example, to startups in Marseille focused on medtech and biotech, GenOmnis and WitMonki, which exploit artificial intelligence to revolutionise human genomics and electrocardiography through connected devices. There is also the stake purchases in two companies – the first, based in the Nice region and specialising in therapeutic strategies in oncology, and the second, VH Quatrevingtreize, which promotes an eco-responsible marine turbine and was a recent laureate of the call for greentech projects by the Ministry for Ecological and Solidary Transition.
“Looking ahead to 2019, our main objective is to accelerate the market entry of public research technologies, by pursuing on the one hand the momentum built with our shareholders and on the other hand strengthening our privileged relations with companies and especially startups.”
All these big numbers warrant a closer look at individual months. The year was off to a relatively slow start in January with just 45 deals – in line with January 2017’s 43 deals – but quickly accelerated to more than 60 deals from February through to August. December, while quieter, was not as slow as might be expected over the Christmas period. There were some big deals over the holidays, such as US-based electric skateboard manufacturer Boosted, which raised $60m in a series B round that included Stanford-StartX Fund, the investment vehicle backed by Stanford University, and China-based artificial intelligence software development tool creator 4Paradigm, which received more than $145m in a series C round backed by Tsinghua University’s Science Park.
It seems unlikely that June’s peak of 115 deals – a record in 2018 or indeed any year since GUV was launched – will be broken any time soon,- but after the past year all bets are off.

Christine Gulbranson, senior vice-president and chief innovation officer at University of California said: “2018 was a great year for University of California’s innovation and entrepreneurial community. We are seeing the result of strategic investment into our ecosystem infrastructure, enabling more startups to get off the ground and positively impact and contribute to our society and economy.
“A few highlights include a successful annual pitch competition, record number of applications to our incubator programs, the opening of our first innovation centre in China, and the mapping of our intellectual property portfolio using an AI-driven analytics tool by ClearAccess IP to increase its use and distribution to industry. Additionally, we led a trip to China with a handful of our alumni-founded startups looking for market development and growth, and some of our UC alumni companies reached unicorn status.”
Gulbranson, who is also chairwoman of the GUV Leadership Society, added: “As I reflect on university innovation around the world, we are seeing more and more universities and colleges adopt an ecosystem approach to university innovation and pushing to re-define the classical tech transfer model.
“Additionally, we are seeing greater interest from industry in core research efforts coming from universities to fuel innovations and new products to commercialise. As we move into 2019, I am confident that both of these trends will continue, though it is up to university leaders to drive forward with a vision for innovation.”
Industry interest in university research was also noticed by Rafi Hofstein, chief executive of commercialisation firm Mars Innovation, who said: “2018 was an exceptionally successful year for Mars Innovation and its member institutions. Several of our portfolio companies furthered their assets to meaningful milestones which resulted in establishment or expansion of significant partnerships. Just as illustration, drug developer Triphase’s Marizomib was moved by pharmaceutical firm Celgene into phase 3 – brain tumours – drug discovery company Fibrocor’s lead asset was licensed to Galapagos – fibrosis of various organs – and biotech producer Vasomune established a collaboration with biopharmaceutical firm Anges in Japan – acute kidney and lung injury. The list gets longer and better.”
Hofstein continued: “In 2019 we expect several other portfolio companies to announce significant clinical developments leading to significant financial transactions. At the same time, Mars Innovation and its members will broaden the scope of activities in the area of AI and machine learning in ways that are relevant to healthcare.
“The success of 2018 and the strong positive prospects for 2019 are proof that the commercialisation paradigm developed by Mars Innovation is a powerful one and should be adopted by others as well.”
All these deals require capital, and the total put into spinouts last year was an impressive $11.7bn – the first time that university commercialisation has attracted more than $10bn in a calendar year. There is a small caveat here – the $9.36bn in 2015 for only 449 deals illustrates that investors have become more cautious about making large bets and are putting less capital into more spinouts. This is a welcome development, however, as more innovation makes its way to the marketplace.

