Half of Australian universities have a spinout fund — ahead of US and Europe

Looking for the world’s most advanced ecosystem when it comes to university spinout investments? Welcome to Australia, where more than half all universities have access to an investment fund that can help support the fledgeling companies emerging from their institution.

This is a higher percentage in the US, where only a third of top research universities have a fund, and Europe, where some 40% institutions have a fund that invests in their startups.

In Australia, some 25 out of 43 academic institutions are associated with an investment fund.

There are several reasons why Australia has such a mature ecosystem.

One of the key building blocks is Uniseed, one of the world’s oldest university venture funds. Formed in September 2000, Uniseed launched with A$20m (around $11m at the time) from the University of Queensland’s tech transfer arm UniQuest and the University of Melbourne’s commercialisation arm, Melbourne Enterprises International.

From there, it added many more funds and university partners, including pension fund Westscheme Superannuation Fund, the University of New South Wales, the University of Sydney, state-owned research agency Commonwealth Scientific and Industrial Research Organization (CSIRO), Monash University, Macquarie University, the University of Technology Sydney, Western Sydney University and the University of Newcastle. Today, more than a fifth of Australia’s universities are covered by Uniseed.

Brandon BioCatalyst: life sciences funding for Australia and New Zealand

Out of the 25 institutions with a fund, 14 have access specifically to a life science investment fund called Brandon BioCatalyst, a unique partnership between biotech company CSL, Australian pension funds, Australian state governments, the Australian and New Zealand national governments and more than 50 medical research institutes (several universities have more than one relevant institute, while some institutes are independent) and hospitals across Australia and New Zealand.

Institutes within Flinders, Griffith and James Cook universities are among those with access to the Brandon BioCatalyst fund, while in New Zealand it’s research units within the universities of Auckland and Otago as well as Victoria University of Wellington.

In Australia, Brandon BioCatalyst also runs the CUREator incubator for biotech companies and manages public grant funding programmes focused on areas including anti-microbial resistance, dementia and health security.

Pension funds, wifi and state initiatives are part of the playbook

Uniseed’s, and Australia’s, success in university venture funds is partly due to its pension fund ecosystem. The country’s largest, AustralianSuper, has A$341bn ($227bn) under management. UniSuper, which invested A$75m ($50m) in Uniseed in 2022, has A$139bn ($92bn) under management.

Australia, despite its modest population size of about 26 million people, in fact, has one of the largest pension fund repositories in the world. It has created a mature ecosystem that means out of the top 20 largest funds, half are investing in local venture capital funds, according to Nick McNaughton, who ran university venture fund ANU Connect Ventures — set up by the Australian National University and backed by pension fund Spirit Super until ANU Connect Ventures was wound down in 2022.

“We had compulsory pensions 30 years ago, so that’s now 30 years of compulsory commitments from each employee in Australia going into one of these funds,” says McNaughton. That has built huge wealth ready to be deployed into venture capital (something the UK government is now trying to replicate through its Mansion House reforms announced last year).

$200m spinout fund to launch with UK pension money

VC firm Future Planet Capital and pension solutions provider Mobius Life will launch the fund in Q1 of 2025 to take advantage of UK pension reform.

And there is something else that’s given Australian innovation a big boost: wifi. Developed at CSIRO, royalties from the ubiquitous connectivity technology enabled the agency to set up a venture capital firm, Main Sequence Ventures, in 2017, which has become an important player in the Australian ecosystem. Across three funds, Main Sequence has grown to more than A$1bn under management. It invests broadly in the local innovation ecosystem — its first two funds benefited 28 universities. Main Sequence participates in seed through to series B rounds.

Not unlike MIT-associated Engine Ventures in the US, Main Sequence Ventures has taken on some of the biggest — and therefore most expensive — challenges that humanity is facing, from decarbonisation to space tech to an agricultural infrastructure that can feed a future 10 billion people.

One Australian state, in particular, is going all in on university innovation: Victoria, home to the country’s largest institution, Monash University, and Uniseed co-founder, University of Melbourne. In 2021 the state government set up Breakthrough Victoria, a A$2bn investment fund whose mission includes providing patient capital to drive commercialisation. None of the other Australian states have created a comparable fund yet.

Deakin University, La Trobe University, Monash University, RMIT University and Swinburne University of Technology have all partnered with Breakthrough Victoria through its University Innovation Platform to set up funds. The University of Melbourne has even set up two funds through this platform: the A$125m Tin Alley Ventures (also attracting additional capital from alumni, family offices and institutional investors) and the A$15m Genesis Pre-Seed Fund (backed by the university and Breakthrough Victoria, and an amount on par with the other funds established through the University Innovation Platform).

Corporate support is crucial

Corporates also play an important role. Biotech company CSL is a partner in Brandon BioCatalyst, while project and construction management provider Hindmarsh is the general partner of Significant Early Venture Capital, which invests in companies coming out of Deakin University, the University of New South Wales, Australian National University, Queensland University of Technology, the University of Tasmania, the University of Newcastle, the University of Technology Sydney and CSIRO. Significant also has a partnership with Canberra Innovation Network, a non-profit that supports founders in the Australian Capital Territory.

Auckland and Wellington are New Zealand’s lone stars…

To some extent, New Zealand benefits from Australia’s strong ecosystem. Three of the country’s eight universities have access to the Brandon BioCatalyst Fund — the University of Auckland, the University of Otago and Victoria University of Wellington. The University of Auckland also has a dedicated investment vehicle, the Inventors’ Fund, set up by tech transfer arm Auckland UniServices. Will Charles, executive director of Auckland UniServices, calls the fund “central to success” that the tech transfer office has found since 2016 (a period in which it trebled its spinout rate).

Victoria University of Wellington meanwhile sought a partnership with local financial services firm Booster to set up the NZ Innovation Booster fund.

… but Kiwi institutions are facing a crisis

However, other New Zealand universities may be hard-pressed to contribute to any funds as the tertiary education sector has been facing severe financial challenges for a while. Between them, New Zealand’s eight universities were forecasting a NZ$42m ($26m) deficit for the year, and a report written for the government said Massey University and Victoria University of Wellington were regarded as high risk, while three others – Otago, Lincoln and Waikato universities — were deemed a medium risk.

Both Victoria and Massey have disputed the claims to some extent and said they were on track to reach financial stability. But it is feared the universities will struggle to afford basic maintenance and upgrades — let alone funding tech transfer offices. Some have already had to downsize. Victoria University of Wellington, for example, streamlined its leadership team in 2023 (letting go of chief executive Anne Barnett, who had at one point planned to ‌turn the tech transfer into a social enterprise) and reduced its head count from 34 to 26 people.