It’s not about the money

University venture fund leaders and tech transfer professionals from all over the world gathered in Houston, Texas, earlier this month for the GUV Summit, run in parallel with the Venture Houston conference held by our sister publication Global Corporate Venturing – with many interesting crossover panels over the two-day event.
Houston mayor Sylvester Turner opened the conference – singing the praises of a city that has thrived thanks to large numbers of highly-skilled immigrants and an ecosystem that has grown beyond its traditional focus on oil and gas – before Julie Goonewardene, chief innovation officer of University of Texas System joined editor-in-chief James Mawson on stage for a fireside chat.
Goonewardene holds several other positions at the university, such as managing director of university venture investor UT Horizon Fund, leading her to recall one of her early mentors saying: “One of the rewards for good work is more work.”
The UT Horizon Fund was designed to generate financial return but importantly, Goonewardene said, its mission was also to advance commercialisation – a theme that recurred throughout the summit. She noted that, particularly in regard to healthcare spinouts: “You do not just save the patient, you save the family, their kids – you save everyone. It is critical for a public university to do this kind of work. We are servants of the public.”

Above: Julie Goonewardene talks to GUV editor-in-chief James Mawson
The fund typically invests from $100,000 to several million dollars, with the opportunity to provide follow-on funding. Goonewardene said she was proud of the fund’s efficiency, with a process to decline deals within four weeks or commit capital within eight to 12 weeks. The fund has celebrated a handful of exits, both flotations and acquisitions.
With more than 200 people in the room, many of them corporates, Goonewardene took the opportunity to call on corporate venture capitalists to define what they mean by “early stage” when they are passing on investments. To academics, she said, “early means they have an idea and will conduct an experiment, or they need to reduce the manufacturing costs from a prototype”, making it difficult to find common ground with corporates. “We need a common definition of ‘early’,” Goonewardene concluded.

Above: Led by Erika Smith, far right, Koji Murota, Ferran Prat, Doron Ben-Meir and Thomas Luby discuss healthcare
The main stage then turned its attention to the corporate world, led by Tom Whitehouse, senior adviser, energy and mobility, for Global Corporate Venturing and chief executive of consultancy Leif Capital, before welcoming more university discussions later in the day, beginning with one that took on the challenges of the healthcare sector.
The panel discussion focused specifically on living better and longer lives and was moderated by Erika Smith, CEO of ReNetX, a therapeutics developer for spinal cord injury, stroke recovery and Alzheimer’s disease.
The panel included Ferran Prat, senior vice-president of research administration and industry relations at the MD Anderson Cancer Centre; Koji Murota, president and CEO of university venture fund Kyoto University Innovation Capital; Doron Ben-Meir, vice-principal of enterprise at University of Melbourne and director of BioCurate; and Thomas Luby of JLabs, an incubation program of pharmaceutical firm Johnson & Johnson.
The discussion focused initially on challenges in developing university-generated intellectual property (IP) in the life sciences realm. Panellists agreed that innovation in university was discovery-oriented and deficient on market and commercial orientation.
However, as Luby pointed out, the healthcare and, in particular, the pharmaceutical industry was looking to increase its minority holdings of externally generated medical innovation, so the opportunities were significant. This also led to the observation that institutional VCs had lost out on the sector – by the time they were willing to invest, spinouts had nothing to gain from them as corporates had already provided cash and, importantly, expertise.
All panellists agreed that developments in regulatory environments concerning IP and university-driven innovation had exerted no significant impact in recent years.
The panel also discussed new technologies with the potential to be game-changers in healthcare, citing areas such as therapeutics for neurodegenerative diseases in old age, precision medicine, cancer cures and datafication of healthcare.

