The impact of Covid-19 on university ventures

Universities are large complex organisations with vast amounts of research, teaching, industrial collaboration and intellectual property (IP) commercialisation going on at any one time. As Covid-19 hit the UK and businesses scrambled to re-engineer their processes and communication to work in the new environment, we wondered how universities, would cope.
Highly effectively, it turns out. University College London (UCL), an institution of magnitude and complexity, delivered a swift and focused response to the pandemic that was impressive. This rapid response was highlighted by the UCL Ventura Continuous Positive Airway Pressure (CPAP) project: departments quickly collaborated and brought in industrial partners to make a real, life-saving difference. The university’s hospitals – already at the forefront of reorganising to tackle the pandemic – coordinated alongside to help test the prototypes and make design improvements.
Tech transfer office UCL Business, our partners in the UCL Technology Fund (UCLTF), swung into action too, ensuring the designs were made available globally on their specialised licensing platform, E-lucid. The designs were downloaded everywhere, from Australia to Zambia – a massively important contribution in the fight to save lives.
Elsewhere, academics across the university have accelerated and repurposed research to tackle all aspects of the crisis. For example, a world-leading team of cancer scientists and antibody engineers at the UCL Cancer Institute are applying their expertise in targeting cancer cells and activating the immune system to kill tumours to instead develop therapeutics that target the SARS-CoV-2 virus and elicit an appropriate and controlled immune response to clear the virus and potentially provide long-term protection.

UCL is a university with a long history of applied research that has global impact, but now more than ever the focus on application is at the forefront as these examples demonstrate. That mindset is contagious, and opportunities are appearing at an even more rapid pace.
Many of the portfolio companies within the UCL Technology Fund have also been working at top speed to respond as they re-engineer their businesses to survive and thrive. As a university fund, many of the portfolio businesses are early stage deep tech and biotech opportunities. To some extent that shields the companies within the portfolio from immediate impact as they are generally capitalised to grow without much near-term revenue and designed to support long term change rather than exploit current trends. Anecdotally, we are seeing more interest from the wider tech investment community in earlier stage and deeper tech, which is positive and a trend we are hopeful will be positive for university ventures.
However, particularly for revenue generating but pre-profit businesses, the capital required to take them to inflection points has increased. UCLTF has been supporting its businesses by leading applications to the Future Fund and contributing to investment rounds that will deliver growth.
Similarly, the biotech investment community – after a brief blip in March – has continued to strongly support the early stage sector, and this interest has remained quite broad in terms of focus, not just in relation to funding Covid-19 projects. A slate of IPOs in the last two months has demonstrated the public markets’ unslaked thirst for potentially world-changing therapeutics opportunities, and this has fed into ongoing, strong support by venture investors for early-stage rounds despite the pandemic.

However, the balance of power has very much shifted in favour of the biotech investors from the investee companies. Biotech venture has raised substantial capital in recent years and is not wanting for cash to put to work. At the same time, many biotech developers are facing delays to clinical trials and preclinical experimental work, and are battling to get slots with contract research organisations to get the work done given the closure of many labs, universities and hospitals. This has put early-stage investors in a stronger position in negotiating valuations on new investment rounds, particularly at the time when many biotech spinouts are facing a ticking clock on their cash positions.
We have been working tirelessly with the academic community to facilitate the progress of projects and companies during this unprecedented period – and that is one of the key advantages of having a fund operating within the university venturing environment. The fund’s broader contact network across co-investors, contract research companies, manufacturers, experts and management teams means that project goals and work programs can be swiftly reoriented, to ensure the right resources are in place to minimise delays in progressing life-saving drugs and diagnostics to patients.
In fact, despite the undeniably challenging circumstances in which the world finds itself today, the university venture sector has never been better placed to be at the forefront of solving some of the greatest global challenges, and actually have the funding to bring those solutions to life. The ability to rapidly collaborate – across research, clinical practice, commercialisation office, venture capital and the wider network – is essential to rapidly innovating under pressure.
Whether it is how we interact with each other, how businesses share and use data, how we diagnose and treat disease, or indeed in how we can begin to rise to the next big challenge the world faces in the form of climate change, the pandemic has reinforced the importance of university-based innovation in ensuring humanity’s positive progress.