Crossing the "Valley of Death" of technology transfer
3 April 2019, Written by Andrea Alunni, expert in corporate venturing for the European Commission and former senior advisor at Oxford University Innovation
Only a small portion of patents are actually exploited for commercial gain. If more of them could be put to use in Australia there would be great potential for a lift in the country's economy.
It's a rainy day in Oxford, traditional weather, and an Aussie knocks on my door. Samuel Conway has just landed in the UK after a long-haul flight from Adelaide. He is moving the whole family to the city of spires in order to fulfill his entrepreneurial dream - to establish an Oxford start-up and run it as CEO.
The opportunity has come after a project based on intellectual property from the Computational Biology Research Group has successfully passed the Proof-of-Concept (POC) phase.
It is 2014, six years since I joined the New Venture Support and Funding unit at Oxford University Innovation, the technology transfer office of the University of Oxford. Samuel is about to become the CEO of a brand-new startup, Zegami, based on an Oxford technology which has proven its concept and wants to change the world of business to explore their data in the pursuit of new and different information and answers.
That is the practice I have set up to make sure that any new venture has a sound, proven technology to rely on - a small investment in building a prototype to raise a big investment from private investors.
However, offering proof-of-concept (POC) to university inventors is often a difficult task for most Technology Transfer Offices (TTOs). That's why after almost a decade as the Oxford Head of the POC activity I decided to take a three-year long pause and write a book.
Through an in-depth analysis of IP portfolio management by Oxford University Innovation (OUI), I identified the salient aspects of the technology transfer evolution and the role that technology transfer managers (TTMs) play in closing the gap between academia and business (the so called "Valley of Death" in technology transfer).
To do so, I analysed a 15-year span of data from the Oxford TTO and concluded that an effective TT roadmap should first of all revolve around the proof-of-concept (POC) mechanism, which surprisingly, is also the cheapest tool within the current available TT tools. The result of this analysis materialized in a Vademecum which is the first evidence-based TT roadmap for an effective solution to the "Valley of Death".
In order to give a quick idea of the impact that this solution offers, I draw from a recent study by the European Commission the following reasoning: currently in Europe 95 per cent of the patents granted (around three million) are dormant. Nevertheless, the effective exploitation of 5 per cent of the European patent portfolio brings a contribution of 40 per cent circa to the European GDP.
Based on these estimates and applying the solution I propose in the book, I reckon that with a specific investment in POC, Europe can exploit an additional 2 per cent of the European patents and increase its GDP by a further 16 per cent. This exponential impact could be achieved with a prototyping fund that allocates (on average) only 100,000 euros per patent ($157,590).
A similar estimate can be done for the stock of Australian patents, where a proportionally lower total investment for prototyping is needed as the patent portfolio is made of circa 144,000 patents in force, many of which are dormant. That could bring about a boost to the Australian GDP and create thousands of jobs.
On the face of it, Innovation Finance and Technology Transfer: Funding Proof of Concept seeks to prove that a well-managed POC Fund can achieve positive financial results and offers a Vademecum to practitioners to follow a step by step best practice procedure embraced by the Oxford TTO to manage the POC investment process.
Andrea Alunni is a world leading expert of Technology-Transfer, Intellectual Property & management of Seed Funds. His professional experience spans over 25 years in the field of finance, technology and innovation, including corporate finance in Telecom Italia, technology investment banking at Nomura and private equity at CDC Capital Partners in London.
Author: Andrea Alunni, expert in corporate venturing for the European Commission and former senior advisor at Oxford University Innovation