Tag Archives: academia

Spinout success: commercialising academic research

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Research and teaching in UK universities is widely recognised to be among the best in the world.  In fact, the University of Oxford has topped the Times Higher Education World University Rankings 2020 for the fourth year in a row.

However, in November last year, venture capital firm Octopus Ventures published a new measure of UK universities’ success – the Entrepreneurial Impact Ranking.

Instead of focusing on traditional measures of success, such as research, teaching and citation impact, Octopus Ventures’ new index measures UK universities’ effectiveness at translating this research into commercial success via the creation of “quality, investor-ready spinout companies”.

The results are a little surprising – with Queen’s University Belfast reaching the top spot, ahead of big players such as the University of Cambridge and the University of Oxford.

In this blog post, we consider these findings in more detail, and discuss the potential to further capitalise on the potential of spinouts in the UK, and the key factors that underpin their success.

A brief history of spinouts

A university spinout has been defined by Octopus Ventures as “a registered company set up to exploit intellectual property (IP) that has originated from within a university”.

In other words, it is a company that has been established based on ideas derived from a university’s research.  Often, former or current researchers are directly involved in the management team, and start-up funding is provided by the university (or one of its connected venture funds).

UK universities have been allowed to commercialise the results of their research since the mid-1980s. Between 2003 and 2018, approximately 3000 IP-based spinouts were created by UK universities.

Since 2010, there has been a notable increase in investment into university spinouts – both in terms of the number of deals achieved and the amount of money invested in university spinouts, from both private and public investment sources.

High rates of success

There is good reason for this increased investment – the survival rates of spinouts are high compared to other types of start up enterprise.  Research published in 2018 by law firm Anderson Law found that nine out of ten spinouts survive beyond five years.  By way of comparison, only two out of ten new enterprises survive beyond five years in the wider start-up environment.

Indeed, many spinouts not only survive, but thrive.  The UK has produced a large number of very successful spinouts – for example, Oxford Nanopore Technologies, a University of Oxford spin-out company that has gone on to reach a £1.5 billion valuation.  ARM Holdings is another example – a designer of smartphone chips, established by the University of Cambridge, and acquired by Japanese firm Softbank for £24 billion in 2018.

Unrealised opportunities

However, while the UK has seen a number of high profile spinout success stories, Octopus Ventures, argue that there is yet more untapped potential to be realised:

“The UK has produced a host of successful university spinouts, but there are many unrealised opportunities that have been left in labs or got lost on their funding journey. These could be worth trillions of pounds to the UK economy.”

This potential is perhaps best illustrated by looking at the unrivalled success of many universities in the United States.  Take, for example, Massachusetts Institute of Technology (MIT).  MIT has been the genesis for around 26,000 spinout companies, with a combined annual company turnover of US$2 trillion.  This is a huge amount from one university – and is equivalent to around 65% of the UK’s entire annual GDP!  The resultant spinouts have also created in the region of 3.3 million jobs. MIT clearly illustrates the huge potential that exists to capitalise on universities’ research.

Index results

Back in the UK, this massive potential has yet to be realised.  Indeed, one of the key aims of the new Entrepreneurial Impact Ranking is to identify where this potential exists, and which universities are making notable progress towards capitalising on it.

The key data points included are:

  • total funding per university;
  • total spinouts created per university;
  • total disclosures per university;
  • total patents per university;
  • total sales from spinouts per university.

An interesting element of the index is that it is also adjusted to account for the total funding that a university receives.  This means that it is not dominated by Russell Group universities simply on the basis of them receiving the most funding.

Indeed, Queen’s University Belfast was ranked first – putting it ahead of both the University of Cambridge (2nd place) and the University of Oxford (9th place) in terms of its production of spinout companies and successful exits, relative to the total funding received.

Queen’s University Belfast, through QUBIS Ltd, the university’s commercialisation arm, has had a number of spinout successes, including Kainos, Andor Technology, and Fusion Antibodies, all of which have been listed on the London Stock Exchange.

In Scotland, the highest ranking university was the University of Dundee (6th), which has had a number of successful spinouts, including Platinum Informatics, which specialises in the provision of software to analyse ‘big data’.

