Healthy numbers for the university innovation ecosystem during the third quarter could mean 2019 will again break all records.
Global University Venturing tracked 226 deals in spinouts during the third quarter of 2019 – a adding to 167 in the first quarter and 234 in the second, and bringing the total for the year so far to 627. It is only slightly below the 636 deals clocked over the same period last year, which finished with 822, and it does not seem unreasonable to bet on a new record being set.
Massachusetts Institute of Technology (MIT) led the pack, with 16 investments such as the $105m series A round for its small molecule cancer drug spinout Kronos that featured investors such as GV, one of the early-stage corporate venturing subsidiaries of technology conglomerate Alphabet. Perhaps unsurprisingly, MIT spinouts also came out on top for the amount of capital raised: $351m.
In Europe, it was University of Oxford that achieved 13 deals for its spinouts, although funding-wise it was beaten by its Cambridge peer whose companies brought in $337m between them.
Indeed, with nearly $4.6bn invested over the space of the three months, a lot of spinouts continued to benefit from a healthy ecosystem – even if the figure is down slightly on the approximately $5.1bn during the previous three months. It has brought the total for this year to more than $12.3bn – already more than the $12.1bn invested throughout all of 2018.
The quarter’s largest round belonged to FlixMobility, a Germany-based travel services provider backed by Technical University of Munich-affiliated Unternehmertum Venture Capital Partners, which scored a reported $561m in its series F round in July 2019.
In fact, Germany did well this past quarter as the second largest round went to Biontech, an immuno-oncology therapy developer spun out of Johannes Gutenberg University Mainz, which completed a $325m series B round led by financial services group Fidelity Management & Research in July. The spinout went public earlier this month in an exit, indicating that the fourth quarter of the year will also have interesting stories to tell.
US-based immuno-oncology drug developer Century Therapeutics rounded off the top three biggest deals, emerging from stealth with $250m in funding to commercialise research from Harvard University and Stanford University. Leaps by Bayer, an investment vehicle for pharmaceuticals and chemicals producer Bayer, invested $215m to lead the round and was joined by Fujifilm Cellular Dynamics, a biotech-focused subsidiary of imaging technology producer Fujifilm, and Versant Ventures.
Exits, after a brief peak in July, dropped down for August and September to total 18 over the quarter. It is less than the 22 during the second quarter but still more than the 11 in the first one. Amounts were modest, too, totalling more than $1.8bn – but anything would be dwarfed by the phenomenal $15.7bn acquisition of Tableau, a US-based data visualisation and analytics spinout of Stanford University, by enterprise software producer Salesforce in June.
But impressive deals still happened in the third quarter that are hardly captured by a graph making everything but June 2019 look tiny. Biotechnology producer Vertex Pharmaceuticals agreed to purchase Semma Therapeutics, a US-based diabetes treatment developer spun out of Harvard University, in a $950m all-cash deal in early September, making it the biggest exit of Q3.
In fact, all but two of the top 10 biggest deals were acquisitions and again Europe did well, with the second largest exit belonging to University of Geneva’s Amal Therapeutics, a Switzerland-based cancer-focused biotechnology spinout that agreed to an acquisition worth up to $365m by one of its existing investors, pharmaceutical firm Boehringer Ingelheim in mid-July.
The troubles around Woodford Investment Management could be enough to make one doubt if there are any good news left in the fundraising area, but dozens of vehicles are still being launched each month.
There is a list in our news roundup in this magazine, but notable examples include Mission Bay Capital, the venture capital arm of University of California-aligned commercialisation office California Institute for Quantitative Biosciences (QB3), which has raised $60m for its third life sciences fund from partners including UC Investments.
Max Planck Foundation, the charitable investment vehicle for research institute association Max Planck Society, has backed the initial $66.4m close for an academia-focused pharmaceuticals venture fund raised by Khanu Management.
And Ahren Innovation Capital, a UK-based investment firm co-founded by eight scientists from the Cambridge, UK ecosystem, has closed its inaugural vehicle at more than $250m with limited partners including consumer goods conglomerate Unilever.
When Global University Venturing predicted that the ecosystem would see all records being broken by the end of the decade, the assumption was that it would happen once, not year after year. But with 2019 continuing to go from strength to strength, this is exactly what looks to happen.
