GUV 2014 data review

Although somewhat skewed by our increasing coverage of the sector, 2014 saw the largest figures in terms of deals, value, funds and overall fund value since Global University Venturing began operating. In total, we recorded 538 deals worth $8.5bn – with much more undisclosed – and $5.5bn raised over 90 funds.

Deals

Comprising $3bn of our dealflow total and 45% of all deals Global University Venturing has observed throughout the year, healthcare continues to dominate.

This is not going to come as a surprise to regular readers. Life sciences still tend to be the first thought at most technology transfer offices around the world’s leading universities and research institutions. Combined with the vast amounts of cash it takes to successfully bring a drug through from idea to market, healthcare spin-outs thirst for investment has been unabated in 2014.

The hottest area in life sciences has been the emergence of immunotherapies for oncology. While the methods vary from company to company, the general gist of immunotherapies involve genetically modifying T-cells. Otherwise known as white blood cells, the T-cells are re-engineered outside the body to identify and target cancer. Once returned to a patient, the cells get to work on breaking down cancers. So far, trials with immunotherapies have had startling results, with large percentages of patients treated – most considered otherwise terminal – showing signs of full remission.

By far the stand-out company has been Juno Therapeutics, a spin-out of Seattle-based Fred Hutchinson Cancer Research Centre, the Seattle Children’s Research Institute and New York City-based Memorial Sloan-Kettering Cancer Centre. The firm launched in December 2013 with $120m in series A, which grew to $176m by April 2014 when the round closed.

Already enough to be selected as Global University Venturing’s Deal of the Year 2014, this was quickly followed up with a series B worth $134m over the summer, and Juno raised a further $265m in the closing moments of 2014 when it held a pre-Christmas initial public offering (IPO).

Juno’s two rounds take up the two biggest investment deals recorded throughout the year, but the US-based firm is not the only immunotherapies firm to have a stellar 2014. Adaptive Biotechnologies, also based on Fred Hutchinson research, raised $105m in April, while Oxford University spin-out Adaptimmune came a close fourth with $104m.

Immunotherapies also played a big hand in exits, with Juno’s aforementioned IPO and University of California Los Angeles’ Kite Pharma floatation both raising substantial funds for the respective companies. However, the award for biggest IPO Global University Venturing recorded this year goes to Imperial College London’s Circassia.

The allergy drug development firm raised $329m, valuing the company at close to $1bn, and marking the largest biotech offering on the London Stock Exchange seen in years. The firm’s allure comes from its core products, which could spell an end to hay fever and cat allergy sufferers. The IPO was all the more welcome at Imperial Innovations, Imperial’s tech transfer office, which made a combined $66m from the Circassia and three other smaller exits last year.

The two biggest exits came from the technology sector. Edinburgh spin-out Wolfson Microelectronics was acquired in a surprise deal worth $467m by Cirrus Logic which is looking to incorporate Wolfson’s audio technologies into its own portfolio of electronics.

The largest exit, and overall deal, came via Oxford University. Formed in 2003, NaturalMotion has carved out a substantial and well-respected role in the games development community. Its core animation packages have driven some of the biggest games of the last 10 years, including numerous top titles from Rockstar, the developers of the Grand Theft Auto series – the latest iteration of which has become the fastest selling entertainment product in history after making over $1bn in sales within three days.

As the gaming market opened up onto mobile platforms, NaturalMotion moved into developing games by itself. In 2012, it released CSR Racing, which would top App Store charts in 70 countries and at one point was making $12m a month for the firm. Later, it would release Clumsy Ninja, which would go on to win critical acclaim and a spot in the iPhone 5 reveal keynote speech.

It was this prestige in both animation and portfolio of games which attracted Zynga, most commonly known for Facebook games such as Farmville. Since the social network changed its rules on apps to protect users from being harassed by Farmville players, Zynga has had to enter the mobile industry, something the firm has done with mixed results. To counteract dropping sales, Zynga bought NaturalMotion for $527m at the start of 2014, which resulted in $50m being returned to the university.

Funds

While the year was free of an eye-watering $1bn fund similar to Invoke Capital’s 2013 raise, several large funds did appear throughout.

The largest came through GGV Capital, which raised $620m in its fifth fund, bringing its total under management to $2.2bn. The venture capital firm is backed by both the University of California and University of Texas systems, although the exact amount the institutions chipped in was not disclosed.

The firm is targeting digital and mobile sectors in both the US and China. China would seem to be the hot word for venture capitalists looking to lure university investors, as Qiming Venture Partners raised $500m for its fourth fund. Princeton, New York, Pittsburgh and Texas universities all supported the raise, along with Massachusetts Institute of Technology and Mayo Clinic.

China-based Tsinghua University continues the eastern theme in 2014’s funds. The university invested in the Chinese Government Microchip Fund, which also saw backing from the City of Shanghai, venture firm Summitview Capital, Shanghai Jiading Venture Capital Fund, and microchip manufacturer MediaTek. Currently sat at $488m, the fund is expected to grow to $1.6bn, and will be used to give China a leading edge in the design of microchips for smartphones.

Arch Venture Partners raised its eighth fund since spinning out of Chicago University’s technology  transfer office in 1986, securing $400m – $150m more than its target – to invest into healthcare, energy, and advanced materials.

The year also saw the creation of the largest ever pure university venturing fund. The University of California system overturned a self-imposed ban on investing in its own startups in the summer, and quickly followed the announcement up with UC Ventures, a $250m fund which will be directed at spin-outs coming from the system’s 10 campuses and five medical centres.

Most active universities

By deals and news reports covered, 2014’s most active universities were:

1 Oxford – 30

2 Cambridge – 22

3 Stanford – 16

4 Imperial – 12

5 Carnegie – 10

6 University of California Los Angeles – 10

7 Michigan – 9

8 Manchester – 9

9 Leeds – 9

10 Washington – 6

Deals by country

1 US – 242

2 UK – 170

3 Australia – 19

4 Canada – 19

5 Germany – 15

6 Other EU – 18

7 Others (non-EU) – 13

8 Netherlands – 9

9 Ireland – 7

10 Switzerland – 6

Deals by sector

1 Healthcare – 233

2 ICT – 109

3 Industrial – 55

4 Clean-tech – 33

5 Education – 32

6 Others – 21

7 Consumer – 14

8 Utilities – 11

9 Servic
es – 6

10 Media – 5

Biggest deals and funds

Deals:

1 Juno Therapeutics – $176m (series A)

2 Juno Therapeutics – $134m (series B)

3 Adaptive Biotechnologies – $105m (series D)

4 Adaptimmune – $104m (series A)

5 InsideSalescom – $100m

Exits:

1 NaturalMotion – $527m (acquisition)

2 Wolfson – $467m (acquisition)

3 Circassia – $329m (IPO)

4 Juno Therapeutics – $265m (IPO)

5 Kite Pharma – $128m (IPO)

Funds:

1 GGV Capital – $620m

2 Qiming Venture Partners – $500m

3 Chinese Government Microchip Fund – $488m

4 Arch Venture Partners – $400m

5 Syncona Partners – $329m