Incubator grows to £580m as Asian investors join backers of UK academic spin-offs

Oxford Sciences Innovation, which commercialises science and technology from Oxford university, has expanded its coffers to £580m in a new funding round, making it the largest private university fund in the UK.

The £230m injection of capital has come primarily from Asian investors, including large tech companies who wished to remain anonymous, and sovereign wealth funds, such as Singapore’s Temasek and Oman Investment Fund.

The fund has backed approximately 20 start-ups spun out from the university’s labs, including Oxford Nanoimaging, Vaccitech and Oxford Flow — double the number they planned to fund a year ago.

“They found there is more scope for investment than they had originally anticipated, so went back out to the market,” said Ceri Thomas, of Oxford university.

The UK has five of the world’s top 10 medical research universities, according to Times Higher Education, and Oxford has been number one for the past five years.

The burst of funding highlights the increasing flow of private capital into the UK’s academic sector to help spin out research breakthroughs.

The £50m UCL Technology Fund was set up in January to invest in intellectual property from University College London. In the same month, the £40m Apollo Therapeutics Fund was created in collaboration with Cambridge, Imperial College London and UCL, with backing from AstraZeneca, GlaxoSmithKline and Johnson & Johnson.

These have joined others such as Imperial Innovations, IP Group and Cambridge Innovation Capital which were already active on UK campuses.

Cambridge Innovation Capital recently added £75m to its fund ahead of a planned flotation, while Neil Woodford, Britain’s best known fund manager, spent £11.6m to take a 22 per cent stake in Imperial College’s offshoot fund, Imperial Innovations.

“Raising this capital reflects our confidence in the breadth and quality of opportunity available to investors to help the University of Oxford develop a world-class commercial ecosystem around its unmatched intellectual capital and heritage,” said Peter Davies, chair of OSI.

“We are also very excited to be working with new shareholders from across the world, notably from Asia and continental Europe, and grateful to our original supporters, the 10 largest of which have participated in this funding round.”

Deep technology start-ups have been particularly attractive targets for Asian investors: telecommunications, media and technology accounted for almost a third of Chinese investment into the UK last year, according to consultants Grant Thornton.

Tencent, the Chinese internet group, for instance, invested in two British companies in 2015, mapping start-up Sensewhere and gaming company Miniclip. In October, Chinese state-backed fund CSC Group helped fund a multimillion pound artificial intelligence incubator in London.

“We want to maintain the UK’s position as a world leader in research, which is exactly why our upcoming industrial strategy will place science and innovation at its core, helping businesses across this burgeoning sector thrive,” said Jo Johnson, the UK minister of state for universities, science, research and innovation. “This funding is a further vote of confidence in Britain’s world-class research sector and will provide a real boost to local businesses as they develop new technologies.”

by: Madhumita Murgia, European Technology Correspondent