In the last few months we have welcomed experts from both Stanford University and Massachusetts Institute of Technology to the UK to share good practice in technology transfer.
This has contributed to the work of a universities/HEFCE group, chaired by Professor Trevor McMillan, the Vice-Chancellor of Keele University.
A key lesson we have learnt from US colleagues is that we need to understand the inter-play between a university and its local eco-system as a key driver of entrepreneurship. One aspect to this is access to finance, though there are many more being explored in the McMillan work.
Silicon Valley now provides Stanford University with the necessary ingredients for success in technology entrepreneurship – mentors, incubators, CEOs and financiers needed to get a spin-out company to the market.
This has not always been the case, though. Stanford and Silicon Valley have developed in parallel, with important inter-play between leading figures at the university and leading figures in the Silicon Valley industries.
Key figures include the visionary academic engineer at Stanford, Frederick Tiernan, who believed in an industrial mission for the university, and successive Stanford presidents who have supported academic entrepreneurialism, such as current President John Hennessey.
An important ingredient in any entrepreneurial eco-system is money. Start-ups in technologies such as biotech may require vast amounts of capital before they get a product to market.
Some may need to go to public stock markets before they are able to make sales – and indeed before they are certain they have anything to sell.
There is a lot of money in Silicon Valley but above all, there is the right mix. On the long road from start-up to Google, different types of investor are needed.
At the outset, the issue is seed funding from people who recognise the scientific insights, and daring to take a punt on an idea that most of us could barely understand.
But that leads to the need for people – the venture capitalists – who can commit large sums and can see how a major industry with significant impact on the economy and society can be built.
Silicon Valley companies have access to venture capital with very deep pockets, sometimes deeper than stock exchanges here.
It is possible for UK spinouts to thrive: for example, Professor Hagan Bayley at Oxford University whose research led to a new company, Oxford Nanopore Ltd, producing technologies that have helped fight the Ebola virus in Africa.
The UK is strong in financial services, but we do not always have the mix of money to hand off between the seed funders and the venture capital investors. So such examples are rarer than they might be.
The Patient Capital movement is one proactive step UK universities, their academics and private sector partners have taken to bridge the gap.
University technology transfer expert, Tony Hickson of Imperial Innovations, has explained this movement in a briefing paper for HEFCE to inform the McMillan group work.
Patient Capital creates new sorts of expert intermediaries that specialise in, and work closely with universities.
These intermediary businesses take the long-term view, with ‘ever green’ funds that get ploughed back into more spin-outs.
The intermediaries have forged links with financial backers, who have access to major capital and who are willing to make considered, long-term bets on the basis of expert advice.
This does not replace the need for other important capital contributions, but it adds into the mix making it more likely that more technologies will cross the so-called valley of death.
As with Stanford and Silicon Valley, the Patient Capital movement started, and has been developed, through the initiative of visionary academics, universities, technology transfer offices and investors coming together, with the support of Government.
In the 1980s, the Government took decisive steps to start the ball rolling. It made universities here, like Stanford, responsible for their own entrepreneurship. Universities have since supported their entrepreneurial academics to devise new approaches.
A landmark in the development of Patient Capital was an innovative deal done by the head of chemistry at Oxford University, Professor Graham Richards, with a company, Beeson Gregory. This led to the formation of one patient capital business, IP Group.
Universities like Imperial College, with heads like Richard Sykes from industry, have played a part through the innovative approach of spinning out their technology transfer arm and listing it on AIM – Imperial Innovations, another patient capital business.
Successive governments have supported the infrastructure for technology transfer expertise in universities – through HEIF funding, for example – and provided greater incentives for universities to make an impact on the world.
The last couple of years have seen success in patient capital vehicles. Investors increasingly want exposure to the best of UK research.
Still, these are risky areas, and it’s important that universities, funders like HEFCE, as well as Government, are in it for the long haul, inspired by the potential to make a difference to society from the excellent research conducted in the UK.
We anticipate that the McMillan group report in July will have more to say on how we can strengthen universities working with their successful eco-systems.