Imperial College Deal With Investors Seeks to Stimulate Tech Transfer in Britain

January 05, 2011

The investor-owned technology transfer company of Imperial College London expects to raise about $215-million in a private stock offering in London this month, and will use the capital to back new companies spun off from Imperial as well as from the Universities of Cambridge and Oxford and from University College London.

The deal will fill a void for Imperial and the other universities, says Cengiz Tarhan, managing director of UCL Business, the tech-transfer company for University College London. Venture-capital money for investments in early-stage companies "has all but disappeared" in Britain, he says.

Since 2005, Imperial Innovations Group has raised nearly $100-million in private funds, including about $40-million from an initial public offering in 2006. An IPO is unusual for a university tech-transfer company. The company said it would use about 40 percent of the proceeds from the latest stock offering to put into companies it has already invested in, to avoid having its ownerships stakes diluted, and in new ventures. The rest will be available for investments in spinoffs from the three other universities, or other institutions.

Mr. Tarhan said the deal opens up financing opportunities for University College and the other universities, but does not obligate them to work with Imperial. Imperial Innovations has a more profit-focused motive than most tech-transfer operations, while UCL Business strives to have a balance of projects, including ventures in which the benefits are societal, not financial. Mr. Tarhan said that the focus at UCL Business is not changing but that having Imperial Innovations' funds for UCL Business's more profit-focused ventures would be a plus.

The new capital, however, will come at a cost for Imperial College. In raising the additional investment funds, the university is giving up its majority ownership—and control—over the 24-year-old Imperial Innovations Group. After the sale of the additional shares, most of which are being acquired by Imperial Innovations' existing investors, the college will own about 30 percent of the company.

While some American universities work closely with venture-capital firms to help them create spinoff companies, none have a relationship as deep or overtly commercial as Imperial's with the Imperial Innovations Group.

Since 2006, Imperial Innovations has invested about $75-million in various start-up companies, including some that have since been sold. It now holds ownership stakes in 79 companies.


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