Beyond the Breakthrough

Is 2025 the year that university technology transfer will see a big boost? It certainly looks promising, particularly in the UK, where a government-led spinout review has encouraged universities to lower equity in spinouts to 25%. Most universities in the UK have adopted the guidelines. The debate over equity stakes is a discussion that Michele Barbour, associate pro vice-chancellor for enterprise and innovation at the University of Bristol, says she actually welcomed because it gave tech transfer a visibility that had so far lacked.

UK academic institutions will also have access to a £40m ($50m) pot for proof-of-concept funding. Although that is very little by international standards, it could still lead to as many as 80 new spinouts that wouldn’t have happened otherwise.

In Asia, Japan has demonstrated its ability to build a formidable ecosystem of university venture funds — some of which rival even the size of Oxford Science Enterprises, the world’s biggest such investment company in spinouts.

And in the US, the University of Kentucky’s Estate Whiskey Alliance is a unique new partnership that focuses on an industry not traditionally associated with commercialisation but that stands to benefit from research into sustainable agriculture, waste management and tree harvesting.

Here is a look at the highlights of the last season of the Beyond the Breakthrough podcast.

This is Thierry Heles’ farewell episode of the Beyond the Breakthrough podcast.

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To date, 49 universities in the UK have adopted a recommendation to take between 10% and 25% equity in their life science spinouts. The recommendation was inspired by the USIT Guide, published last year by tech transfer group TenU, making it the guide’s arguably biggest impact yet.

But it’s just the start. The University of Southampton has used the USIT Guide to develop a Deal Readiness Toolkit. It’s an effort to standardise and harmonise spinout deal negotiations, with templates, checklists, and advice on process improvement, says Diana Galpin, director of enterprise and knowledge exchange at the institution.

Ross McNaughton, a partner at law firm Taylor Wessing, welcomes the approach and says he’s keen to see a UK version of US-BOLT, a template term sheet for life science spinouts developed by a group of universities, VC firms and law firms in 2020.

For Michelle Barbour, associate vice-chancellor for enterprise and innovation at the University of Bristol, the USIT Guide and the discussion about equity stakes has been an opportunity to educate professors for whom a spinout had previously never been on the cards but who were now interested to learn more.

And Owen Metters, an investment manager focused on deep tech at Octopus Ventures, argues universities should use their newly found confidence in negotiations to follow venture capital’s power law and spin out more companies more quickly — acknowledging that most will fail but the winners will deliver outsized returns.

Diarmuid O’Brien, the pro-vice-chancellor for innovation at the University of Cambridge, leads the panel discussion, recorded at the TenU summit at the Tate Modern in London last month.

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The UK government has committed £40m ($50m) to proof of concept funding over the next five years. How should the money available be deployed? One idea — inspired by the Flemish approach — is to set up investment committees of industry, VC and university experts to allocate the money.

But is it enough money? Andrew Williamson, managing partner of venture fund Cambridge Innovation Capital, says he was delighted by the announcement because he was told by the government initially that there was no money at all, and then that they would provide £20m over three years.

The commitment remains small by international standards. Paul Van Dun, general manager of KU Leuven Research and Development, says the five universities in Belgium’s Flanders region have access to five times as much money. Anne Lane, chief executive of UCL Business, the tech transfer arm of University College London, was able to build an internal pot of £7.5m thanks to a successful spinout exit but the university still needs more money to fund every opportunity.

Andrea Taylor, chief executive of Edinburgh Innovations at the University of Edinburgh, says it is even harder in Scotland, where the government’s formula isn’t as generous when it comes to higher education innovation funding.

For Russell Schofield-Bezer, chief executive of consultancy RSB Advisory, proof of concept funding ought to be part of the country’s industrial strategy: if the UK wants more quality spinouts, it has to put money into the proof of concept stage necessary to create commercially viable businesses.

This podcast was recorded at the TenU summit at the Tate Modern in London last week.

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A year ago, Irene Tracey, vice-chancellor of the University of Oxford, and Andrew Williamson, managing partner of venture capital firm Cambridge Innovation Capital, published their UK government-sponsored report into the spinout ecosystem with a list of 11 recommendations on how to uplift the sector.

Among these points was a call to adopt the USIT Guide, a template for term sheet negotiations that asks universities to take a stake of between 10% and 25% in life science and physical science spinouts. Today this has been adopted by 49 institutions throughout the country.

Williamson says he’s glad the “myopic” focus on equity stakes has been put to rest and the conversation can shift to the great work that is being done at universities. One of the ways that work will be highlighted is with a database of all spinouts from UK universities, due to be released in spring 2025, thanks to the support of Research England, whose chair Jessica Corner leads the fireside chat in this episode of the Beyond the Breakthrough podcast.

But what more could, or should, be done? Research England has also committed capital to a series of pilot projects for joint tech transfer offices — such as one led by the University of the Arts London focused on social sciences and humanities — and the review led to the creation of a £40m ($50m) pot for proof-of-concept funding.

This fireside chat was recorded at the TenU Innovation Summit at the Tate Modern art gallery in London earlier this week.

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Whisky may not be the first industry to come to mind when you think of university innovation, but for the University of Kentucky — based in a US state known around the world for its bourbon industry — it’s an obvious next step in its tech transfer activities.

UK Innovate, the institution’s commercialisation arm, is spearheading a new organisation called Estate Whiskey Alliance (EWA) that will allow members to access and help guide research in areas such as sustainable whisky production and regenerative farming.