The increased activity was not only noticed in the traditional hotspots of the US and the UK. Nick McNaughton, chief executive of ANU Connect Ventures, the university venture fund of Australian National University (ANU), told GUV: “2018 was a very busy year for ANU Connect Ventures. In the first quarter, they sold one of their portfolio companies to a global listed US-based technology company for an undisclosed sum. In the second they secured a major follow-on commitment from their major limited partner to go longer and deeper in their top-performing companies. In the third they participated in the $15m series C raise for portfolio company Instaclustr and in the fourth participated in an $11m series A raise for one of their other portfolio companies.
“In 2019, the fund expects to continue to follow on in its top-performing companies as they reach their next value inflection points.”
McNaughton, who is also chief executive of multi-university venture fund Significant Capital Ventures which was launched last year, was similarly optimistic about that vehicle’s opportunities: “2018 was a very busy year for Significant Capital Ventures, assessing over 150 opportunities from its partner universities – ANU, University of Technology Sydney, Deakin University, University of Canberra and University of Wollongong.
“The first two investments will close in the first quarter of 2019. We expect to screen 300 to 350 opportunities in 2019 and make four to six new investments.”

McNaughton’s fellow countryman Peter Devine, chief executive of multi-university venture fund Uniseed, had no shortage of spinouts coming through his door. He told GUV: “Uniseed continued to focus on new investments in 2018, with five new investments approved and four of these closed – biotechnology developers Certa Therapeutics and Kinoxis Therapeutics, smart helmet technology producer Forcite Helmet Systems and animal radio-tracking platform Wildlife Drones. The other – an agricultural robotics technology – should finalise legal documents by the end of January 2019. This takes Uniseed’s tally to 12 new investments in the first three years of its new fund.
“Major follow-on funding rounds were also closed for existing Uniseed companies edtech developer Smart Sparrow, probiotic drink maker Perkii Probiotics, digital health company Cardihab, plant trait company Nexgen Plants, biopharmaceutical firm Exonate and cancer treatment developer Que Oncology, with over $45m committed to Uniseed companies from other investors and grants in 2018.”
Uniseed, which has celebrated a range of impressive exits over the years, also continues to garner recognition for those companies. Devine added: “Uniseed’s big three exits – fibrosis treatment developer Fibrotech Therapeutics, pain management drug producer Spinifex Pharmaceuticals and commercial chicken incubation, transportation and brooding company Hatchtech – were recognised in the prestigious journal Nature as game-changers in Australian biotech.”
Devine, who ranked fifth in the inaugural GUV Powerlist, also acknowledged the hard work of his team this past year, saying: “It was great to receive the recognition in the GUV Powerlist 100, though the Uniseed team – John Kurek, Anthony Musumeci, Natasha Rawlings, Brighid Pappin and Wendy Shelton – deserve most of the credit.”
Looking ahead to the next 12 months, Devine said: “In 2019 we continue to be focused on new investments and may also announce our first exit for the fund, though these are most likely in 2020.”
The number of activities does not mean big deals were wholly absent from 2018. US-based immuno-oncology drug developer Allogene Therapeutics was launched with $300m in series A funding from investors including University of California’s office of the chief investment officer of the regents in April and Cambridge Mobile Telematics, a US-based telematics technology provider spun out of Massachusetts Institute of Technology, secured $500m in December from the SoftBank Vision Fund, the $98.6bn vehicle managed by the Japanese telecoms and internet conglomerate.
Jill Smith, president and chief executive of commercialisation firm Allied Minds, also achieved several later-stage rounds for portfolio companies. She said: “Allied Minds made great progress in 2018 against our strategic objectives, in particular in sourcing co-investments from strategic investors. Next-generation memory company Spin Memory raised series B funding including from semiconductor companies Arm and Applied Materials, and two of our emerging space assets, HawkEye 360 and BridgeSat, raised strategic money from defence contractors Raytheon and Boeing respectively. These investments validate the considerable progress each of these companies has made under new leadership.
“The financial and commercial backing of heavyweight strategic partners provides substantial commercial advantages to our portfolio companies through access to resources, customers and distribution capabilities. This underpins our confidence as we look forward to 2019 as a year in which we expect several of our portfolio companies to generate commercial revenue for the first time.”

Despite the high figures for investment in June, individual amounts were actually low. Five months broke through the $1bn barrier and amounts increased in December when spinouts collected more than $1.2bn in just 45 deals. With many larger deals already closed in January 2019, this could show that after a frenzy of smaller deals we now have many spinouts that need larger rounds to keep growing – though predicting a ratio would be a futile endeavour as tech transfer offices are unlikely to slow down forming new companies.
The university sector experienced a respectable increase in exits over 2017 with 63 last year. Of note was the $200m flotation in October of Orchard Therapeutics, a UK-based gene therapy spinout of University College London (UCL) that was named GUV Deal of the Year 2018 for its $110m series B round, for the sheer speed at which the company went from its founding in 2015 through multiple funding rounds to the public markets.
There were mergers and acquisitions, such as that of Quethera, a UK-based glaucoma therapy spinout of University of Cambridge, bought by pharmaceutical firm Astellas Pharma for up to $108m in cash and contingent commitments in August.
But more fascinating were the acquisitions of spinouts that were already public – and it was primarily these transactions that pushed the amount generated by exits to a historic total of nearly $14.8bn.

