Technology transfer from academia to industry
Academic research with a view to commercialisation is becoming increasingly popular. The number of university spin-out companies and partnerships with industry is growing. Rupal Mehta investigates the reality behind this entrepreneurial spirit.
Professor Peter Haycock is swamped. Finding time to conduct research, run a business and teach is not easy. Haycock is Technical Director of SciSite Ltd, a spin-out company established in April 2006 from research carried out at Keele University in Stoke on Trent, UK. It specialises in non-contact, non-destructive detection of rust on steel using a specially developed corrosion probe. Several industry partners are conducting commercial trials with a view to scale up the technology. ‘We have a range of possibilities that may involve outsourcing or franchising [the technology, or] continuing as a small high tech consultancy,’ says Haycock.
Based at the University’s Science Park, SciSite is one of hundreds of spin-out companies around the UK engaging in industry collaboration to take a product/technology from laboratory to market.
The most recent survey of UK university commercialisation activities was completed in 2004 by The Universities Companies Association (UNICO), based in Cambridge, UK. Of the 75 institutions surveyed, including 25 of the top 30 universities in terms of resource income, each, on average, spun out two new companies in 2003, consistent with figures from 2002. Invention disclosures, licensing activity, patent applications and patents issued increased in 2003. Income from licensing research to industry rose from £22.4m to over £31.3m from August 2002 to July 2003.
Moreover, according to research from Southampton University, UK, spin-out companies that are floated on the stock exchange generally perform well due to their credibility. ‘They are very different types of beasts,’ says Tony Raven of the Centre for Enterprise and Innovation at Southampton. ‘They are often based on 20 years’ of research rather than just an entrepeneur’s idea. The Alternative Investment Market (AIM) has opened up public money for early-stage start-ups.’ During 2003-6, 26 such companies went public, with a combined value at their initial offering of £1.3bln. The UK Government has also invested £500m in university technology transfer since 1997.
Such is the rate of activity that UNICO joined forces last year with the Association of University Technology Managers in the USA and the Canadian Technology Transfer Association to develop a set of metrics for measuring and benchmarking technology transfer.
But how far have the worlds of academia and industry united in the UK?
Haycock argues that there is still skepticism among academics about dabbling in commercialism. He says, ‘A lot of academic scientists are [engaged], on the main, in groundbreaking developments, and have little interest in industry’s seemingly watered down use of science. Some industry sectors tend to be rather slow to adopt scientific innovation, partly on economic grounds, but also through inertia, since there is no need to adopt something new if the old method works. [Other] academics think that the results of research should be widely disseminated, including to industry, and are opposed to commercial exploitation by universities’.
This hesitation among ‘pure scientists’ has also been observed by Danny Green, CEO of BioCeramic Therapeutics Ltd (BCT), a spin-out company at Imperial College London, UK. Green, who has an extensive background in venture capital investment, looks after the business end of BCT, while Dr Molly Stevens concentrates on scientific research into novel biomaterials.
Green says, ‘I do think there can be tension within every individual academic – “how can I reconcile the idea that I want to do something for humanity, but people will only back me if I make money for them?” My response is that if a footballer or pop singer can be a millionaire, why can’t someone who invents a device that saves lives? Which one of these groups is more deserving?
‘The alternative is that the work just stays as research, which some academics are happy with. But I don’t think most scientists want to stay in their ivory tower.’
He argues that it is a myth that giving the research away and not patenting it will benefit humanity. ‘Unless you patent it, no organisation will spend the money to test it,’ explains Green. ‘To translate academic research into products, you need to protect your intellectual property (IP) and work with or form companies. [Stevens’] attitude is healthy – she recognises that universities are not designed to create things to sell. That’s what companies do.’
Taking the plunge
Having decided to ‘do business’, moving forward is still no mean feat. Haycock set up companies previously that came to naught. He says, ‘For an academic to commercialise research outputs while remaining in post at a university, it is essential to involve the university. The first time I tried it was before all the government-funded mechanisms were put in place to allow smaller universities to provide substantial support. The process was unduly exhausting, and looking back on it, it had little chance of success. Keele has developed its support rapidly over the last 10 years’.