Run by director Landon Borders and operations manager Alexa Narel, the alliance builds on the university’s expertise through its James B. Beam Institute for Kentucky Spirits. But it’s not just for Kentucky: there’s already one co-founder from Canada (spirit producer Black Fox Farm and Distillery), and Estate Whiskey Alliance plans to expand into other whisky-producing nations such as Scotland and Japan.

There will be a highly visible benefit for consumers, too: the Estate Whiskey Alliance will authenticate and certify whisky made to strict, high standards — from milling to fermentation to barreling and ageing, everything has to occur on the distillery’s estate, and at least two-thirds of the mash bill grains have to be grown on estate-controlled land.

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Researchers with promising technology in the UK can apply for public innovation agency Innovate UK’s pre-accelerator programme ICURe, which supports them in reaching out to 100 potential customers to understand the market viability of their idea.

It’s a powerful initiative that helps would-be founders understand if their idea can make a good business and what it should look like. But securing money wasn’t, until recently, part of that programme and researchers weren’t taught to ask for cash — the thinking was that anything inventors had to offer at this stage didn’t yet have commercial value.

Pearse Coyle, founder and partner of the Deeptech Seed Fund, says that’s the wrong approach. He worked with Innovate UK to change the ICURe programme. The solution is a scorecard outlining potential customers’ willingness to pay for a pilot project and engage seriously with a spinout.

Coyle’s thesis is that spinouts that demonstrate this early traction are much more likely to be successful in the long run. He argues that spinouts should focus on asking for money early on — long before there’s a finished product — and avoid spending time in incubators which may add no value.

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Just over a fifth of academic institutions in Asia have access to a dedicated university venture fund, with a third of all funds found in Japan — that’s the finding of GUV’s latest regional analysis published last week.

It puts Asian universities behind those in the US, Europe, Australia and New Zealand, though the Japanese ecosystem deserves recognition for being very mature: out of 13 universities on the list, 11 have at least one fund. The University of Tokyo Edge Capital Partners is also a rare example of a fund that invests overseas, rather than just in spinouts or the local ecosystem.

On this episode of the Beyond the Breakthrough podcast, we are turning the table on usual host Thierry Heles, who wrote the analysis, with editor Kim Moore asking the questions.

You can listen to a previous episode, discussing the US and Europe findings, here.

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Should professors be spinout founders? An increasing number of universities are pushing their faculty to be more entrepreneurial but data suggests that that’s not always a good thing — for the professor, the spinout or the students.

Maria Roche, an assistant professor at Harvard Business School, examined the funding and exits of hundreds of biotech spinouts and discovered that if the startup’s technology is closely linked to the research in the original lab or the faculty is a founder, the spinout is much less likely to raise significant funding. Having an academic founder also doesn’t improve the odds of being acquired or going public.

For PhD students in the academic founder’s lab, the experience can be miserable because suddenly, this great mind they were hoping to learn from is busy running a startup. That has long-term implications: these students publish fewer studies themselves and are significantly more likely to go into consulting rather than becoming researchers themselves.

Roche is not against spinouts per se but warns that universities don’t seem to be aware of the cost. In this week’s episode of Beyond the Breakthrough, she offers tips on how to mitigate these effects.

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Despite the benefits of universities having a venture fund they can draw on to invest in companies they help commercialise, they are still a rarity in places with mature venture capital sectors like Europe and the US.

More top European universities have access to university venture funds than the US’s most research-intensive institutions — that’s the finding of Global University Venturing research published this summer. But the story isn’t quite that simple. Both geographies count an equal number of funds, but multi-university venture funds (investment vehicles backing spinouts from two or more institutions) are a more common feature in Europe.

One reason for that is deal flow: Ireland, for example, saw a total of 26 new spinouts founded in the whole country last year so a fund for a single institution wouldn’t be sustainable. Indeed, the Atlantic Bridge-managed University Bridge Fund is backed by multiple universities and invests throughout the nation.

Surprisingly, while raising a venture fund is a live discussion at universities on both continents, some are against setting up an investment vehicle to the point of declining money offered by alumni. There’s a few reasons for this, including financial risk, that we’ll dive into on this episode. Fill out a brief survey to help us with more university venture fund research.

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We look back at some of the highlights of season 3, which featured many a discussion about university incubator and accelerator programmes, including insights from Jim Shaikh (The Greenhouse at Imperial College London), Paul Devlin (Cardiff University), Brandon Paschal (LaunchLab at Stellenbosch University), and Duncan Johnson and Miles Kirby (NG Studios powered by Deeptech Labs).

This season also featured discussions around university venture funds (Anita Nel at Stellenbosch University and its University Technology Fund) and investing in the construction sector (Ilian Iliev at NetScientific).

We also tried to answer the question of what makes an ideal spinout founder with GUV’s own Fernando Moncada, as well as an episode guest-hosted by Imperial College London’s Simon Hepworth that specifically looked at immigrants as founders. John Dearie (American Center for Entrepreneurship), Alice Li (Cornell University’s Center for Technology Licensing), Desmond Cheung (an investor with Foresight Group) and Dorian Haci (founder and CEO of Imperial spinout MintNeuro) all contributed to that panel discussion.

Beyond the Breakthrough is taking a summer break — but keep your eyes peeled for a bonus episode or two coming later this month!

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