Transcript RESEARCH AND INNOVATION SERVICE
Research and Innovation Support Conference
Successful University Spin-outs
Andy Duley Dr Arshad Mairaj Dr Cassie Doherty Dr Paul Ko Ferrigno Dr Neil Loxley Dr Sarah Jarmin
Research and Innovation Support Conference 1. IP Commercialisation at Leeds 2. Global Trends in Venture Capital: Measuring Investor Confidence v 3. What Makes a Good Spin-out Opportunity?
4. Why spin out? 5. Business Leaders and Research Professionals, Building a Partnership for Successful Spin-outs 6. Key messages
Research and Innovation Support Conference
IP Commercialisation at Leeds
v
Andy Duley Director of Commercialisation
Commercialising Intellectual Property
Multiple pathways for IP Commercialisation: • • • • Licences IP Sale Co-Development (JV) Spin-out Companies
Building Successful Strategic Partnerships
Faculty and Sector Hub Innovation
Commercialisation working closely with Faculty and Sector Hubs is critical to the development of opportunities to the appropriate Commercialisation Readiness Level Hubs • • • • • Digital Technologies High Value Chemical Manufacturing Cultural & Creative Industries Professional Services Transport Systems Super Hubs • • Healthcare • Health Services • Stratified Medicine • Pharma & Biopharma • Medical Technologies • • Social Care Food Security Energy and Resources • • Energy Water • Climate and Environmental Services
Building Successful Strategic Partnerships
Commercialisation Readiness Levels 1 2 3 4 5 6 7 8 9 10 Science Activity Research idea Proof of Market Technology Proof of concept Concept Validation
Core science Invention Willingness to exploit Identify novelty, align with market Realise inventive concept and prove technology readiness Market alignment, competitive advantage, detailed IPR review
Market Validation
Detailed market analysis, formal IP
Commercial validation
protection, develop technology and commercial strategy
Commercial PoC
Undertake technology develop against industry benchmarks, building commercial relationship
Commercia lisation Pathway
Prepare and execute licence, IP sale, JV or spin-out
Product
Partner develops the technology for market launch
Market Market Launch Monitor
Revenue Impact Financial Funding available from Sector Hubs, Faculty and Commercialisation depending on CRL
Building Successful Strategic Partnerships
Research and Innovation Support Conference • Focus on internationally leading research • Strategically align research with external markets • Demonstrate the Impact of our research • Provide a financial return for the University • Build long-term partnerships with investors, such as IP Group plc, and spin-out companies
Building Successful Strategic Partnerships
Spin-out Companies Over
100
companies since 1995
6
market listed companies Total value of spin-outs is
£190M
Start ups employ over
300
staff Keracol
Building Successful Strategic Partnerships
Research and Innovation Support Conference
Global Trends in Venture Capital:
v
Measuring Investor Confidence
Dr Arshad Mairaj Senior IP & Commercialisation Manager
2010 Snapshot of Investor Confidence
2009 Venture Capital (VC) fundraising was lowest in decade Fundraising fell by over 50% (in terms of new funds and total invested) Exits via stock market Initial Public Offering (IPO) or Acquisition dropped by 40% Fundraising situation would be far worse without Public Funding 40% of public funds feature in VC deals – public policy matters It is taking longer for investors to see Returns on Investment (ROI) Global average for a successful IPO exit is 7.5 years (UK broadly fits) Despite gloom - Fundamentals of UK Investment market appear good VC funds still capable of good exits - returns today stronger than after dot.com VC funds are delivering exits with lower capital invested over previous years
“Venture Capital: Now and after the Dotcom Crash” Yannis Pierrakis, NESTA, July 2010
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Pathway to Confidence Recovery
dot.com – Venture Capital industry saw 2 yr. contraction before recovery During recovery typically seed and early stage companies suffer mostly Unlikely for rapid recovery - as fund-raising first then investment 2009: Continued downturn of fundraising indicating near-term recovery is unlikely Trend: Increased fundraising in 2003 saw higher investment in 2004 (post dot.com) Longer than ever to realise investor Return on Investment (ROI) Low stock market activity & Reduced acquisitions = UK companies struggle to exit Given climate, leading Venture Capital funds tend to focus on existing portfolio Seeking new business opportunities naturally becomes a lower priority
“Venture Capital: Now and after the Dotcom Crash” Yannis Pierrakis, NESTA, July 2010
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2012 Snapshot of Investor Confidence STUDY DEMOGRAPHICS
Global Survey by Deloitte & National Venture Capital Association (NVCA) 13 countries with participating VCAs (US, EU, Middle East, Asia Pacific) 440 respondents having $50m-$10bn assets under management Majority of 35% having $100-499m assets 28% from US and 72% from non-US “Global trends in Venture Capital: How Confident are investors?”
