The Role of the University Enterprise Company

The Materials Engineer Conference

19 April 2010

Teri Willey, Chief ExecutiveCambridge Enterprise Limited, University of Cambridge

Support the University Mission

• Impact from basic research through dissemination of results of research and scholarly activities through commercial channels via our Consultancy Services, Intellectual Property Licensing and Seed Funding for New Ventures

• In doing so we have a responsibility to capture a fair return for the University (our shareholder)

• The return we help generate provides incentives to academics to participate in dissemination of ideas through commercial channels as well as non-hypothecated funds to University Departments

• During the last two years (2007/08 - 2008/09) income from licensing, consultancy and equity transactions exceeded £18 million, of which approximately £14 million was distributed to University academics and departments to encourage engagement in innovation. £1.5 million was reinvested in University patent assets and £0.9 million to University ring fenced accounts for seed funding.

• Long term there may be potential to also provide non-hypothecated funds to the University, in addition to distributions to Departments, to support campus wide strategic research initiatives. However, we can’t guarantee ‘big winners’, we can only be poised to manage them if and when they come along.

University Research Funding

Goals

• ...to take the most promising ideas forward through IPR licensing, new venture creation and consultancy by:

• building strong relationships with University academics to encourage disclosure and cooperative management of the most promising innovations

• making significant, measurable progress toward financial sustainability to drive long term benefits to academics, departments and University

• being an attractive partner for industry and investors to take University ideas forward through commercial channels

Models of Knowledge Transfer - Policy and Practice

Knowledge transfer may be achieved through various means. The models are often discussed as:

• Open Science – open innovation, open source, rights made publicly available

• Collaborative – rights owned by research sponsors or the inventor

• Licensing – rights owned by university but transferred to third party for commercialisation

• Venture Creation – facilitating, including funding, companies to take innovations forward with rights to innovations being transferred to the new company

IP Policy and Practice

• The University of Cambridge has a flexible policy (December 2005) and practice conducive to all models of knowledge transfer allowing decisions to be made based on what is best for dissemination of research results for the public benefit

• The policy provides incentives for academics to participate in knowledge transfer. This is important in that University academics have significant obligations in teaching, research and to their colleges. Knowledge transfer using commercial channels is an endeavour in addition to these

• Resources for proof-of-concept in addition to patent funding and traditional technology transfer services, supports the commercialisation of innovations from basic and fundamental research which have the most potential for impact

Disposition of IPRDisposition of IPR

Academics

University Sponsors

Consultancy

Research Grantsand Contracts

“The IP Policy”

Cambridge Enterprise Group

Cambridge Enterprise Services for University include:

1. Technology Transfer Services:

Services include invention disclosure management; patent strategy, filing and maintenance; proof of concept funding; research reagents transfer; intellectual property licensing and contract management; income distribution and bespoke marketing.

2. Consultancy Services:

Services include support for University of Cambridge staff and research groups wishing to provide expert advice or facilities to public and private sector organisations worldwide. This includes negotiation of contract terms, assistance with costing and pricing, formal arrangements for use of University facilities, invoicing, debt collection and income distribution.

3. Seed Funds Venture Services:

Services include access to capital and expertise via Cambridge Enterprise Seed Funds and Investment Committee, angel and early stage investors through Cambridge Enterprise Venture Partners, equity portfolio management, business planning, mentoring, marketing, technical and IP feasibility programmes.

Finance & Operations and Marketing teams provide support to all three business units.

Cambridge Enterprise Internal and External Markets

1. The primary internal customers are University of Cambridge academics and also include:

• Academics and Students

• Administration (VC, Pro-VC, Registrary, Finance Director)

• Departments and Schools

• Colleges

• Units with overlapping interests (Research Services Division, Communications, Development Office)

• University Committees

2. The primary external customers are buyers of IP or licensees but also include:

• Companies interested in IP

• Investors interested in University affiliated companies and entrepreneurs

• Organisations with relationships with the above such as consultancies

• Professional advisers (fund raisers, banks, law firms, accountants, patent attorneys)

• Service providers such as incubators

• Government and other granting agencies

CE Group Principles

1. Attract and accept into the portfolio those cases that have the strongest potential to make a significant positive impact and where using commercial channels is the most reasonable means to carry the idea forward

2. Take the course that supports commercialisation of the technology and work creatively to add value to the technology through the use of patent, proof of concept and internal and external evaluation resources

3. Work effectively with University inventors and innovators to support their aspirations, manage conflicts, comply with University regulations and encourage synergy with the mission of the University

4. Engage with industry and investors early to understand their requirements and find the best partner (licensee or start-up senior management and investors) to take the idea forward

