At the bottom of page fifteen of his new independent report commissioned by UKRI on university and investor links Tony Hickson Chief Business Officer, Cancer Research UK and Cancer Research Horizons, writes that:
Innovation and economic growth is a team sport from end to end, involving individual researchers, institutions, investors, supporting infrastructures as well as agencies, government and philanthropy.
A good idea without any funding or support will never make any impact. A bad idea with funding and support will fail. Accepting innovation and growth as a “team sport” means prioritising the growth of the ecosystem over yet another debate on equity, and it means shifting the collective behaviours of investors, businesses, universities, and researchers, rather than rehashing the forever debate on how to make academics more entrepreneurial (whatever that means.)
One way or another
On the face of it this is a report that follows the likes of McMillan, Dowling, Rees, and Tracey in wrestling with how to get good ideas out of universities and into the economy. In the context of UKRI’s significant change of approach toward more explicitly supporting economic growth this review feels like it has been published at exactly the moment it has an audience willing to listen and able to act. It is a review which does not seek to just engage with the economy as it is but position the partnership between universities, governments and their agencies, and investors, as a force for shaping the economy itself.
It is less a guide on how to do commercialisation more of a prospectus on how to build a more prosperous country with universities at its heart.
The review is entirely explicit that this isn’t just about changing how universities work (albeit there are far reaching proposals on forcing universities to disclose IP policies, incentivising entrepreneurial activity, and new formula funding for proof-of-concept work) . Taking a good idea to a funded proposition depends on the effective interaction between the production of knowledge, the availability of capital, infrastructure (including business support), the availability of talent, and proper policy and regulation. It is how all the actors work together that can make the ecosystem successful.
The analysis presented here is that parts of the ecosystem are working well. The UK government has been successful in continually funding high-quality research and producing the kind of stable investment environment through HEIF and other funds that businesses enjoy. The parts not working so well include the availability of specialist capital, regional distribution of research, the diversity of institutions and topics being funded, the lack of specialist support in some areas, and the lack of investor expertise or understanding in some fields.
The better ecosystem is therefore about making all of the players within it coalesce around clear goals with clear incentives and better support. As respondents to the field work highlighted the UK is not large enough to try to succeed at everything nor is it small enough to coalesce assets around a few key areas. Clearer goals and more targeted support requires better relationships between universities and investors.
Living in the real world
As any frequent attendee of university-business collaboration events will tell you, universities are often called slow moving, bureaucratic, not entrepreneurial enough, or otherwise shielded from how the real world works. There is an analysis of university commercialisation that suggests that if universities acted more like businesses they would be better at attracting more investment. This analysis is unhelpful in placing the focus on one actor within a complex ecosystem and underplays the extent to which the stability of universities, and therefore the investment certainty they can bring, is actually their greatest contribution to the ecosystem.
It turns out UK universities are already pretty good at commercial activity. The UK is second only to the US in terms of value generated from university spin-outs. The UK is a leader in the number of venture capital exits (against behind the US). And university spin-outs are showing growth in venture capital investment at later stages where later stage investment more broadly is growing at a slower rate.
The university-investor relationship is also more complicated than is often assumed. For a start, there is no single approach to commercialisation and there is no single kind of investor. Commercialisation might include spin-outs but it also includes consultancy, licensing, partnerships, and start-ups. Venture capital may be the single most popular kind of funding (excluding grants) but the landscape includes family offices, government, private equity, university affiliated funds, and others.
There is also a difference between universities being able to produce economic goods and those economic goods being deployed in the right places, at the right time, to the maximum impact. Hickson’s report highlights that proof of concept funding is hard to come by, specialist support for specific deep-tech sectors is limited, and the availability of capital for certain areas can be limited.
Call me
In his foreword Hickson writes that “There is no shortage of good ideas and the long-held myth that the UK excels at research but struggles with commercialising ideas out of academia is increasingly outdated.”
Dispelling this myth requires more work to support access to finance (and the right kind of finance), improving university-investor relationships and mutual understanding, reframing how success is recognised within universities, and improving the shared the capacity of universities and investors to work together. The opportunity is for universities to not only seize the mantle of economic growth but to increase their own impact through research.
There is a lot to like in the review but it is perhaps strongest in being clear that all actors have a role in university-investor supported economic growth. UKRI, as the commissioners of this work, has already committed to looking at unlocking pension capital, supporting sector-specific accelerators, more regionally focussed funding interventions, and working with partnerships to expand specialist training. The success of a proposal to shift the university-investor ecosystem depends on how the ecosystem responds. If UKRI can set out a ten year vision with new metrics for commercial activity, while strengthening the national innovation economy, and nudging capital markets to more closely align with university needs, then this review could come to be seen as a turning point for the whole sector.