THE UNIVERSITY AND ITS COMPANIES - Accelerate Cape...

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THE UNIVERSITY AND ITS

COMPANIES

February 2016

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INNOVUSMaking Innovation Matter

TECHNOLOGY TRANSFER

AUTM definition: "the process of transferring scientific findings from one organization to another for the purpose of further development and commercialization."

This transfer is generally effected by means of IP licensing agreements (contracts) between universities and private companies or publicly owned commercialization agencies.

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Time for a new strategy?

University technology transfer has internationally been

largely dominated by a business model of licensing

university patents to the highest – and most often, only -

bidder.

This model is unprofitable for most universities and

sometimes even risks alienating the private sector.

THE REALITY

A new and smarter model has emerged and is increasingly

being adopted.

In this new model universities nurture their own start-ups

and make available their patents to them.

SOLUTION?

• USA: <17% of US TTO’s are either profitable or

breaking even

• AUTM 2014: <1% of US TTO income from equity

• Seems that US universities start companies as licensing

strategy

• Elsewhere: Universities often not allowed to have equity

in companies

• Considered risky and resource intensive

• But: noticeable shift towards a spinout strategy

• Question: How can we make the biggest impact?

SPINOUTS AS TECH TRANSFER STRATEGY

THE CHANGING ROLE OF UNIVERSITIES

Teaching

Research

Innovation

Graduates

Publications

PublicationsIP Entrepreneurs

Researchers

Industry

Knowledge Region

UNIV IN THE ECOSYSTEM

• Cambridge University

◦ Cambridge Science Park (1969)

◦ Created >50 startups and entrepreneurs outside university

created their companies around the university

◦ Today, 3000 companies in greater Cambridge, 1000 are

pure innovative companies

• Munich (Medical technology), Finland (ICT, opto-

electronics and life sciences)

EUROPEAN EXAMPLES

EUROPEAN EXAMPLES: CAMBRIDGE

• 100th spinout company in 2013

• Gemma Frisius Fund

• 5 Science Parks around Leuven (10 years)

• Several incubators with high-tech labs and companies

• Strong networks

NOW IN LEUVEN

Gemma FrisiusFund Created

LESSONS FROM LEUVEN (1)

Leuven

Critical mass of high Quality Research

FavourableEntrepreneurial

Climate

Legal Framework

Clear incentives and Policies

Professional networks

Seed or VC Fund

Infrastructure

Technology Transfer Entity

Industry and Government Support

Quality of Life

LESSONS FROM LEUVEN (2)

“But most importantly, we made our people aware that it could be done. For the first time, scientists and engineers were pointed in the direction that their intellectual property not only had academic value but commercial potential.”

- Martin Hinoul

UNIVERSITIES AND THEIR VC FUNDS

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Meanwhile back in South Africa

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Do we have the ingredients?

• PCT applications = first international step

• Published by World Intellectual Property Organisation

(WIPO) six months after application (normally month 18

of patent life)

PATENTS

PATENTS (PUBLICLY FUNDED): 2009 - 2015

0 10 20 30 40 50 60 70 80 90

Stellenbosch University

University of Cape Town

University of the Witwatersrand

North-West University

University of Pretoria

University of Kwazulu-Natal

University of the Free State

Nelson Mandela Metropolitan University

University of the Western Cape

Tshwane University of Technology

Medical Research Council

University of Johannesburg

Vaal University of Technology

Cape Peninsula University of Technology

Agricultural Research Council

Rhodes University

University of Limpopo

University of South Africa

University of Zululand

University of Fort Hare

University of Venda

Walter Sisulu University

Central University of Technology

Durban University of Technology

Mangosuthu University of Technology

Total published PCTs, 2009 - 2015

Published PCT Applications

PATENTS (PUBLIC AND PRIVATE): 2009 - 2015

0 10 20 30 40 50 60 70 80 90

Stellenbosch University

SASOL Technology

University of Cape Town

University of the Witwatersrand

DETNET South Africa (Pty) Ltd

North-West University

Element Six (Production) (Pty) Ltd

Discovery Holdings Limited

University of Pretoria

AEL Mining Services Limited

University of Kwazulu-Natal

INSIAVA (Pty) Ltd

University of the Free State

Nelson Mandela Metropolitan University

University of the Western Cape

LEVINSOHN, Steven Mark

Tshwane University of Technology

Poynting Antennas (Pty) Ltd

Medical Research Council

Published PCTs, 2009 - 2015

High risk tech funders in innovation value chain

Idea VC

Public sector research:

NRF, Science Councils,

Universities

THRIP ????

Other PE

Convergence Partners, Inspired Evolution,

Intel Capital, Knife Capital, CorCulture,

HP Ventures Africa, TriVest

Seed stage Start Up Venture ExpansionResearch

InVenFin, 4Di Capital, Acorn, Halls,

GroVest, EchoVC, Redwood Capital,

Savannah Fund, AngelHub

Technology Innovation Agency

IDC New Industries (sectors)

THRIP ????THRIP ????

Crowd Funding ???

Source: Ela Romanowska, WITS Enterprise

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Case Study

Nedbank Stellenbosch University LaunchLab

• Did not have a critical mass of university spinouts

• Focused on Step 2: Bringing entrepreneurs to the

university

• Opened the LaunchLab on 1 Aug 2013

◦ Open to any entrepreneur

• Then we waited....