5. Negotiate fair and reasonable terms that reflect the contribution of the assets and expertise being transferred

6. Negotiate and close the greatest number of the best possible deals

7. Look after the deals once they are closed to encourage commercialisation and optimise returns

Value to Stakeholders

• Ultimately performance should be measured by the positive impact of University of Cambridge ideas on the world

• There is value to stakeholders in being able to take a long term view

• Transactions can be correlated with public benefit

– Consultancy contracts are indicative of the need for the transfer of knowledge to the contracting company

– Signing of a licensing agreement or securing equity indicates success in finding a partner to commercialise an idea and represents a commitment on behalf of that partner to take the idea forward through commercial channels

– In managing the current portfolio, receipt of invention related income in the form of royalties is not only indicative of good post deal management but importantly, as in the case of much of our royalty stream, that there are products for patients addressing previously unmet patient needs

Group Performance 2009

• 117 new IP disclosures received

• 124 patent applications filed

• 83 IP transactions signed: 50 for commercial purposes and 33 for other purposes, including research licences

• 499 active IP and licence agreements under management including 143 research licences

• 153 active consultancy projects in portfolio

• 124 consultancy agreements signed

• 13 investments contributing new equity to the portfolio (8 through £349k seed investment and 5 through IP investment)

• 72 companies in which Cambridge Enterprise holds equity

• Equity realisations of £160k were received from seed investments

• £8 million in knowledge and technology transfer income including equity realisations from licensing

• £5.7 million of knowledge and technology transfer income was or will be returned to academics and University departments

IP Licensing – a long term proposition

Engage Partner

License to existing businesses

Engage investors

Form new business

Disclosure and Assessment of Inventions, Software and Materials

Patenting, Proof of Concept

Investment and Marketing to find

investors or Licensees

IP and Commercialisation Agreements

Commercialisation of Technology

&

Generation of Financial Return

Data for 2007/08 - 2008/09

223 IP disclosures207 patent

applications filed

163 new IP transactions499 agreements under management72 portfolio companies

£11.6mRoyalties & fees & patent reimbursements

CE Group Income – Steady growth of ordinary consultancy and licensing income and equity returns now and then...

*Cambridge Enterprise Limited†University Venture Fund‡Challenge Fund Trading Company LimitedAll amounts are gross

Current University Revenue Sharing from Licensing Technology

Net Income (opt in) Inventor(s) Department(s) University

First £100,000 90% 5% 5%

Next £100,000 60% 20% 20%

Above £200,000 34% 33% 33%

Net Income (opt out)

Inventor(s) Department(s) University

First £50,000 100% 0% 0%

Above £50,000 85% 7.5% 7.5%

CE Seed Funds Performance

• During 1995-2009

• 50 investments, of which 47 were in new technology companies and 3 were in other early stage technology funds

• Portfolio companies raised over £456 million in follow-on funding, plus £19.5million in grant awards, representing a leverage of 56 times the University investment

• During the 2009 financial year:

• 22 of the 47 investee companies* have transferred technology from the University for public or business use via product sales or licensing and collectively employed over 430 people.

• 22 of the 72 companies in the full portfolio raised £62 million in new money.

• 8 investments were made in 6 companies (£349k)and 3 pathfinder awards (£12k) were made to support the development of new business ideas.

* University funds and investee companies refer to investments through the University of Cambridge Discovery Fund, University Venture Fund and Challenge Fund Trading Company Limited for equity and does not include the investment of intellectual property for equity.

CE Seed Funds Performance

*all graphs are cumulative

Financial investment in early stage companies furthers the University mission

The University of Cambridge Discovery FundSupporting the 800 Campaign – Our Freedom to Discover

The Discovery Fund is a unique renewable resource that offers donors the opportunity to support the University many times over. A gift to the Discovery Fund:

• is vital in supporting the University’s world-leading position through entrepreneurship

• is an effective way to support a significant priority in the University, of ensuring impact from fundamental and basic research

• will be put to work right away to support promising innovations

• will have an impact that goes well beyond the initial gift as realisations will be returned to the fund to support future innovations

• can be followed as it works, by tracking innovations launched as a result of a gift

• is a wonderful way of supporting innovation and smoothing the path for future entrepreneurs

Cambridge Enterprise

“Cambridge Enterprise exists to help University of Cambridge inventors, innovators and entrepreneurs make their ideas and

concepts more commercially successful for the benefit of society, the UK economy, the inventors and the University”

Contact Us

Cambridge Enterprise Limited

University of Cambridge

Hauser Forum

3 Charles Babbage Road

Cambridge

CB3 0GT

UK

Tel: +44 (0)1223 760339

Fax: +44 (0)1223 763753

Email: enquiries@enterprise.cam.ac.uk

www.enterprise.cam.ac.uk