A PraxisUnico report reveals that despite the continuing difficult economic background the number of university spinouts has stayed constant over the past five years, also companies are surviving longer than before. Data from the PraxisUnico Spinouts UK Survey Annual Report, 2012 indicates that in these demanding times, the process of spinning out companies and nurturing their development has become more specialised, concentrated on those universities which have sufficient experience to enable them to do this effectively, and supported by investors which focus specifically on this sector. These specialist investors are focusing on a ‘select band’ of spinouts that are seen to have especially good growth prospects.
Dr Douglas Robertson, PraxisUnico Chair and Director of Research & Enterprise Services, Newcastle University says, “These are difficult times for spinout companies, and all those seeking to take technologies forward with the investment community. It can take many years for companies to move from start-up to full establishment. This report underlines the important role that spinout companies can play in developing outputs from the science base into market applications and seeking to capture downstream benefits for UK plc. PraxisUnico members play a significant role in the early stages of this complex and lengthy process. It is fantastic to see much of this hard work reaching fruition.”
Several new investment funds devoted to the spinouts sector have been started recently, most notably the Orion Fund for University College London and the universities of Edinburgh and Manchester, managed by MTI Partners which hopes to raise £150 million for investment. Other specialist investors have already raised funds for this sector, the largest being Imperial Innovations Group which completed a £140 million fundraising in December 2010, followed by IP Group with a £55 million placing in June. These investors have been encouraged by some high value exits in recent years; the $1 billion sale of Biovex to Amgen in January 2011 was an outlier, but more recently the sale of Simcyp to Certara for $32 million gave early stage investor Fusion IP a 200x return on investment.
The result has been a stream of high value investments; over the past 18 months the Survey has identified 14 investments of £5 million or over, ranging as high as £60 million secured by Circassia in April 2011 from a consortium led by Imperial Innovations.
The companies attracting this level of interest are predominantly in the life sciences sector, which over the ten years analysed by the Annual Report has accounted for between a third and a half of all spinouts. In the past five years, companies in the renewables and cleantech sectors have become a larger part of the spinouts population, with ICT/digital and physical sciences currently out of the limelight.
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About the PraxisUnico Spinouts UK Survey
Spinouts UK (www.spinoutsuk.co.uk) was startedto create a detailed listing of spinouts and start-ups from UK universities since 2000, to give reliable ‘bottom up’ data for analysing patterns and trends in the development of these companies, and help to inform the debate about how best to maximise the commercial potential of UK innovation and invention.
This Annual Report givesan analysis of the online database of some 1,680 companies formed since 2000 with university involvement, either as spinouts (some 890 companies based on Intellectual Property owned by the university of origin), or start-ups by members of staff or recent graduates.
Spinouts UK was started by Young CompanyFinance (YCF) in 2010, with the support of project partners Finance Wales, Marks & Clerk, MFL Science & Technology, NESTA, Scottish Enterprise, UCLB, UMIP, and Winning Pitch. PraxisUnico became lead partner for the project in October last year.
About Young Company Finance
Young Company Finance (www.ycf.co.uk) has been devoted to tracking and reporting on early stage companies in Scotland since it was started in 1998, and it is the only publication to cover this market exclusively. YCF is a monthly publication which aims to report all significant investments in young companies from start-up to maturity.
A separate publication, YCF North, now discontinued, covered the young company sector in the North of England for four years from 2006 to 2010.
Although the particular focus is on how young companies with high growth potential can finance their development from start-up to maturity, YCF also reports news about other organisations involved in the wider ecosystem in which young companies develop; investors, advisers, incubators, public sector agencies, private sector consultancies, and many others.
In addition to producing the monthly publication, YCF has also been involved in observing and commenting on the young company sector through a series of Special Reports (to date Life Sciences, Digital Entertainment, and Renewable Energy), trends surveys for several of the Connect organisations in the UK, preparation of Risk Capital Market reports for Scottish Enterprise, a wide range of research projects in the early stage high growth company sector, and a popular annual conference now in its tenth year.
About PraxisUnico
PraxisUnico is the UK’s leading research commercialisation association and a not-for-profit educational organisation set up to support innovation and commercialisation of public sector and charity research for social and economic impact. PraxisUnico encourages innovation and acts as a voice for the research commercialisation profession, facilitating the interaction between the public sector research base, business and government. PraxisUnico provides a forum for best practice exchange, underpinned by first-class training and development programmes.