What makes a successful spinout company?

As well as identifying the most effective universities in terms of spinouts, the Octopus Ventures report also looks at the shared success factors that have contributed to their effectiveness.

There are three key factors:

  • Funding – Access to early funding is essential to success. Universities that ranked highly in the index were ones that raised funds to help get ideas off the drawing board. As Simon King, a partner in Octopus Ventures states: “Universities that enable early-stage proof of concepts and prototyping by making early-stage funds available, either internally through their own funds or through collaborative schemes with other funds are more successful at creating spinouts.  That’s a key takeaway.”
  • Talent – the issue of talent is considered a ‘consistently challenging’ issue for spinouts.  There is a huge demand for the right skills, and spinouts are often viewed as being high-risk propositions compared to more established enterprises.  Other challenges include a lack of academics’ understanding of the business world, and limited incentives for them to engage in the commercial world in light of the pressure to ‘publish or perish’.
  • Collaboration – As well as university-industry collaboration, collaboration between different universities was a key factor in the creation of successful spinouts. Collaboration helps to increase both scale and capacity, whilst also helping to attract and retain top talent.

Future support for spinouts

Measuring the relative effectiveness of UK universities’ ability to commercialise their research provides a number of signposts for the future in regards to how best to support and further develop this potential.

This is increasingly important given the economic uncertainties surrounding Brexit and the availability of a number of European funding streams once the UK leaves the European Union.

The UK’s Industrial Strategy places a clear emphasis on academic entrepreneurialism as a driver of economic growth.  And in 2018, the UK Government launched the £100m Connecting Capability Fund to support university collaboration in research commercialisation.

Commercialising academic research is far more complex, risky and expensive than establishing a typical start-up.  But their potential contribution to the economy, and wider society, is huge.

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What works now: how can we use evidence more effectively in policymaking?

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Evidence use in policymaking is nothing new. It has been talked about by policymakers, academics and professionals for the best part of ten years, and has been highlighted a lot, among other places, on this blog. Over the years various government initiatives have been set up to try to establish how best to use evidence and identify “what works” in relation to specific policy interventions, and “evidence-based” policymaking has become the catchphrase of policymakers across most sectors.

One of the newest books to be added to the Idox Information Service library reflects on the rise of “what works” as an approach to policy development. The book builds on discussions from the first edition of the book, and provides a sector-by-sector breakdown of how evidence is – and could be – used in policymaking across areas like health, the environment, education and criminal justice. It also offers some insight into appraising evidence and how to assess quality, as well as how evidence is used internationally, providing examples from the USA, Australia, New Zealand and Scandinavia.

As one of our key aims is to support and facilitate the sharing and use of evidence in the public sector, this book has been a welcome addition to our collection.

Making use of research across policy

In 2013, the UK government launched the What Works Network, which is now made up of 10 independent centres committed to “supporting the creation, supply and use of evidence” in specific policy areas including crime and policing, education and economic growth. The centres aim to improve the way government and other organisations create, share and use (or ‘generate, translate and adopt’) high-quality evidence for decision-making. According to the UK government, the initiative is the first time a government has taken a national approach to prioritising the use of evidence in decision making.

What Works Now? highlights research from Weiss (1979) which suggests that there are “7 types of research use”:

  • Knowledge Driven – research will be developed, applied and used once it has been produced
  • Problem Solving – research will be applied directly to a particular policy problem in order to solve it
  • Interactive – research forms part of a wider web of knowledge, policy and other research which all interact with each other
  • Political – research could (and probably will) be used to retrospectively provide support for a policy decision which has already been made
  • Tactical – research can be used as a tool to delay or deflect from decision making or action around a particular issue (i.e. “more research is needed in this area”)
  • Enlightenment – research informs policy through encouraging people to think and discuss particular ideas or concepts in a different way
  • Embedded research – research production is embedded in a wider contextual system which includes political priorities, the law and the media

Building a research base to support “what works”

Creating and disseminating research effectively have been cited as being key to creating a “what works” evidence base. A number of research institutes and think tanks contribute alongside real-life experiences of practitioners and other stakeholders to try and establish the conditions which support effective interventions and lead to positive policy outcomes.

