Speaking at the World Universities Network (WUN) workshop in Leeds today [11 December], Ventures Director Sharpe says that in exploitation activities, universities share enough similarities to technology rich corporates that they might learn lessons from QinetiQ’s own corporate venturing experiences.
“Initially we followed the political agenda of research commercialisation for the knowledge economy borne in the mid ‘90s, but since this agenda has been adopted as mainstream, our focus at QinetiQ has shifted to playing directly to financial opportunities and the methods of maximising our offer to market.
“Our original corporate venturing was quite traditional – creating, incubating and grooming our pipeline of ventures internally, funded by our consultancy activities, until they’d reached a maturity where they had equity value, and then looking to external partners and finance. But this is quite a laborious and often fraught process, with internal funding levels at the mercy of the organisation’s profit margins and dealing with accountants who considered investments as losses.”
QinetiQ realised that it needed to adopt a more innovative offer and a more sophisticated model, and acted quickly. In 2007, the organisation shifted its focus and packaged seven ventures together and put them into an external Fund under a limited partnership agreement. The model was supported by £20 million investment from Coller Capital Private Equity and a further £20 million from QinetiQ, with a dedicated fund manager to drive all the individual companies forward.
“This approach makes for a more attractive offer to VCs and the market and improves chances of earlier exit,” says Sharpe. Recent financial reports now value QinetiQ’s venturing activity as commanding 20 per cent of the organisation’s share value. I believe it’s our way forward.”
Sharpe says that packaging up related technologies is just one model that universities might consider. “Of course, every university is different; there’s no quick fix, and no ‘one size fits all’ solution to successful exploitation but there are lessons to be learned both from QinetiQ’s successes - and failures.
“For example, universities must have a clear objective - a mixed model won’t work. Buy out academic entrepreneurs’ time from teaching to let them focus. Insulate ventures from mainstream activities, use incubators and get the entrepreneurs out of the laboratory and into a more business-like environment. It makes a big difference to how people behave,” says Sharpe.
Making the venture stand on its own two feet with a distinct brand as soon as possible is also important, he says. “And lose the ‘university spin out’ tag, as it makes them look vulnerable to the market.”
Another activity that universities might encourage is the increased use of ‘Open Innovation’, says Sharpe. “Expand the IP offer by finding others working in similar areas and partner with them to create a more attractive offer and outcome. This may be counter-cultural to the academic environment, but it’s a pragmatic and growing approach that can work really well.”
“Whilst I’m still learning what works and what doesn’t here at QinetiQ,” he says, “I think the most important piece of advice is to recognise and build in a process that attracts and nurtures innovators rather than inventors. Inventors turn money into ideas, but true innovators turn ideas into money. The bottom line is that all our most successful ventures were headed by innovators, with drive, vision, flair and passion.”
Jo Kelly | alfa
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