Q: How did you get involved in University
spin-outs?
In 1995 I was contacted by David Sainsbury who ran the Gatsby
Trust. He was concerned that although plenty of money was being pumped
into universities there was very little coming out in the way of
innovative commercial ideas. It was only really Oxford that was doing
anything in this respect. So we tried to emulate the Oxford model - it
was Southampton who was the first university to co-invest in this kind
of technology transfer.
Q: Where had universities been going wrong?
In universities, innovation is internally focused. It is driven by a
high level of academic curiosity rather than commercial gain.
Oftentimes, faculties do not communicate sufficiently to marry an idea
in one department to an idea in another. There are problems like
rivalry, academic priorities, patent and publication issues or even
geographical location that often prevent a ‘killer application’
emerging. An outside body can marry research outcomes with industry
needs and bypass these institutional problems.
Q: Are academics necessarily the right people to
then run the spin-out?
Not really. You need a strong management team and there are few
scientists who have experience running businesses. It takes a long time
to take a raw piece of innovation and make it patentable. Plus there is
the problem of pride: if you’ve had the original idea and then have to
see it wrangled over and perhaps carved up and sold off, that can
present problems. Universities need outside help in providing, a high
profile CEO or a strong board who will drive the business.
Q: So what incentives did the Gatsby Trust offer
to ensure the ideas kept flowing?
Well, we set up a system whereby any revenues generated were split
three ways between the inventor, the investors and the university. This
led to a huge influx of ideas; it was a real turning point and is now
the standard procedure at most universities. Offering the university
share options is also an effective method of ensuring that they really
support their spin outs. Spinning out companies costs nothing and the
rewards can be enormous but in comparison to America, British
universities are very poor at doing so.
Q: So how did you get it so right with Kymata?
Kymata is a prime example of an outside body putting together two
disparate concepts and creating a world class company. We took
innovations in fibreoptics and microchips from two different
universities and created an optoelectronic components manufacturer.
Starting with a fairly modest investment in 1996 we then reached a
valuation of $600 million by 2000. Hunter Fleming is another good
example; they kept the scientists on board in consulting roles and kept
the university involved with share options. The real breakthroughs came
with a strong board and people outside the academic community
championing the business. There was a good blend of commercial acumen
and academic curiosity.
Q: Where do we go from here? How can
universities spin out more Kymatas and Hunter Flemings?
Universities have become a lot better. Manchester, Bristol, Imperial
College London, Southampton and Bristol are all improving their tech
transfer infrastructures. Universities now spend £4.5 billion on
research - this is comparable to Ford, BT and IBM budgets. But I still
think universities need to improve communications between faculties.
They still work in ‘silos’ where perhaps understandably, there are
conflicts between research, teaching and business.