More than half of that came from Avexis, a US-based neurological disease treatment developer commercialising Ohio State University (OSU) and Nationwide Children’s Hospital research, that announced an acquisition deal with pharmaceutical firm Novartis for $8.7bn in May. OSU’s remaining stake was worth a fraction of the sale price – $2.7m – but the deal served as a proof that the university’s innovation continues to be recognised by corporates long past the traditional investment and exit routes. The price is even more remarkable considering Avexis raised just $95m in its initial public offering in 2015 after attracting some $82.5m in equity funding.
Another organisation celebrating an exit was Indiana University Research and Technology Corporation, which manages the Innovate Indiana Fund and Philanthropic Venture Fund on behalf of Indiana University. Tony Armstrong, president and chief executive of the corporation, said: “We made our final investment from the Innovate Indiana Fund in 2018, with one of our portfolio companies exiting.
“We are really excited about 2019. We have plans to increase our fundraising activity and engage Indiana University alumni around the world with our innovators. We have a number of new capital providers in Indiana, and we are working to bring all of the investors in Indiana together for better awareness and syndication of deals in the state of Indiana. The corporation moved into a new co-work space in Bloomington called the Mill and we have seen a huge uptick in activity here in Bloomington as a result.”
There are reasons to be more cautious about predictions for 2019 – the protectionist policies of and the longest government shutdown in history in the US and the threat of a recession in multiple large economies, including Germany, could throw a spanner into the works of spinouts hoping for large exits. But pessimism remains a stranger to investors for now.
Despite the challenges facing the UK with the approach of March 29, when the country will leave the EU – so-called Brexit – thought leaders remain upbeat there too. Moray Wright, chief executive of Parkwalk Advisors, the fund management arm of commercialisation firm IP Group, said: “2018 was an extremely interesting and positive year for spinouts in the UK. The government began outlining its industrial strategy for a post-Brexit world and as part of that announced some meaningful and encouraging support for the ecosystem.
“We believe the government truly understands that innovation and novel discoveries are key to Britain’s future prosperity and security. Comments from two senior ministers referring to electric motor manufacturer Yasa, one of our portfolio companies, seemed to confirm their commitment.”
Wright quoted Sam Gyimah, science minister: “We need you to be able to do what Edison did – have an idea, create a product and share it with the world. Take the example of Yasa Motors. This year they opened a new production factory in Oxfordshire, which is supporting 150 high-skilled jobs and aiming to produce 100,000 units.”
Wright also took the opportunity to refer to a quote by Greg Clark, the secretary of state for business, energy and industrial strategy, who said: “Yasa is a brilliant example of what can be achieved when government, academia and industry come together to turn the best ideas from the best minds into scale-up companies.”
Continuing in his own words, Wright added: “One significant development in 2018 was the outcome of the patient capital review, with additional resources and capital being made available for scaling up companies, which has historically been a difficult stage to find sources of funding for.
“The government also introduced further consultations to explore other means to support the sector, which we believe will have positive impacts in 2019 and beyond.
“From our perspective, Parkwalk saw record in-flows to our funds and deployed £65m into new and existing portfolio companies. We think the sector continues to thrive, with improved funding opportunities and a ramp-up in the quality of management and entrepreneurs. At the same time, our partner tech transfer offices continue to develop their already strong offerings.