One of the big discussions currently is around the creation of academic research to support what works programmes. Exploring what sort of research is useful to practitioners and policymakers and aligning this with the research agenda of academics and universities can help to create an effective supply chain of evidence to inform policymaking. However, often academics often do not engage with the policy process, or politicians politicise evidence, picking and choosing which findings to take notice of, which can distort the perception of what evidence is available in a particular area.

Encouraging fuller participation and a more robust appraisal of research from across the board is something which many institutions are trying to work towards. Research impact and knowledge exchange is now integrated into research funding and a growing number of people are working to feed research more effectively into the policy arena.

Evaluating research and evidence and judging which to take forward to inform policy decision making is also important. Along with discussions around assessing and labelling evidence the book considers how some of the main organisations in the UK concerned with promoting evidence-informed policy have gone about appraising evidence, weighing it up, assessing quality and “fitness for purpose” and taking account of non-research based forms of knowledge and evidence, such as the personal experience of practitioners.

Applying “what works” in practice

Applying “what works” in practice can be a challenge, especially in a setting that is perhaps very different from the conditions of a study that has been shown to produce successful outcomes from a particular intervention.

In the book, 10 guiding principles to support the use of evidence in practice are set out:

  • Translated – To be used research must be adapted and reconstructed to fit with local contexts. Simply providing findings is not enough
  • Ownership – Ownership of the research and allowing people to feel a sense of ownership over the development of research
  • Enthusiasts – Individual “champions” can be useful in ensuring that research actually gets used
  • Local context – Local context must be taken into account, particularly in relation to specific barriers and enablers which might help or hinder change
  • Credibility – Credibility of researchers and the people who support the research is key to ensuring that the research is taken seriously
  • Leadership – Strong leadership provides motivation, authority and integrity in the implementation of evidence
  • Support to implement change – Ongoing support to implement change is important, this could include financial, technical, organisational or emotional support
  • Develop Integration – Activities need to be able to be integrated with existing organisational systems and practices, changes do not happen within a bubble
  • Engage key stakeholders – To ensure effective uptake and buy-in key stakeholders should be involved as fully as possible form the earliest possible stage
  • Capture learning/ Effective evaluation – Don’t forget the importance of evaluation, identify what worked and what didn’t to help share learning and support future projects

Final thoughts

In theory, using evidence to inform policy sounds straightforward. The reality can be quite different. What Works Now? highlights that the “what works” agenda remains dominant across the policy landscape, even if the application or approach to it differs from policy area to policy area.

What counts as evidence is still disputed; getting evidence “out there” and encouraging academics to be involved in the policy process is still hard to achieve (although there is good work being done in this area to try and combat this); and context is still key to making evidence work in a particular environment.

Understanding evidence, and how to use it effectively has been a core aim of policymakers in the UK, and across the world for the many years. This book, and the supporting research outlined in it highlights that while evidence is still at the fore of policymaking, actually identifying what works and putting it into practice is a bit more of a challenge.

Members of the Idox Information Service can log into our website to request a loan of “What works Now?”

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Science, technology and innovation: the impact of Brexit

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Scientist working with a large cylinder-shaped piece of lab equipmentBy Steven McGinty

There have been many twists and turns in the Brexit story. The latest, has been Theresa’s May’s failed attempt to increase her parliamentary majority and gain a personal mandate for negotiating her own version of Brexit.

However, since the UK voted to leave the EU in June 2016, STEM (science, technology, engineering and maths) researchers and professionals have consistently voiced their concerns over the potential negative impacts of Brexit, particularly in areas such as funding, collaboration and skills.

Prospect – a union for 50,000 scientists, engineers and technical specialists – has made it clear that they believe:

“Science is an international endeavour and continued free movement of people is vitally important both to the public interest and the wider economy.”

Their research highlights that British participation in prestigious Europe-wide research projects could be under threat, such as the mission to find the ‘oldest ice’ in Antarctica and the European Space Agency’s project to develop the most ambitious satellite Earth observation programme.

The Financial Times also highlights that British researchers have been very successful at winning important grants from the European Research Council. As a result, the UK receives 15.5% of all EU science funding – a disproportionate return on the UK’s 12% contribution to the overall EU budget.