Deloitte LLP, NVCA, July 2012 Building Successful Strategic Partnerships
2012 Economic Trends
1.
Overall Investors have higher level of confidence in their home country macroeconomy compared with 2 years ago 2.
Overall Investors have higher level of confidence in global economy today compared with 2 years ago
“Global trends in Venture Capital: How Confident are investors?” Deloitte LLP, NVCA, July 2012
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Regional Confidence & Sector 2012
1.
Investor confidence in EU is overall low. However UK, German, Dutch Investors lead European investments.
2.
UK Investors have very high confidence in seed level investment into UK and EU early stage companies 3.
Q2 2012 globally Venture Capitalists invested $8.1bn in 812 deals (highest since 2001) 4.
Leading sectors : Cloud computing, Software, Social Media, Healthcare IT. Lagging sectors: Cleantech, Telecoms, Semiconconductor, Biopharma
“Global trends in Venture Capital: How Confident are investors?” Deloitte LLP, NVCA, July 2012
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Key Findings – Measuring Venture Capitalist (VC) Confidence in 2012
1.
VCs are very confident in BrIC nations and IT sub-sector investments 2.
VCs are more confident investing domestically than globally 3.
VCs confidence in investing in Europe is lower than average but...
4.
While overall confidence on the economy, capital markets and fundraising remains low; investment confidence is still high 5.
More than 20% of deals in Q2 2012 were at seed level and overall investment of $8.1bn is highest since 2001
Building Successful Strategic Partnerships
What Makes a Good Spin Out Opportunity?
Dr Cassie Doherty 4 th December 2012 [email protected], 0113 384 5858
Systematically build outstanding businesses based on intellectual property.
Commercialisation of University IP through partnerships
17 Leeds spin-outs Value £189M
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Clear Market Opportunity
Is there are commercial need?
How big is the market? Are the accessible market figure appropriate? Who will buy this technology?
How will the market change over time?
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Strong Competitive Advantage
100% of the colour introduced to the hair using the TruKolor coloration system can be completely removed (and another colour re-applied if desired) using our TruKolor Remover product, with no significant hair damage.
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Robust Data
Demonstrated proof of principle – multiple repeats Benchmark data – show an advantage over the competition The field trials show that Xeros’ next generation washing system delivers superior cleaning performance to conventional commercial washing systems, as well as significantly reduces energy, detergent and water consumption.
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Protectable IP
Means to prevent competition
Patent Know How Copyright Trademarks Customer Relationships Unique Customer Relationships Commercialisation of University IP through partnerships 21
Solid Team
Board of Directors
John McArthur | Chief Executive Officer Dr. Raymond Kwan | Chief Technical Officer Technology venture capital Academic transport scheduling Max Cawthra | Finance Director Rod Jones | Non-Executive Chairman John Nelson | Non-Executive Director harles Winward | Non-Executive Director E&Y Chartered Accountant Senior management roles in relevant companies Rail industry expert Technology venture capital Commercialisation of University IP through partnerships 22
Clear Route to Market
How much will it cost to take this product to market?