Above: Rosemarie Truman’s keynote address brings the first day to a close
Rosemarie Truman, founder and CEO of the Centre for Advancing Innovation, a consultancy specialising in tech transfer, concluded the first day’s university sessions with a keynote speech on the innovation arms race – warning that the west was losing out to its peers in the east.
She said she had found declining quality and efficiency in patent filing in both the US and the EU, with China set to surpass the US in R&D spending and GDP growth by 2035.
The gala dinner featured not one but two awards ceremonies. After Whitehouse named US-based big data analytics developer Maana as GCV’s inaugural Energy-tech Investment of the Year, GUV editor Thierry Heles took the stage to reveal the top 25 leaders on the GUV Powerlist 2018, an industry-first ranking of university venture fund leaders.
Jim Wilkinson, chief financial officer of Oxford Sciences Innovation (OSI), won first place, with the award collected by his colleague Matt Perkins, chief executive of tech transfer office Oxford University Innovation (OUI), which works closely with the fund, on Wilkinson’s behalf.

Above: Matt Perkins gives a thank you speech on behalf of Jim Wilkinson, inset
The second day was kicked off by Karin Immergluck, who became head of Stanford University’s office of technology licensing five months ago. Immergluck, previously with University of California San Francisco, summed up her initial impression, declaring: “It has been a wild ride.”
Immergluck provided an overview of the Stanford ecosystem, explaining how the university supported entrepreneurs through dozens of initiatives, including several that are internationally renowned, such as accelerator StartX.
She said: “There can never be enough entrepreneurship education and training. Students have different needs than faculty.”
A total of 40,000 active companies could trace their origin to Stanford, she said, and between them they had generated $2.7 trillion in annual world revenues. Arguably the most famous company to emerge from the institution to date was internet company Google, which gained the support of Immergluck’s predecessor Katharine Ku when co-founders Larry Page and Sergey Brin were unable to convince anyone else of their idea.
It was no surprise, Immergluck noted, that 55% of students chose Stanford for its entrepreneurial brand.
Matt Perkins followed with his keynote speech on what makes Oxford unique as a university and a city. Picking up on the idea that university venturing really is not about capital, he said: “OUI is not there to make money for the university, that is not our remit. It is about creating impact.”
Nevertheless, OSI with its $800m firing power had been a real boon for the ecosystem.
“Oxford does not change very quickly, but it has survived for 900 years,” Perkins continued, revealing that OUI had significantly increased its spinout rate and was set to generate another 10 companies a year on top of its current average of 20 thanks to a new social sciences program launched a few months ago led by Mark Mann. The increasing number of spinouts has led to an interesting challenge, as Perkins noted they were struggling to find office space in the small city.
Perkins also observed a key difference from Immergluck’s approach: “I was surprised to hear Karin say their mission is to exit as quickly as possible. At Oxford, it is: hold on to shares until all hell freezes over. But we are starting to sell some.”
Admitting a certain admiration for Oxford’s historic rival Cambridge University, Perkins concluded: “Oxford has a tradition of excellence. We are not scared of competition, we enjoy it.”
Koji Murota then returned to the stage to provide an overview of KU-iCap, a university venture fund born out of a Japanese government initiative in 2013 to allow public institutions to invest in their own spinouts.
Murota cited the example of stem cell research firm iPSC as a success story for the university, with its technology having an impact on a wide range of healthcare sectors such as cancer treatments and, through spinout Cuorips, on heart disease.
He drew particular attention to the GUV: Fusion conference earlier this year, where a meeting with a delegate from industrial conglomerate General Electric led to an investment in medical diagnostics developer Drawbridge Health.
And while it is not always about the money, Murota noted that when the time came for KU-iCap’s second fund he would avoid government funding as that came with a demand for a certain degree of control. Instead, Murota said, he hoped to raise capital from the private sector.
Money was no issue for the next speaker, Alastair Hick, senior director of Monash Innovation, the tech transfer arm of Monash University, who after a 24-hour flight was facing a different problem – the vast distance between his home ground and the US meant nobody knew where Monash was. That was despite the fact that Melbourne was a city of 5 million people with more than a third of citizens born overseas. He said Monash was Australia’s largest university, with 80,000 students.
Australia, which had not suffered a recession since the 1990s – a global record in modern history, Hick noted – had suffered from a global dip in investments following the 2008 financial crisis but had recovered to go from A$200m in venture capital available in 2014 to nearly A$1.4bn today.

