Beyond the Breakthrough with Thierry Heles

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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Andy Shenk, the chief executive of Auckland UniServices, the commercialisation subsidiary of the University of Auckland, knows that collaborating with the Māori people is important. He also knows that big data and AI offer great opportunities, but tells me about some of the challenges too.

He also argues that the country’s remoteness actually makes space tech a strength for New Zealand, although the nation still struggles with a lack of serial entrepreneurs despite the fact that many people are open to trying their hands at a startup.

Auckland UniServices is also unique in that it doesn’t simply create its own spinouts and startups, but also operates businesses – including one that trained medical staff in delivering the covid-19 vaccine across New Zealand and several Pacific island nations.

Today we’re revisiting a classic episode from the archives. If you want to know more about Auckland UniServices, head on over to globalventuring.com/university where you can find a brand new op-ed from Andy’s colleague Will Charles looking at why university venture funds and low equity stakes are important.

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Setting up a venture fund in 2020 was a “huge paradigm shift” for Stellenbosch University in South Africa, because, for the first time, the executive leadership at the institution became interested in spinouts, says Anita Nel, the chief director for innovation and business development, because they understood that academic research had commercial value and a way to build, for example, local pharmaceutical expertise (the country had to wait six months longer than the northern hemisphere for a covid-19 vaccine because there were no vaccine developers or drug discovery companies in all of Africa).

External investors have taken note too: since the University Technology Fund (UTF) was launched with the backing from public-private investment vehicle SA SME Fund, there have been “hundreds of millions of rand” (ZAR100m = $5.4m) invested in the startups incubated by the university, says Brandon Paschal, the deputy director for spinout companies and funds who is also in charge of incubator LaunchLab.

The fund is a first not just for Stellenbosch University or South Africa, but for the whole continent because it invests solely in university spinouts from Stellenbosch University and the University of Cape Town (while University Mohammed VI Polytechnic in Morocco also has a fund, UM6P Ventures, though that one invests in startups across Africa).

The first University Technology Fund, which raised ZAR230m, has been deemed a success. Now, a second fund is being raised with one key difference: it will be a national fund after Nel overcame early hesitancy from other tech transfer offices in the country.

Immigrants are profoundly entrepreneurial people: they leave behind everything they know for a new country and new opportunities, often at a financial risk. This willingness to embrace change and build a new life from scratch means it should not be a surprise that in the US alone, 43% of Fortune 500 companies have been founded by immigrants.

But there are obstacles that governments around the world put in front of such people and those they subsequently want to hire for their startups. In the US, for example, the number of H-1B visas (which allow companies to hire foreign talent) is capped and only 65,000 such visas can be issued in total each fiscal year.

And while large corporations have the financial and legal resources to navigate routes like the H-1B or Global Talent visa in the UK, startups typically lack these means and so can miss out on talent even when they’re developing technology in a field that only has a handful of experts around the world.

John Dearie, president of the Center for American Entrepreneurship which lobbies policymakers for changes, points out that “the United States is the only industrial democracy on the planet that does not have a visa category specifically designed to attract and retain foreign-born entrepreneurs”.

Dearie is joined on this episode of Beyond the Breakthrough by three people who have first-hand experience of the challenges, and opportunities, around immigration: Alice Li, executive director of the Center for Technology Licensing at Cornell University; Desmond Cheung, senior associate at Foresight Group; and Dorian Haci, founder and CEO of neural implant startup MintNeuro.

Simon Hepworth, director of enterprise at Imperial College London, leads the discussion, which marks the third and final part in our mini-series in partnership with tech transfer association TenU on building spinouts.

Part 1 of this mini-series: The key ingredients of successful spinout teams Part 2 of this mini-series: Funding for all — unlocking diversity in spinouts

Alice Li previously joined the Beyond the Breakthrough podcast for an in-depth conversation about Cornell University’s ecosystem. Listen to that episode here.

Commercialising social sciences research is such a new area of technology transfer that when you spin out a company “you might be the first to do that type of deal,” says Paul Devlin, the head of research commercialisation and impact at Cardiff University.