Distributors Commercialisation of University IP through partnerships Direct Sales Partnership / technology acquisition 23
Pre 2006
Academic research
2006 Company
incorporated – grub and seed investment
2010
AIM listing £25M US patent granted CE mark
2009
First product in clinical trials
2007
£3M series A
2008
Chairman and FT CEO recruited Commercialisation of University IP through partnerships
2011
December £25M share placing 24
High Exit Potential
Route to generate a financial return for shareholders of the spin out company.
Look for precedent deals, and successful companies.
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Why Spin-out?
Paul Ko Ferrigno Head, Discovery Technology Avacta Group, plc
Who are you?
• Consciously competent?
• Consciously incompetent?
• Unconsciously competent?
• Unconsciously incompetent?
Who are you?
• Consciously competent?
• Consciously incompetent?
• Unconsciously competent?
• Unconsciously incompetent?
Should you spin-out?
• Consciously competent?
•
Hotshot, game-changing academic
• Consciously incompetent?
•
Frustrated in academe, you want to do more
• Unconsciously competent?
•
This stuff’s easy- I’ll go and make some money
• Unconsciously incompetent?
MONEY
POWER
PASSION
PASSION
BUSINESS LEADERS AND RESEARCH PROFESSIONALS
BUILDING A PARTNERSHIP FOR SUCCESSFUL SPIN-OUTS Dr Neil Loxley, Loxley Enterprises Limited
Dr Neil Loxley - Background
24 years experience of technology company funding and development Previously took Durham University spin-out through venture capital funding to main-list public company Now active in VC-backed technology businesses, assisting companies raise over £8m since 2007 Currently on Board of 5 VC-funded start-up including CEO at two Leeds University spin-outs
Spin-outs: Researcher Viewpoint
“My innovation is ground-breaking and as soon as I tell people about it, they’ll all want to buy it” “I’m a Professor/Reader/Senior RA in a prestigious University Department and running a business has to be easy in comparison” “It’ll be no problem to run a spin-out company whilst pursuing my academic interests” “I’ll end up owning 80% of the company and selling it for £100m in 3 years time”
Spin-outs: VC Viewpoint
Interested in commercial opportunity, return and risk Will ask questions that the Researcher may not have considered: Who’ll buy it?
How big is the market? How is it segmented?
Does the financial forecast justify our investment?
Will want to understand the role and commitment of the Researcher Partnering with a Business Leader can significantly improve the credibility of the proposition for a VC
How can a Business Leader Help?
Experience of company formation, funding, corporate development, leadership and management Understands the VC mindset and can see the opportunity through their eyes Will be realistic about timescales, effort required, likely funding needed and potential future value Will help to validate the market opportunity and prepare a viable business plan and financial forecast Will understand the funding process and will assist in negotiations and deal completion Can become a long-term partner to the researcher in building the business
A Business Leader…..
LIKES someone: With Enthusiasm With Common sense With Dedication Who is easy to work with DISLIKES someone: Who lives in an ivory tower Who is resistant to being challenged Who has “Not invented here” syndrome
Summary
Forming a Researcher and Business Leader partnership at an early stage can: Add significant value Set realistic expectations Reduce wasted effort and false starts Improve the chances of a successful spin-out The Researcher should partner with a Business Leader who: Demonstrates credibility in the technology area and target markets Has a track record of successfully developing technology businesses Has a good personal chemistry with the Researcher
Research and Innovation Support Conference
Dr Sarah Jarmin
Senior IP & Commercialisation Manager
Research and Innovation Support Conference
Summary
• • •
Leeds is successful at commercialisation Strategic working with Faculty and Sector Hubs critical in supporting this success Building internal and external partnerships pivotal
Building Successful Strategic Partnerships
Research and Innovation Support Conference
Contact us: [email protected]
0113 343 0900
Building Successful Strategic Partnerships