There was, Hick said, another problem he had been facing – Australia’s continuously changing administrations. During the seven years he had lived in the country, there had been six prime ministers – though one “was a repeat” – making it difficult to establish consistent policy.
That had not stopped Australia from punching above its weight, he said. And that was only set to improve, with A$900m in specific funds targeting spinouts in the country and international interest from parties such as UK-based commercialisation firm IP Group, which recently expanded into the country.
Heles then welcomed Christine Gulbranson, senior vice-president and chief innovation officer of University of California, and Tony Armstrong, president and CEO of university fund manager Indiana University Research and Technology Corp on stage together with Nancy Saucier, director of new venture development at University of Massachusetts Lowell.
The panel, which took an interactive approach and had an open discussion with the audience, focused on the challenges of creating and funding spinouts and identified a range of common issues faced by tech transfer people when trying to sell their mission to other university departments, such as trying to raise money from alumni for a fund rather than for a new building or scholarships.
Gulbranson also noted that the university leadership encouraged her to find new money to avoid competing for philanthropic donations for new chairs or research. Armstrong quipped: “If you ask for money you get advice, if you ask for advice you might get money, so I have been asking for advice”.
The morning’s proceedings concluded with two “unpanels” – a concept originally developed by Global Corporate Venturing that involves a series of roundtable discussions around specific topics.
The first was hosted by Mawson and focused on proof of concept from ideation to funding and IP licensing to spinouts, discussing the trials and successes of commercialisation, and featured delegates such as Matt Perkins.
The second was hosted by Heles and looked at setting up an in-house university venture fund, balance-sheet investing and attracting external venture investors. It featured delegates such as Peter Devine, chief executive of multi-university venture fund Uniseed.
In the afternoon, Hick returned to the stage alongside Helena Wisniewski, vice-provost for research and graduate studies at University of Alaska Anchorage, and Christine Burke, director of commercialisation and technology transfer at University of Texas, San Antonio, for a panel discussion hosted by Mawson about nurturing an ecosystem through state and federal grant funding.
Hick reiterated his frustration that “the constant turnover of administrations is a real challenge to us” and when approaching politicians the usual response was more of a keen interest in generating jobs and getting re-elected than offering support in building an ecosystem.
Wisniewski, who previously worked for US intelligence agency CIA, noted that while there were many different grant programs on offer in the US, there were also less obvious routes, such as approaching the agency’s investment affiliate, In-Q-Tel. But while “you need the money”, she said, “you really need people excited about the ecosystem and buying into it”.
Hick agreed that “building an ecosystem means having all your stakeholders and collaborators in place. You need to know what you want to do and how you want to do it, you cannot wait for someone with a pot of money to come in”.
Burke added that “academics know how to apply for grants”, so money was never the issue there either. She challenged Truman’s view from the previous day, saying that completing patents was not necessarily a measure of success. Some patents turn out not to be worth pursuing further, she said.
Heles then welcomed back Saucier and Ben-Meir to the stage, together with Tom Vanhoutte, a partner at Imec’s investment fund Imec.xpand, and Brad Burke, managing director of the Rice Alliance for Technology and Entrepreneurship at Rice University.
The panel discussed the “brave new world” of deep tech funding, with Vanhoutte observing that his mission was about cash. He said that his remit was to pour in “stupid amounts of money at a very early stage” to help get spinouts with complex technologies off the ground – investing $500,000 in a semiconductor spinout would not be enough, he said.
Burke, who joined the conference from Rice’s own event, explained that his university held regular meetings with specific groups of investors, the previous day focusing on healthcare. He also discussed a 14.5-acre innovation hub in midtown Houston, where Rice was investing $100m, taking inspiration from Chicago’s 1871 hub and the role played by the Pritzker family in that ecosystem.