And Cardiff is going all in: the institution is a founding member of Aspect, a UK-based multi-university organisation that was set up to drive the creation of social sciences spinouts. Two years ago, Cardiff opened a six-storey incubator, called sbarc|spark, which is dedicated to social sciences and home to the tech transfer office itself.

Devlin — who’s been in the job for 18 months — can already claim early successes such as HateLab, a platform to detect online hate speech and crime, that began as a social sciences research project but last year was spun out as Nisien.ai.

Devlin is also working with his boss Vanessa Cuthill and vice-chancellor Prof Wendy Larner to make sure tech transfer is measured by impact, rather than just VC investment raised — a metric that makes sense for life sciences or software spinouts, but not for social sciences.

Learn more about SETsquared in our interview with the enterprise partnership’s interim executive director Marty Reid.

The Cambridge, UK cluster isn’t short of opportunity: the university’s research and knowledge exchange activities alone contribute £23.1bn to the economy per year. Investment firm NetScientific, and its fund management subsidiary EMV Capital, are among the investors that have flocked to the city.

And NetScientific is now doubling down on the cluster, chief executive Ilian Iliev says, after having taken over its local peer Martlet Capital, a firm that had been the corporate venture arm of aerospace and defence company Marshall Group for nine years until 2021. The move was the natural conclusion to EMV Capital’s earlier decision to become an investor in Martlet.

EMV Capital is now exploring launching new funds under the Martlet Capital brand. Already, the acquisition has helped NetScientific nearly double its assets under management to more than £100m and more than doubling the portfolio to 70 companies.

Iliev, who first joined the podcast in March last year, returns also to discuss NetScientific’s decision to acquire a 30% stake in Wanda, a remote patient monitoring platform. It’s an unusual full-circle moment for the portfolio company and the investor: Wanda was majority-owned by EMV Capital until 2019 (this predated EMV Capital’s own merger with NetScientific). Noting that there can be “poetry in finance”, Iliev explains how the world’s shift to telemedicine accelerated by the pandemic has made Wanda a valuable proposition to an investor like NetScientific once again.

Ilian Iliev first joined Beyond the Breakthrough in March 2023. Listen to that episode now to learn more about NetScientific and EMV Capital’s history and why the firm is bullish on deeptech, healthcare and the Cambridge cluster.

Duncan Johnson argues that spinout founders in the north of England need to learn to think bigger. That’s not just a question of access to capital (his investment firm Northern Gritstone has £312m at its disposal) but also of infrastructure to mentor and nurture these founders.

Duncan took a trip to Boston last year where he realised that even the Massachusetts Institute of Technology had benefited from creating The Engine, which has a fund and a deeptech incubator.

To do something similar back home, Duncan found a willing partner in Miles Kirby, chief executive of Deeptech Labs, an accelerator and fund that began with a focus on the Cambridge ecosystem but is today attracting startups from all over Europe.

The two teamed up to launch NG Studios powered by Deeptech Labs, a 10-week accelerator programme that teaches academic founders how to approach their fledgling businesses as potentially world-changing unicorns and to go after big funding rounds. It does it, for example, by bringing in industry experts for 1:1 insights and world-class mentors like serial entrepreneur Stan Boland, who has sold multiple companies (such as fabless semiconductor manufacturer Icera to Nvidia for more than $367m).

It also does it through a demo day, bringing hundreds of potential investors to the north of England, a region historically ignored by VCs that have tended to focus on the golden triangle of London, Oxford and Cambridge.

The first cohort of NG Studios are advanced materials developer Auxetec, robotics software platform BOW, cybersecurity company Cavero, microbial biomanufacturing systems developer Evolutor, single molecule spectroscopy tool producer Exciting Instruments, and protein microgel developer MicroLub.

Further listening

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Disclaimer: Mawsonia Ltd is a limited partner in Deeptech Labs.

Some of the most innovative clean energy and climate technologies originate in the labs of the world’s research universities. At Imperial College London’s climate innovation accelerator, The Greenhouse, startups address solutions in niche areas such as bio-textiles, waste management and green hydrogen.

It is not just venture capital investors that are engaging with these startups. Corporate investors seeking to decarbonise their supply chains are seeing opportunities to partner and finance these early-stage startups at the seed investing stage.