SciSite has access to discounted accommodation, free legal advice, an EU consultant on regulatory matters and a business mentor. The university also put the team in touch with funding bodies to get the ball rolling.
But experiences among academics vary considerably, says Mike Wright of Nottingham Business School at the University of Nottingham, UK, who has completed a number of studies in the area. He argues that although most institutions now have technology transfer offices and are more sophisticated at protecting IP and setting up businesses, they often fail to nuture the companies.
‘There is a difference between the creation of spin-outs per se, and spin-outs that create wealth,’ says Wright. ‘The proportion of university spin-outs that succeed is tiny. Few in the UK have been sold or floated on the stock market. Venture capitalists expect 10-15% of new businesses to generate wealth. Unless universities are prepared to back their spin-outs with appropriate resources, most will continue to fail.’
Key areas that need to be addressed are:
- A lack of finance.
- Employing people with the right skills.
- Infrastructure, such as a suitable space on a science park to ensure credibility with suppliers, investors and customers.
- Incentives and rewards for university staff, such as shares in the company.
- Establishing a clear business plan.
Wright adds, ‘A lot of academics set up a company as a way of getting grants as an extension of their research, even though the funding is for commercialisation’.
While he acknowledges that smaller universities might not have the resources to back entrepreneurial academics, he emphasises alternative routes.
He suggests that such institutions draw on the skills of MBA students in their business schools, consider working with other universities through regionalisation, glean advice from academics who have already set up businesses, and work with organisations such as the IP Group, based in London, UK. The IP Group collaborates with a number of UK universities, including Bath, King’s College London and Southampton, to help commercialise products.
One UK university that is actively commercial in its outlook is Imperial College London, UK. Imperial Innovations is a business in its own right, dedicated to technology transfer, company incubation and early stage ventures in disciplines such as energy, environment, healthcare and emerging technology trends. It caters to research coming out of Imperial College, as well as handling technologies originating through clients such as the Carbon Trust and other universities.
The scope of support provided by the company illustrates the effort required to commercialise research, and the uphill task faced by smaller outfits. Imperial Innovations has a team of 47 to support academics in all areas, including setting up meetings with big players in industry, providing access to lawyers and accountants, and installing experienced chairpersons and chief executives to head new ventures.
One notable success is Ceres Power. This AIM-listed offspring of Imperial Innovations was established in 2001 to explore solid oxide fuel cell technology. It is now a £40m firm with a team of 60 based in Crawley, UK.
‘As a business we go out and talk to industry and find out what it is they are looking for, and meet those needs [through] the technology transfer process,’ says CEO of Imperial Innovations, Susan Searle. ‘The academic can have a driving role in the business or a passive role, or can concentrate on the scientific research. It’s up to them – it’s a partnership. We will take the concept, test it against the market, build a prototype and make it into a viable investment proposition. [We are not] a passive filer of patents.’
One of the main decisions to be made at the outset is whether to license a technology or product, or build a company around it. Searle explains, ‘The licensing route requires less resources. If you have a single product opportunity with a clear market player out there, then the most sensible thing is to license. The partner has a sales team in place to get the product to market quickly, and we usually get an upfront fee and royalties when the product is sold’.
When it came to Ceres Power, the range of applications for fuel cells prompted the team to establish a company, ‘The key thing we needed to do was scale it up and take it through to commercial prototype development. And you need a dedicated business to do that,’ says Searle. ‘[For companies] we tend to look for things where development work would add value.’
While Imperial Innovations has the backing of the University’s reputation in the market, Haycock emphasises that academic entrepreneurs venturing out on their own need to think more about the needs of industry. ‘Often it is not viable to go for the scientifically most exciting solution. Cost-benefit analyses are important.’
Stevens adds that the focus at university should rightfully lie with the research assessment exercise and teaching, but that the experience of running a company can be exhilarating and enhance teaching. ‘To me, the two are closely linked – quality science leads to great innovations.’