University College London (UCL) has made it four from four as it joins fellow peers Oxford, Cambridge and Imperial College London (ICL) at the top of the UK university league tables with its own university venturing fund.
The £50m ($70m) UCL Technology Fund will be looking to invest in spinout opportunities emerging from across the full spread of UCL’s faculties, including firms such as immunotherapy startup Autolus, which bagged £30m in its series A round last year, and Magnus Life Science, which raised £15.5m in its seed round to bring a new business development model to Europe in 2014.
In many ways, UCL’s fund will operate much like other university venturing funds that have emerged over the past three years or so, but there is one noticeable difference in its structure – another tech transfer office is a cornerstone investor.
When Cambridge Innovation Capital (CIC) was launched in 2013 with £50m as an evergreen fund and a plan to float the fund later this year to bring it to £100m, it drew from a number of sources – Cambridge semiconductor spinout ARM, the university’s endowment fund, and commercialisation firm IP Group. But it was predominantly cornerstoned by two firms, Lansdowne Partners and Invesco – the two leading shareholders in ICL’s technology transfer office Imperial Innovations.
Last year, Lansdowne and Invesco again acted as cornerstones along with Woodford Investment Management, Google Ventures, IP Group, Oxford University’s Endowment Fund, and Wellcome Trust in setting up Oxford’s university venturing arm with £320m.
However, for the UCL Technology Fund (UTF), gone is the endowment fund support, IP Group, corporate investors and cash directly from Invesco and Lansdowne. Instead, UCL is using a large chunk of public investment cash from the European Investment Fund which is being matched by Imperial Innovations. They are contributing £24.75m each with a top-up of £500,000 by fund manager Albion Ventures.
The choice of investors, and which are missing, is full of intrigue. What is striking is that UCL itself has chosen not to take a stake in the fund, looking instead to leverage the benefits of licences for spinouts which now have a major backer. When compared with Cambridge’s and Oxford’s endowment funds, at £5.8bn and £4.2bn in 2014 respectively, UCL’s £104m does not seem much to play with. But Imperial’s own endowment is not light years ahead at £114m, yet the university retains the third-biggest stake in Imperial Innovations. This begs the question: does ICL’s tech transfer office believe more strongly in the potential of its rival’s technology than UCL itself?
Also notable are the missing corporates. Granted, UCL does not have a spare ARM lying about, nor is it churning out the sort of artificial intelligence spinouts that make Google think it is Christmas. There could also be the underlying notion that UCL did not want a corporate to be involved in the fundraising. However, a corporate backer shows that the fund does have a potential route to the market it is aiming for, and also has a fund with big pockets to go to when the pre-IPO rounds for companies such as Autolus come into view.
It could be argued that without the UCL contribution, it does look like the university is being strong-armed into joining its Golden Triangle peers in raising university venturing funds. But from another angle, from UCL’s perspective, it is all about the distance. Not having UCL funds nor UCL management anywhere near the fund is a strategy that keeps the university – along with all the associated bureaucracy and red tape that goes hand in hand with any campus – at arm’s length. This can only be a good thing. With Russ Cummings, CEO of Imperial Innovations, stating that the UCL fund could act as a catalyst for anywhere between £100m to £200m being invested in UCL technology, having the rubber-stamp culture of universities as far away from dealmaking can only be a position of strength for UTF.
Another subtext to this story is the blossoming collaboration at work. Imperial Innovations has been using its £346m raised over the past decade to invest not only in ICL technology but across the Golden Triangle. This move is being reciprocated by CIC, which made investments in UCL spinouts, such as medtech Abcodia which raised £5.25m last year from the university venturer in a round backed by UTF’s manager Albion. And while Oxford Sciences Innovation has stated it plans to invest only in Oxford spinouts, it is not likely that £320m will just sit there indefinitely while regular startups around Oxford and spinouts in the wider area go unfunded.
Could it be possible that four big rivals are finally burying the academic hatchet and getting on the same page with respect to innovation? There certainly seems to be enough money changing hands to suggest that the four are big fans of each other’s intellectual property. The next step, however, would be some sort of formal partnership, akin to SetSquared in the south of the country. To get to that point, innovation will need to triumph over tradition at all four campuses, but with SetSquared’s innovation statistics of 1,000 companies incubated at a 90% survival rate, with £1bn raised over the past 13 years, the Golden Triangle needs to take note. A similar model using some of the world’s brightest students, wealthy and experienced local entrepreneurs, and top intellectual property with all that cash floating about for investment could well be one of the most important contributions any of the universities could make to UK innovation.
On a related note, Bristol University has joined Oxford and Cambridge in taking advantage of the Enterprise Investment Scheme and Seed Enterprise Investment Scheme in setting up its own fund with Parkwalk Advisors, manager of the Oxbridge funds, which is now in the process of raising funds. The early-stage seed investment-sized funds have performed well for both Cambridge and Oxford, which have chosen to renew the funds annually since their launch and have allowed the tech transfer offices of both to invest in spinouts.
The schemes could lead to a number of universities opting to join the three in raising early-stage seed funds that can make all the difference to whether a spinout thrives or dies. It could also be good news for SetSquared, which has yet to raise a fund of its own despite the undoubted impact it would have, with at least one of its five core partner institutions warming to the idea of university venturing fund.
Both the UCL and Bristol funds demonstrate that the UK’s universities are becoming more switched on to getting the funding they desperately need to get their technology out there and that innovation is becoming the focus it deserves to be across UK campuses.
Overall, it is a matter of pride that in this, my final editorial for Global University Venturing before I leave for fresh pastures, I can say that when GUV first came about, both editor-in-chief James Mawson and I were huge advocates of the mostly unheard of university venturing fund and collaboration among universities. Just over three years later, we are beginning to see those ideas gain momentum in a way that could substantially change the UK’s approach to developing the wealth of talent and ideas emanating from campuses.
There is still much work that needs to be done, these bold steps will help transform the UK economy into the tech-heavy beast it needs to be to compete globally in the years ahead.