“Significantly, we have also seen an increase in inbound strategic interest from global corporates, confirming the quality of UK innovation and commercialisation.”
Wright acknowledged Brexit and global challenges in the current political climate but concluded: “There are some major uncertainties in 2019, not least the unknown impact of Brexit and rising global trade protectionism, but we remain optimistic that the innovation and value being created in the UK university spinout sector will continue to grow and Parkwalk remains committed to supporting it.”
The events on the global stage have also done little to concern James Wilkie, chief executive of University of Birmingham Enterprise, who summed up the past year. “Our first move in 2018 was a change of name from Alta Innovations to University of Birmingham Enterprise. This was a result of much hard work since 2008 to establish Alta Innovations as a trustworthy and valuable aspect of the university’s activities, and the university is now very keen to ensure that people inside and outside the organisation understand that we operate on their behalf.”
Wilkie and his regional peers have also been busy setting plans in motion for continued success. He added: “In early 2018, an alliance led by University of Birmingham Enterprise landed £5m from the UK Connecting Capability Fund to create the largest collaboration between university technology transfer offices in the UK. The Midlands Innovation Commercialisation of Research Accelerator will provide straightforward access to the collective intellectual property from eight universities.
“One of the imperatives behind this development is the need to attract patient capital investors to the Midlands region, which has been relatively underserved by investment compared with the rest of the UK. The intention is to attract significant new early-stage investment funds in the £50m to £300m range and stimulate the growth of innovation-led businesses in the region.”
Such investors would find a large pool of potential investments, as Wilkie explained. “Internally, our intellectual property development team has continued to recruit and retain talented individuals to grow the intellectual property pipeline. In the past year, the team delivered the highest numbers of invention disclosures, patent filings and signed intellectual property licences we have ever recorded, and the latest national data put us at fourth in the UK for number of recorded inventions, and seventh for the number of new patents filed.
“We had another record year in other areas as well. Our academic consultancy services continued to grow income, the Birmingham Research Park is currently full, and the BioHub Birmingham has initiated a project to cater for the continued demand for bioincubation space close to the university.
“Our BizzInn business incubator entered into new collaborations and delivered external business support programs funded by the UK Intellectual Property Office, consultancy PwC and the European Regional Development Fund, in addition to supporting 120 entrepreneurs from the Midlands and elsewhere.
“Overall our operations were profitable and we were able to make a substantial charitable donation to our shareholder, the university.
“Our plans for 2019 include supporting university academics as they prepare for future Research Excellence Framework evaluation, even more intellectual property development and company income, working with fund managers to set up our large investment fund, and filling the new space in the BioHub.”
Koji Murota, chief executive of Kyoto University Innovation Capital (KU-iCap), a wholly-owned investment subsidiary of Kyoto University, has perhaps less to worry about in Japan, where the economy has had an extended period of growth, but he is still keenly aware of global issues. He said: “In 2018, KU-iCap invested in eight new ventures. As a result, the number of our portfolio companies stands at 24 at the end of 2018.”
Murota also took the opportunity to thank GUV for its support, alluding to an investment in Drawbridge Health, a US-based medical diagnostics spinout of industrial conglomerate General Electric, that was inked in October 2018 following a meeting at the GUV: Fusion conference in May. He said: “Remarking on 2018, we were able to run our business smoothly, thanks very much to GUV’s support. Throughout 2018, our unique position has come to be recognised among major industries. KU-iCap not only offers venture capital but is an investment company that develops businesses based on Kyoto University’s technology.
“Looking ahead to 2019, we will continue expanding our global collaboration networks. Also, I hope the number of portfolio companies will reach more than 30.  Meanwhile, I am paying attention to several big issues, such as the economic war between the US and China, Brexit and the leadership competition to 5G telecoms and so on. These seem to have been noted by GUV as well.
“I believe that GUV and GCV are going to be more important than in 2018.”

Where does all of this leave us for 2019? One aspect of the 2018 activity that is hidden from our graphs – and that we will look into more specifically in our annual data review in May – is that 129 new funds emerged last year, including dedicated university venture funds, third-party vehicles specifically focused on spinouts, and funds backed by universities that may very well seek out those opportunities.
One fund of note was the official unveiling of the £100m Ahren Innovation Capital – not so much for its respectable fund size but for who the co-founders and limited partners are, namely eight scientists from the Cambridge, UK, ecosystem who want to provide substantial support to portfolio companies. Insurance company Aviva, diversified holding group Wittington Investments and several unnamed US family offices have also put their weight behind the fund, which is expected to raise significantly more cash in the near future.
A total of 129 funds is a lot and it supports the optimism voiced by everyone GUV has had the privilege to speak to for its review. With a vastly larger pool of investors looking to back spinouts, the ecosystem may very well weather any storms that geopolitical challenges will throw at the economy. We may have said all bets are off, but perhaps there is a wager to be made about the achievement of 1,000 spinouts in a year – it certainly does not look as unrealistic a prediction as it might have done, even last January.

Thierry Heles

Thierry Heles is the editor of Global University Venturing, host of the Beyond the Breakthrough interview podcast and responsible for the monthly GUV Gazette (sign up here for free).