How can universities make research pay?
Monetising university research isn’t new, but an intensified focus on commercialisation has led to some innovative approaches in bringing products to market. Julie Ferry finds out more
Delivering innovative research has always been at the heart of UK universities but ensuring that stellar research makes it out into the world and impacts society requires academics to tread the less clear path of commercialisation.
Often research has stalled without the necessary skills and funding to make that leap from the lab to the marketplace and universities have been unable to capitalise on the wealth of talent they have at their fingertips. However, over the past few years, these hurdles are beginning to feel like a relic of the past, as research-intensive universities bolster their commercialisation arms and begin to compete with the rest of the world. Indeed, in 2017 a study found that the UK was outperforming the US on the number of invention disclosures per £100m spent on research and was catching up with their American counterparts in terms of IP income (currently the US achieves 4% of research resource and the UK 3%).
“When I started in the sector almost 20 years ago, it was still at a stage where people didn’t think about commercialisation,” says Dr Anne Dobrée, head of seed funds at Cambridge Enterprise, the commercialisation arm of the University of Cambridge. “Nowadays, entrepreneurship is a career choice for students and postdocs. The transformation in the environment has been amazing and is still happening. Our team here has grown enormously and that reflects the support and growth of this environment across all universities.”
Less than 20 years ago, people in the sector were still not thinking about commercialisation – Anne Dobrée, Cambridge Enterprise
Cambridge Enterprise supports its academics, staff and students through a number of channels. One of these is a consultancy through which an academic has a relationship with a large corporation which can help with administrative support and technology transfer, and which can identify commercial ideas and assess how to protect and licence them. An idea may then progress to the seed funds team in cases when investment is needed to create a spin-out company to take the research to the market.
Dobrée names Quethera, a company developed to slow or prevent the loss of sight in patients with glaucoma, as one of the highlights of last year’s crop. The company that focuses on gene therapy to eventually achieve long-term control of the disease through a single injection had received investment from the university in 2015, which contributed towards pre-clinical development and the establishment of a strong intellectual property platform, as well as funding a postdoc to test the efficacy of the therapy.
These measures attracted attention from Astellas Pharma who acquired the spin-out for £85m, which became a wholly-owned subsidiary. “It means that the technology is in the hands of an organisation that has the capability to take it to clinic,” Dobrée adds.
Such success stories are inspiring but require a lot of background work and support to achieve. For enterprise teams that are growing in number and are constantly searching for innovation, that can be a drain on university resources in itself. It leaves the question as to why universities continue to focus and grow this area of activity.
“The first thing to remember is that it’s not about financial return,” says Dobrée. “It is about fulfilling the university mission in terms of contributing to society. You are not fully contributing if you are not exploring all the ways in which that research can get out into society whether that’s straight knowledge sharing or through the commercialisation of a product. A large chunk of university funding comes from government and government is very keen to see that universities are fulfilling this part of their mission.”
Andrew Czyzewski at UCL agrees that this type of innovation work fosters positive connections. “It’s about the university being part of society rather than a separate entity. Spin-outs contribute to the economy but there are other examples of the positive aspects of working commercially.”
Indeed, the benefits to a university of a dynamic and thriving enterprise offshoot are not just limited to fulfilling their commitments to society. A strong track record in this area will attract academics who are leaders in their fields and are looking for an entrepreneurial environment where they can commercialise their work. It also helps to recruit postdocs who are increasingly concerned about securing their future careers.
At UCL there has been a particular focus on encouraging entrepreneurship among the student body. Enter The Hatchery, a business incubator where students who have a concrete idea for a business are offered support and mentoring with a view to attracting seed funding.
“The Hatchery is a really exciting project and is a big growth area for UCL,” explains Czyzewski. “There are around 30 students there at the moment and some are really gaining traction with their ideas.”
In fact, the past few years has seen the enterprise sector itself quickly responding to the changing business environment of the modern world, diversifying its offerings to suit its available talent and matching it with the specific needs of industry. For example, UCL has been helping academics to develop short courses for the professional sector and has overseen partnerships between research staff and large corporations such as Tesco, who have given the university access to an anonymised large data sample to gain insight into customer behaviour concerning brand loyalty. This partnership led to a high-profile paper being published in the journal Nature Human Behaviour and in so doing furthered the research capabilities of the academic who helmed the study.
Clearly, responding to the needs of its researchers and potential entrepreneurs has become a key part of enterprise in the university sector. Jaci Barnett, senior investment and commercialisation manager at the University of Bristol has seen a shift in the way that universities are dealing with entrepreneurial academics in recent years.
“The sector has found that some entrepreneurial academics who have had experience in commercialisation are saying that they don’t need the full support of the university and are looking for a different model in terms of the equity the university takes,” she explains.
“Therefore we have given them a choice; more support for a higher level of equity versus less support for a lower level of equity but importantly all our equity remains dilutable, which is different to other offerings.”
Barnett refers to arrangements at US institutions like MIT who retain a much lower stake but that percentage is non-dilutable to a certain investment point.
It is a model that Imperial Innovations at Imperial College London has adopted through a pilot programme called Founders Choice. It aims to give more experienced academics who have knowledge of the commercial environment greater flexibility and encourage more licensed spin-outs to form.
However, the use of non-dilutable equity as an approach is in its infancy in the UK and Barnett explains that it hasn’t been adopted by Bristol at the moment.
“There are arguments that a lower non-dilutable equity stake is better for the university in the long term but we feel that some investors might be put off by those terms.”
While the sector responds to increasingly savvy academic entrepreneurs, the future will no doubt see further diversification of enterprise models and the way universities interact with their staff and students to take exciting innovations to market. However, the core relationship between research, institution and society will remain.
“We do this work because we want to make an impact on society and the economy,” Barnett says. “But as a charitable organisation we have to be mindful that there must be a fair return on our investment in the research activities that underpin these companies. If we make a return it is ploughed back into research and enterprise to support the next generation.