SO, WE TRIED IT

THE NEDBANK SU LAUNCHLAB

LAUNCHLAB COMPANY DEVELOPMENT TRACKS

* Meeting rooms and hot seats ** Preference for High-Growths and TTO Spin-outs

Source

TTOProjects

StudentVentures

ExternalEntrepren

Selection

Pitch-In Meeting

IdeaProgramme

Post Incubation

Development Track

High Growth

TTO Spin out

Ideas Winners

Service/ Social

Community

Online Content

Free Office Space

Seed Capital and Market Access

Free Hot Desks**

Accounting Services

Service Provider Network

Countdown Programme**

Acceleration Programme**

Mentor Programme

Intern Programme**

Rent Facilities*

Coaching Programme

Online Portal**

Rent Facilities*Free Facilities

LAUNCHLAB VERTICALS

Payments & Big Data

Paid Media Cleantech Agritech Education

The results surprised us!

GROUP OF COMPANIES

• Unistel Medical Labs

• SUNMeDIA Stel

• SUNMeDIA Bloem

• SUNMeDIA Metro

• SUSPI

• Diacoustic Medical Devices

• SNC

• SWET

• GeoSUN Africa

• Aquastel

Startups @ Beginning of 2014

• LaunchLab

• USB ED

• Surfactant Medical

Technologies (SMT)

• Custos

• Sharksafe Barriers

• Vulamanz

• Suntrack Analytics

Startups in 2014

• SUDEM Digital Elevation

• SUN Magnetics

• BridgIoT

• Cargo Telematics

Startups in 2015

(Launchlab opened 1 Aug 2013)

TechnologyTechnology relatedNo technology

2016 Pipeline

• CubeSpace

• Heliolab

• Aerospora

• Assisted our startups to raise >R85m in past year

• 201 Employees (2014)

• R187 m turnover (2014)

• Our stake ranging 8% - 100%

• 6 out of 10 are profitable (start of 2014)

GROUP OF COMPANIES

• Prototype development

• Intellectual Property protection

• Assistance with business plan

• Business model workshop

• Directorship training (IoD courses)

• LaunchLab plus programmes

• Set up company

• Legal

• Attract investors and negotiate

• VAT registration, VAT assessments,

• Tax clearance certificate

• Open bank account

• IP management

• Online shop transaction management (Turnkey solution)

• Project manager

• Access to SU trademark

SUPPORT OFFERED FREE OF CHARGE TO ENTREPRENEURS

SPIN-OUT COMPANY GOVERNANCE FRAMEWORK

• Minimum corporate governance levels in the areas of:• Business strategy and Implementation• Composition and selection of BoD• Directors and their responsibilities• Functioning of the board• Financial reporting and communication• Risk management and internal control• External and internal audits• Integrated sustainability reporting

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The University Technology Fund

“Creating a single pipeline of all the top universities’ technologies towards one fund”

RATIONALE FOR A UTF

R D GAP VC PE

R1.2bn/annum

40-70 Disclosures

Company and/or Patent

Equity !

Patent

Prototype

Business

RATIONALE FOR A UTF: FAULTY MODEL

R D MTF(?) VC PE

R1.2bn/annum

40-70 Disclosures

Company and/or Patent

Patent

Prototype

Business

Company 1

Company 3

Company 2

Company 4

Faulty Commercialisation Model

CHANGE THE COMMERCIALISATION MODEL

R D VC PE

R1.2bn/annum

40-70 Disclosures

Patents and Virtual Companies

Incubator

CHANGE THE FUNDING MODEL

Increase Risk

Decrease Risk

R100mR75mR25m

PLACING THE FUND AT A UNIVERSITY

R D VC PE

R1.2bn/annum

R75mR25m

• Invests in projects with strong commercial potential

• TTO manages and invests R25m portion of fund

◦ Primarily development work

• Investment Committee (IC) invests R75m portion

◦ Primarily in Newco’s

• IC appointed by

◦ Umbrella Fund Manager

◦ TTO BoD

◦ University Council Fincom

• Fund gets ownership in Newco’s and portion of license fees

VC TYPE FUND: UNITECH FUND

VC TYPE FUND: STRUCTURE OF UMBRELLA FUND

General Partner Limited Partners (Investors)

Umbrella Univ Fund(Limited Partnership)

Maties Fund Ikeys Fund UWC Fund Wits Fund

Ownership of the Fund

Ownership of the Umbrella Fund in UniFunds

Fund Management

VC TYPE FUND: STRUCTURE OF INSTITUTIONAL

Stellenbosch University Umbrella University Fund

Innovus (Pty) LtdMaties Fund

(Limited Partnership)

Investment Investment Investment Investment

Ownership of the Fund

Fund/InvestmentManagement

No Management Fees

GOING FORWARD: VC TYPE FUND: MODEL

R75mR25m

TTO invests

Investment Committee

UTFR500m

MTFR100m

SU+AlumniinvestR20m

+otheruniversities

• World class technologies from leading universities on the

African continent

• Highly reduced management fees

• Attracts co-investors

UNITECH FUND

Anita Nel

ajnel@sun.ac.za

+27 21 808 3079

www.innovus.co.za

THANK YOU

Anita Nel

ajnel@sun.ac.za

+27 21 808 3079

www.innovus.co.za

THANK YOU

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