UK and Japan’s university venture funds back the most spinouts

University venture funds can be a powerful way to build a startup ecosystem around the groundbreaking innovation coming out of research labs. These funds can not only give spinouts that first crucial investment but also bring in the next set of investors to help companies scale further — notably, this is often true even in places considered innovation hotspots.

Oxford Science Enterprises (OSE), set up in 2015, for example, helped dramatically increase the number of companies that the University of Oxford was able to spin out each year. In 2014, tech transfer office Oxford University Innovation spun out 14 businesses. Within five years of OSE’s launch, that figure had doubled to 28 spinouts established in 2020.

The huge size of OSE — it had raised more than £850m ($1.1bn) by July 2022 — means it essentially plays in a league of its own because there are no other venture funds focused on a single university with that much firepower anywhere in the world. But even among the other funds, not all are created equal: they employ different models (for example, some support projects long before they even become spinouts) and the number of investments they make each year varies hugely. The vast majority make just a handful of investments annually, but at the top end, the most active university venture funds can back more than 50 spinouts per year.

We put together this list of university venture funds that were the most active in the calendar years 2020 to 2022 by number of investments.

Most active university venture funds from 2020 to 2022

The geographical distribution surprised us. Given that the US is known for its success in creating university spinouts (there are more than 15,000 active spinouts in the country, according to AUTM), we expected to see more US-based university venture funds on this list — but there are just four. It’s Europe that tops the list with 10 funds among the most active (six of which are in the UK), while six were Japanese and one each was Australian and Chinese (the 20th most active made the same amount of investments, so the list is in fact 22 funds in total).

It may be that the US has less need for higher education institutions to set up venture funds when the ecosystem already offers large numbers of VC firms. But one, that statement isn’t true in equal measure across all states (Stanford has Sand Hill Road, Fairbanks has not a single VC investor). And two, the Massachusetts Institute of Technology is aligned with two of these four most active funds: The Engine and E14 Fund.

It is noteworthy too that both the University of Cambridge and the University of Tokyo are also each aligned with two funds among the top 20: the former invests both through its tech transfer office’s Seed Funds and has a relationship with Cambridge Innovation Capital, while the latter’s established University of Tokyo Innovation Platform and University of Tokyo Edge Capital Partners, which has made a name for itself investing internationally as well.

Boston, Tokyo and Cambridge shouldn’t need their own funds, you’d assume. But as Oxford proves, maybe they do.

And with the UK responsible for more than half of European funds, are continental Europe and Ireland doing enough? Perhaps the continent doesn’t need university venture funds because spinouts have an abundance of other capital options. Or would there be an increase in mainland Europe spinouts if there were more university venture funds — as was the case in Oxford?

GUV tracked more than 5,000 investors in spinouts in the last three full calendar years — university venture funds make up a relatively small portion of this investor pool. but they remain a unique approach that is poorly understood.

The list above is a starting point for a larger research project GUV is planning. It is a ranking based solely on investments that were publicly disclosed, so inaccuracies at this stage are likely — if you notice any, please get in touch. We’d like to understand which university venture funds are most successful, which models they use and why, and what geographic differences we should be aware of.

For the purposes of this project, we are adopting a broad definition of a university venture fund, including everything that has a demonstrable link to the university innovation ecosystem whether it was created by an institution or is highly active in this space — so Oxford Science Enterprises (OSE), UM6P Ventures and Cambridge Enterprise Seed Funds will be within the project’s scope just as much as external firms like Parkwalk Advisors, Arch Venture Partners and Osage University Partners.

Over the next year, we will collect more data on as many funds as possible, with a view to creating a ranking that can be used by funds to benchmark themselves — a follow-up to a similar exercise we last undertook in 2018 with the GUV Powerlist that saw OSE come out on top. It will also be a tool for policymakers and university executives to understand what works and what doesn’t.

If you are a university venture fund manager and would like to tell us about your fund — and what data points would make a useful benchmarking report — please reach out via email or LinkedIn.

We are open to having these initial discussions under Chatham House rules, but we would particularly welcome contributions from those of you who are free to speak on the record and whose funds might serve as in-depth case studies.

Please also share this project with your own networks to ensure we can reach as many university venture fund managers as possible.