Ben-Meir described a new initiative set up specifically to support biopharmaceutical spinouts, a project that would serve as a testbed for future funding models adjusted to sectors that also required significant resources. He also advocated buying in a team to avoid repeating mistakes, admitting that it cost a lot but that it was unavoidable if you wanted the right talent in place.
He also noted, however, that it was not about the money – if you had a good deal, he said, investors would come. If there was no money to be found, the problem was that the business was not worthwhile.
Ria Ancheta-Adrias, director of operations of startup development organisation NCET2, led the last full panel of the day, with Eric Breese, investment manager of chemicals company Evonik’s Venture Capital division, David Zimmerman, director of technology commercialisation at Stevens Institute of Technology and Glenn Vonk, director of business development and alliances at NCET2.
The panel discussed creating, developing and funding spinouts for corporate strategic needs of business units. Zimmerman noted that it really depended on the type of technology to figure out when a spinout may be ready for a corporate, while Breese added that for Evonik it was a question of how they can protect a certain technology. “We will not give you unlimited funds for patents,” he said, but Evonik would support spinouts with guidance on legal documents to safeguard their product.
Breese however lamented that the equity market had heated up over the past several years, leading to seed rounds now fetching closer to $4m than $1m, and series A rounds approaching $15m to $20m. That meant, he said, that “often we have to walk away because we cannot stomach those valuations”.
Peter Devine followed the panel with a keynote speech about Uniseed, founded 18 years ago. It was launched originally as a proof-of-concept vehicle, before switching to a university venture fund with the second fund. The original launch came with significant challenges – shorty after it was established, the dot-com bubble burst, and it had limited seed-stage funds to invest in spinouts and follow-on rounds were often at a flat valuation.
Devine commented: “I embrace the idea of holding on to shares, like Matt Perkins said. Why would I sell? They are going to be worth so much more.” That may have come as a surprise after the challenges faced by the first fund, but things had changed dramatically since then for Uniseed.
The global financial crisis of 2008 set Uniseed back in a spectacular fashion – a spinout with a fully underwritten prospectus abandoned its initial public offering and collapsed. There was also the acquisition of limited partner Westscheme by fellow pension scheme AustralianSuper, leading them to reduce the number of new investments between 2011 and 2015.
But then Uniseed celebrated three blockbuster exits in 2014 and 2015 – drug developer Fibrotech was acquired by biopharmaceutical firm Shire for $75m, pharmaceutical firm Novartis bought Spinifex, which was working on a treatment for neuropathic pain, for $200m, and pharmaceutical firm Dr Reddy’s Laboratories purchased head lice treatment developer Hatchtech for $10m.
The deals had come with promised milestone payments, but Fibrotech was dropped by Shire after its merger with peer Baxalta – Uniseed had negotiated back the licence and put the research into a new spinout, Certa Therapeutics, with a A$25m round earlier this year. Hatchtech’s potential milestone payments had also faced delays due to regulatory issues encountered by Dr Reddy’s.
“Get as much money as you can upfront,” Devine advised the audience.
Despite the setbacks, the exits meant money had started pouring back into the ecosystem – including from pension funds – as investors realised there was a profitable business opportunity. Uniseed now had several active funds under management, including a co-investment vehicle backed entirely by private money.
Doug Hockstad, assistant vice-president of Tech Launch Arizona, the tech transfer office of University of Arizona, then finished the conference with a fireside chat with Tony Stanco, founder of NCET2.
Hockstad’s message at the end summed up many of the discussions on stage and in the foyer – it is not about the money. In fact, he said: “Many of us cannot invest. I am at a public institution – I cannot put money into a private company.”
Thanking the audience and speakers, Mawson concluded the first GUV Summit in the US – though lively discussions continued in the evening over drinks. The international line-up of delegates had revealed one important truth apart from the fact that the sector was not about money – everyone in university venturing is facing the same issues, wherever in the world they are, even though the details might differ.
Global University Venturing looks forward to continuing taking part in that discussion on its website, in the magazine and at future events, including the GUV: Fusion conference in May next year.
Additional reporting by Kaloyan Andonov, reporter

The full GUV Powerlist 2018 can be viewed online here and is available as a PDF here.