Professor Dr Carsten Welsch, an academic from Liverpool University, underlines how essential EU funding is to his work: “in some years as much as 80% of our funding has been sourced from the EU.”

Figures from technology consultancy Digital Science suggest that leaving the EU could cost UK scientists £1bn per year.

Universities UK has also investigated the wider economic impacts of EU funding in the UK. In 2016, their research found that EU funding generates more than 19,000 jobs across the UK, adding £1.86 billion to the UK economy. Later research has also shown that international students and their visitors generate £25.8 billion in gross output for the UK economy. In addition, as a single group, they add £690 million to the UK retail industry.

What do the politicians say?

With their ‘Save our Scientists’ campaign, the Liberal Democrats have been outspoken in their support for continued scientific co-operation across Europe. Their 2017 General Election manifesto stated that they would underwrite funding for British partners in EU-funded projects such as Horizon 2020 – the largest ever EU Research and Innovation programme – worth nearly €80 billion in funding. It also promised to protect and raise the science budget by inflation, and stop cuts to medical research.

But the UK government has also made efforts to lessen the concerns of STEM researchers and professionals. Similarly, Chancellor Philip Hammond has guaranteed to underwrite EU funding won by UK organisations through programmes such as Horizon 2020, even if these projects continue after Brexit. On the 17th January, Prime Minister Theresa May outlined her 12 objectives for negotiating the UK’s exit from the EU. Within this speech, she stated that:

“We will welcome agreement to continue to collaborate with our European partners on major science, research and technology initiatives, for example in space exploration, clean energy and medical technologies.”

Jo Johnson, Minister of State for Universities, Science, Research and Innovation, has also tried to provide reassurance by emphasising the important role for science and innovation in the government’s industrial strategy. He has highlighted that the strategy includes £229 million of funding for a ‘world class’ materials research centre at the University of Manchester and a centre for excellence for life sciences. In addition, a new funding body will be created – UK Research and Innovation (UKRI) – which will bring together several funding councils to create a ‘loud and powerful’ voice for science.

The House of Lords Science and Technology Committee has also published a report arguing that positive steps should be taken to ensure UK science plays a significant role in the global economy. One idea put forward by the report is that:

“The UK should offer to host – in partnership with governments and funding bodies from other countries – one or more new, large-scale international research facilities. This would be a bold move to signal the UK’s global standing in science.”

International partners – David Johnston Research + Technology Park

At a recent innovation event in Glasgow, Carol Stewart, Business Development Manager of David Johnston Research and Technology Park, set out the thoughts of researchers and companies based at their innovative research park in Waterloo, Canada. Unsurprisingly, their key concern was restrictions on the free movement of labour, and the impact Brexit might have on the EU-Canada Comprehensive Economic and Trade Agreement (CETA).

However, Ms Stewart was positive that there would still be plenty of opportunities, noting that the UK and Canada has a relationship as part of the Commonwealth, and that London will still be regarded as a global technology hub.

Overcoming negative sentiment

One important concern is that there is widespread anecdotal evidence that EU nationals are feeling less welcome. Stories of researchers either leaving positions or citing Brexit as a reason for not taking up posts in the UK are becoming the norm. Anxieties caused by a lack of clarity over the long-term status of EU nationals and the complexities in obtaining permanent residency, can only be damaging to the UK’s reputation for international science.  As physicist and TV presenter Professor Brian Cox explains:

“We have spent decades – centuries arguably – building a welcoming and open atmosphere in our universities and, crucially, presenting that image to an increasingly competitive world. We’ve been spectacularly successful; many of the world’s finest researchers and teachers have made the UK their home, in good faith. A few careless words have already damaged our carefully cultivated international reputation, however. I know of few, if any, international academics, from within or outside the EU, who are more comfortable in our country now than they were pre-referendum. This is a recipe for disaster.”

With the latest election results, the UK is likely to go through a period of political instability. It will be important  that, regardless of political changes, the UK continues to exercise its role as a leader in science, technology and innovation. That not only means providing funding and facilities for research, but also rebuilding the UK’s reputation as a place where the very best scientists and innovators want to live and work.

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