Sister titles Global Corporate Venturing and Global University Venturing analysed last year’s data to identify the top corporate investors in university spin-outs.
Looking at global spin-out deals, the vast majority of investments by number were made by non-corporations, such as universities, their tech transfer offices and funds, angels, governments or venture capital firms.
Of the venture capital firms, the majority of deals were made by firms that specialise in spin-outs, such as UK-based IP Group, which was involved in 10 deals (increasing to 11 if we add Fusion IP’s one deal before IP Group’s purchase of the investor in January), UK-based Mercia Fund Management, which participated in six deals, or US-based Osage University Partners, which also made six investments.
Looking at corporations as a source of support and capital, last year Global University Venturing tracked 559 university spin-out deals ranging from seed rounds to exits, of which a total of 161 involved a corporate venturing investor in the syndicate. Corporations are increasingly active in early stage investing, according to Global Corporate Venturing data (see chart).
Corporations, therefore, were involved in less than one third (28.8%) of all spin-outs, which was a higher proportion then in venture deals more broadly. Last year, corporate venturers were involved in 17.8% of investment rounds to US-based companies, according to the MoneyTree Report from accountants PricewaterhouseCoopers and the local trade body National Venture Capital Association (NVCA), based on data provided by media company Thomson Reuters.
The top spot among corporate-backed investors was held by High-Tech Grunderfonds (HTGF), which leads the table with seven deals. The fund has €576m ($643m) under management, and is supported by Germany’s Federal Ministry of Economics and Energy and development bank KfW, as well as a wide range of corporations, such as chemical producer BASF, pharmaceutical company Bayer, and logistics company Deutsche Post DHL.
HTGF invested in software company Codetrails (spun out of TU Darmstadt), organic solar film manufacturer Heliatek (Dresden Institute of Technology) alongside fellow corporates Bosch and BASF, cloud-based engineering company SimScale (TU Munich), life sciences company PS Biotech and augmented reality company Bitstars (RWTH Aachen University), biopharmaceutical company Rigontec (Bonn University), and exited microscope technology developer KonTem (Max Planck Society) when it was acquired by scientific instrument producer FEI.
The joint-second spot belonged to internet company Google and chip maker Intel as each participated in five deals. Google backed platform-as-a-service provider DNAnexus (Stanford University), artificial intelligence technology provider Kensho (Harvard University and Massachusetts Institute of Technology), while acquiring advertising analytics company Adometry (Stanford University) and artificial intelligence companies Dark Blue Labs and Vision Factory (Oxford University).
Intel’s five deals were computer connectors maker Keyssa (University of California Los Angeles) in which it invested alongside Samsung, education technology company Schoology (Washington University), mobile chip maker Spreadtrum Communications (Tsinghua University), drone manufacturer PrecisionHawk (Indiana University), and semiconductor materials developer Inpria (Oregon State) also alongside Samsung.
Further down the list, in joint fourth, were pharmaceutical company Novartis and conglomerate General Electric, which each participated in four deals.
Completing the top corporate investors are pharmaceutical companies Novo, Pfizer and Takeda, as well as electronics conglomerate Samsung, cloud computing software provider Salesforce, semiconductor maker Qualcomm and online marketing company Clicksco, each of which participated in three deals.
Other corporate investors backing spin-outs during 2014 made only one or two investments, such as software developer Microsoft, which joined a $1m seed round for Stanford spin-out Watchup, a daily news aggregating service for smartphones and Google Glass, and pharmaceutical companies Baxter, AstraZeneca and H Lundbeck.
Corporate interest has also been seen for university-focused VC funds, where 19 out of 93 new funds with disclosed limited partners (investors) included a corporate limited partner.
Perhaps unsurprisingly, those corporates that backed a fund often also participated in investment deals. For example, Google backed Flashpoint’s $1m venture fund in June, pharmaceutical companies Pfizer, Eli Lilly, Johnson & Johnson and communications and IT company Harris & Harris all backed the $51.1m Accelerator IV fund, while HTGF can be found among the limited partners of Sablono’s fund, which secured an undisclosed amount in August.
Overall, the pharmaceutical and healthcare sectors dominate again, with other funds attracting GlaxoSmithKline, Alexion, Mayo Clinic, Nationwide Children’s Hospital, Kolling Institute of Medical Research and Cincinnati Children’s Hospital, although technology companies such as SanDisk and Qiwi, industrial conglomerate Tata Industries and publisher Bertelsmann are also active.
