Want to rank entrepreneurial universities? Look at funds not founders

Do universities with their own venture funds build an ecosystem that produces better founders? If deals database PitchBook’s annual ranking of the most entrepreneurial institutions is anything to go by, the answer is yes. A total of 99 universities — more than half of the 188 ranked institutions — that made it into this year’s lists have access to a dedicated investment vehicle, according to a Global University Venturing analysis.

This is a higher percentage than the third of research-intensive universities in the US with a fund and higher than the 40% of Europe’s top institutions with an investment vehicle, although it’s beaten marginally by the 58% of Australian and New Zealand universities with a fund.

There is considerable overlap between PitchBook’s rankings and the top universities in the US, Europe, Australia and New Zealand that have a fund. New York University, the University of Oxford and Monash University are among those that appear in Pitchbook’s ranking and have access to their own venture fund.

Some of the University of California, Berkeley’s funds, such as the Berkeley Frontier Fund, even employ a unique model where the general partner donates a portion of their carry back to the school, making it an appealing proposition to alumni who want to give back to their alma mater both through a donation and by supporting future founders. It’s a model that piques the interest of peers like Columbia University, which does not yet have a fund but is staying on top of the discussion.

But while PitchBook’s study of alumni — which looked at 167,000 venture capital-backed founders — was an interesting exercise, it doesn’t tell the full story of how much influence the university and any associated VC funds have had on fostering entrepreneurship.

How long ago is too long ago?

Focusing on alumni founders means there is no limit to how long ago someone has graduated. The University of Oxford is top for startups founded by undergrad alumni in Europe and its most successful company is digital bank Monzo, which has raised $1.9bn so far. However, Monzo was founded in 2015, years after founder Tom Blomfield left the institution. He’d been to the Université Panthéon-Assas in Paris by then as well (this institution does not appear in the ranking). Blomfield also had several jobs, working as a consultant, co-founding fintech GoCardless, and joining neobank Starling. Indeed, a dispute with Starling CEO Anne Boden prompted Blomfield to walk away and found Monzo. Yet Oxford is credited with Blomfield and Monzo’s success.

Links between startups and universities are often complex and indirect. Cancer screening technology developer Grail was set up by biotech Illumina in 2015 at the behest of founder Richard Klausner, then the chief medical officer of Illumina. Klausner received his bachelor of science degree from Yale University and his doctor of medicine from Duke University, neither of which appear to be credited for Illumina in the ranking. The University of California, Berkeley, the University of Illinois and KTH Royal Institute of Technology are among those recognised for Grail, however.

Attaching a single startup to multiple universities invites the question: how much is each university responsible for the success of any given company? Grail’s founding chief executive Jeff Huber attended the University of Illinois Urbana-Champaign for his undergrad and Harvard University for his MBA, which are each credited.

Huber, like every other Grail co-founder, graduated decades before joining the cancer screening company.

Similarly, Wojciech Zaremba, one of the co-founders of the artificial intelligence platform OpenAI, went to the University of Warsaw and École Polytechnique before joining New York University, yet neither of the former two institutions are credited for OpenAI.

Spinouts ought to get recognition

Focusing on alumni founders also risks ignoring companies founded by students before they graduated. While some student-founded companies like Onfido, the personal data verification platform founded by University of Oxford students, are counted in this ranking, there are some omissions. Climeworks, the direct carbon capture technology technology developer, founded in 2009 by a team of then-doctoral candidates from ETH Zurich, for example, is not included.

This is one of the reasons Global University Venturing feels there is room for another type of analysis, focused on the activity levels of university-affiliated funds. Our study on university spinout ecosystems looks specifically at fund metrics, including how many spinouts they have backed and how much those spinouts have generated through exits.

A focus on the institutions rather than individual founders, is, we feel, a better proxy for the impact that universities actually have — as opposed to later-life experiences or lucky accidents following graduation.

In the case of Onfido, for example, the University of Oxford invested £20,000 in the student startup in 2013 after the startup became the first entrant in the incubator of tech transfer office Oxford University Innovation. When Entrust bought Onfido earlier this year it marked an 80x return for the university — the highest return the university has made on any student startup investment to date.

Another famous example is Google, the search engine since restructured into internet technology group Alphabet, which emerged out of Stanford University with significant support from its Office of Technology Licensing.

Similarly, MIT’s Engine Ventures and E14 Fund have supported noteworthy companies like Commonwealth Fusion Systems, a fusion technology developer which raised a huge $1.8bn series B round in 2021.

Our first-of-its-kind analysis of university venture funds is for a report due to be published this autumn. If you run a university venture fund, please fill in our brief survey by the end of this week and receive a copy of the report when it is published.

Some innovation hotspots are missing entirely

Focusing on university activities also brings to light some interesting examples which may go unnoticed in other studies. For example, we have seen that spinouts in Switzerland have consistently raised rounds of a median size on par with ecosystems like the UK, according to a 10-year longitudinal analysis conducted by Global University Venturing.

The University of Basel — rarely present in international innovation lists — is a hidden gem and a life sciences powerhouse. Startups in Basel tend to raise more, on average, than those in neighbouring France or Germany. One of its spinouts, Cimeio Therapeutics, a cell therapy spinout focused on rare genetic diseases, hematologic malignancies and autoimmune disorders, launched with a $50m series A round in 2022. Meanwhile, T3 Pharma, an intracellular drug delivery spinout, was acquired by pharmaceutical firm Boehringer Ingelheim for up to $509m last year.

In Ireland, the University Bridge Funds have had a dramatic impact on the relatively small nation. Backed by University College Dublin, Trinity College Dublin, University College Cork and the University of Galway, the funds are managed by Atlantic Bridge and play a considerable role in meeting the government’s target of developing 90 high-potential startups every year.

Africa — also often overlooked by other studies — boasts noteworthy stories such as the University Technology Fund, which has led to a dramatic shift in the South African ecosystem that means half of Stellenbosch University’s active spinouts have been founded since the fund launched. Elsewhere, UM6P Ventures, the venture fund of the University Mohammed VI Polytechnic in Morocco, has invested in multiple countries throughout the continent and is developing programmes that rival those of Silicon Valley.