Academic Acquisitions: University IP & Commercialisation

Introduction

The successful commercialisation of academic research offers tangible benefits for UK universities, as they receive both a financial boost and the opportunity to demonstrate to policymakers that their publicly-funded research can have wider benefits for the UK economy. By licensing their Intellectual Property (IP) to external companies or "spinning out" start-ups to develop and exploit IP, universities are able to harness academic research to satisfy previously unmet needs for consumers and to disrupt traditional markets. Many innovations we now take for granted, from penicillin to LCD screens, were first developed by UK universities.

This article will look at the current trends in the UK, some potential risks of commercialising academic research, and opportunities for future growth.

UK Universities & IP

Recent statistics published in The Financial Times portray a buoyant entrepreneurial environment at UK universities. Investment in spinout start-ups raised £1.1bn from 355 deals in 2017, rising to £1.4bn from 352 deals in 2018. Despite global economic uncertainty and Brexit concerns, 2019’s current figure is still a healthy £852m from 238 deals. 13,000 businesses launched between 2014/15 and 2017/18 and 6,181 are now at least three years old.

A 2018 report for the Department for Business, Energy & Industrial Strategy by consultancy firm RSM, evaluated issues around the commercialisation of university IP, highlighting the differentiators that distinguish leading institutions such as Oxford, Cambridge and Imperial College. Profiled in the report, Cambridge University sits at the centre of the "Cambridge Phenomenon", a cluster of 5,000 high tech companies turning over £12bn per annum. Cambridge Enterprise, a wholly owned subsidiary of the University, supports the academic community through consultancy, the protection and licensing of IP, and through creating and investing in spin-outs. Cambridge Enterprise and Cambridge Innovation Capital are able to invest independently in early stage ideas, providing up to £1m in seed funding and up to a further £10m per company to take them forward. This ecosystem of entrepreneurs, investors and world leading researchers helps provide high financial returns to support the next generation of spin-outs.

Public policy initiatives have helped foster this commercialisation climate, developing a pathway from laboratory to industry. Delivered by SETsquared, an enterprise collaboration of UK universities, the Innovation and Commercialisation of University Research (ICURe) programme offers university researchers up to £35,000 of funding from the non-departmental public body Innovate UK. The 3 month programme aims to support researchers to develop the business skills, connections and expertise to pursue their ideas commercially. A 2018 review, ICURe Evaluation, by Ipsos MORI Social Research Institute found that participation in the programme increased the likelihood of teams pursuing a spin-out or licensing deal from 15 to 79 percent. A key posterchild is scheme participant Ziylo, later sold for £623m in August 2018. The company, spun out of the University of Bristol, pioneered a synthetic module to bind glucose in the bloodstream more effectively in the treatment of diabetes. It was sold to Novo Nordisk, the largest global manufacturer of diabetes drugs.

With a strong media focus on technology and life sciences, it is easy to overlook the thriving creative scene in the UK, and IP support given by universities in this area. Sectors such as fashion have become more collaborative in the use of assets such as reputation, culture, materials, skills and production techniques, aided by technology and online platforms such as Instagram. In a paper Innovation and Intellectual Property: Creating Value and Cultural Currency in Fashion Products, University of the Arts (UAL) IP lecturer Roxanne Peters emphasises that leveraging the inherent IP behind collaborative blends should form a key component in the business strategy of fashion designers and producers. UAL acknowledges that this makes day to day practical decisions for creatives on when to seek permission, when to share and how to share problematic. To support its students, the university offers online guidance through its CreativeIP service, reinforcing the value of protecting and respecting creatives’ IP and the rights of others.

Risks of Commercialisation

Despite such positive developments, the growth of the Artificial Intelligence (AI) industry highlights the risks to universities where interest in the commercial value of academic research reaches fever pitch. The New York Times recently reported on a study conducted by researchers at the University of Rochester, New York. The study found that 153 AI professors in North American universities left their posts for industry in the last 15 years. At the universities the professors left, graduates were less likely to create new AI companies.

As the AI and automobile industries intertwine in the pursuit of driverless cars, hiring sprees have become exponentially bolder, with Uber hiring 40 people (including research professors) from a Carnegie Mellon University robotics laboratory in 2015. An exodus of talent from academia to the private sector, driven by high salaries and generous funding for research, risks the concentration of knowledge in a small number of companies driven by commercial imperatives, rather than the wider societal and economic benefits that universities seek to prioritise.

A collaborative solution may provide the best pathway forward. In 2018 Facebook’s Chief AI scientist Yann LeCun explained to Business Insider that he believes allowing experts to split their time between academia and industry is helping drive innovation. LeCun described how he was able to maintain his position as a professor at New York University whilst working for Facebook and that this type of dual affiliation equips academics to focus on long-term challenges, producing AI software tools shared with others for research in domains such as astrophysics, medical imaging and environmental protection. LeCun concluded by remarking that solving great scientific challenges cannot be done whilst working in silo, advocating a culture of ambitious and open research where ideas are exchanged and built upon.

Future Growth

As documented in RSM’s report, a number of universities have established commercialisation companies and funds to support spin-outs and licensing, with investors looking beyond their traditional focus in London and the South East to opportunities from research-intensive universities in the regions. However the report highlights areas for improvement, including directing funding towards areas where innovation ecosystems are less well developed as well as the importance of building up skilled and experienced staff in a university’s Technology Transfer Office (TTO) to better manage the commercialisation process. It also points to a need for greater transparency of university policies on equity distribution, IP values, royalties and warranties, to streamline negotiations and better manage expectations amongst businesses, investors and the universities themselves.

In February this year Cambridge Enterprise convened with other members of the 6U group of UK universities and US technology transfer leaders from Massachusetts Institute of Technology and Stanford at the Department for Business, Energy & Industrial Strategy. The aim was to share best practice in university research commercialisation, and to identify how international collaboration might be improved.

Conclusion

It seems clear that corporations will continue to be hungry to acquire technologies which they cannot develop organically. Whilst UK academic talent is behind notable acquisition targets of the last few years, such as Google’s purchase of DeepMind in 2014, enhancing UK innovation infrastructure is likely to help academic spin-outs scale up and prepare for the rapid growth that may one day see them become the market leaders of the future.