Russ Cummings, who moves into the role from chief investment officer, told Global University Venturing he was taking over a firm in an exceptionally strong position at a very exciting stage in its development.
Sandwiched between the British Science Museum and Hyde Park, almost exactly as far from Oxford as it is from Cambridge and forming the third point on the UK’s “Golden Triangle” in London, sits Imperial Innovations.
Founded in 1986 as the technology transfer office (TTO) of Imperial College London (ICL), Imperial Innovations took a different approach to most of its peers when it was admitted to the London Stock Exchange in 2006. Following the £26m ($40m) flotation, ICL has been diluted through further share placements – particularly the £140m placement in January 2011 – from a majority to a minority 30.3% stake, a contrast to other TTOs which are, by and large, wholly-owned by the parent university.
Furthermore, ICL is not the largest shareholder. USheadquartered investment management company Invesco has 45.6%, and peer Lansdowne Partners has 13.7%.
This breathing space from its parent has given Imperial Innovations a flexibility other TTOs lack, and would appear to have given both the firm and its spin-outs more credibility in the eyes of business, investors and other universities. Since its flotation, spin-outs have attracted over £430m in external funding, outstripping peers such as Oxford’s £340m since 2000 and University College London’s (UCL’s) £370m since 2001. Even the TTO at the centre of Europe’s most successful tech cluster, Cambridge Enterprise, which recently hit £1bn in external funding raised over the past 18 years, would be outstretched by Imperial Innovations’ spin-outs had it been working to the same timeframe.
While not strictly a venture capital fund, more of a balance-sheet investor, Imperial Innovations itself also moves to back its spin-outs, and has raised £206m to do just that. From 2006, £135m from the firm’s pot has been invested in 82 portfolio companies. Its flexible business-first model has also attracted the attention of other universities. As of January 2011, Imperial Innovations has also had access not only to ICL’s intellectual property (IP), but also to technologies coming out of Cambridge, Oxford, and UCL, as well as the UK’s Northwest London Hospitals Trust. On the back of these collaborations with Cambridge Enterprise, UCL Business and Oxford Spinout Equity Management, Imperial Innovations has made nine investments in spin-off companies coming out of non-ICL universities.
One such investment was Oxford Immunotec, a medical diagnostics firm which has developed a blood test for tuberculosis, when Imperial Innovations last year led a $28m investment round. Immunotec has raised over $110m, and has secured regulatory approval to sell its test in 40 countries worldwide, including the US.
Increasingly, Imperial Innovations has been able to fund and lead larger, later-stage rounds, as its share placements and exits return profits.
In July 2010, for example, Janssen Biotech acquired Respivert for an undisclosed amount – one that gave Imperial Innovations £9.7m, a 4.7x return on investment.
Two Imperial spin-outs have raised more than £50m in funding. Cat allergy treatment spin-out Circassia has secured £105m to date – £25.5m from Imperial Innovations – after closing a venture round in 2011 worth £72m, the third largest for a private European biotech in the past 15 years. Lithium-ion battery developer Nexeon followed, with £55m in venture backing, £22.3m of it from Imperial Innovations, which holds 20.3% and a 38.9% stakes respectively in the firms.
Imperial Innovations is going through a period of change as Susan Searle, chief executive since 2002, resigned this month. Explaining her decision to leave, she told Global University Venturing: “I led Imperial Innovations for 11 years and having just closed a debt financing and with the business in good shape it seemed appropriate to transition to a portfolio of public and private boards while everything is going well.”
Russ Cummings (pictured), who moves into the role from chief investment officer, told Global University Venturing he was taking over a firm in an exceptionally strong position at a very exciting stage in its development.
He added: “Our recently announced £30m facility from the European Investment Bank (EIB) gives us a total of £93m available for investment in the best opportunities.
It means we can put more of our capital to work, and can look for realisations when the time is right, rather than being constrained by a fixed timetable.”
Searle does, however, have a few words of caution. She said although it would be feasible for other TTOs to expand beyond one university as a focus, it required critical mass and assembling the right team with the right skills to do so. She added: “It took a long time to build a team with the skills and mindset to do early-stage business, building on a capital-efficient basis by adding the best of the venture capital approach with proactive business building.”