When the University of Warwick put out a press release in 2010 to say its researchers had developed a technique to recycle all household plastic, it sparked worldwide interest from companies interested in the technology.
Only 12% of household plastic is currently recycled; the rest is either put into landfill or burnt as fuel, so the prospect of being able to recycle all household plastic is enticing, both from the environmental and commercial points of view. As Adrian Griffiths, managing director of Recycling Technologies, the spin-out company eventually formed to exploit the technology, says: “The potential market is breathtakingly large.”
Four years on, Recycling Technologies has an office in Swindon and a 10-person team, and will soon deliver its recycling equipment to a test customer, Swindon council. Local authorities are particularly interested: they pay to dispose of plastic waste at the moment, but the Recycling Technologies product gives them the opportunity to make money from it. “The gap between what you could have paid and what you now receive for it is substantial,” says Griffiths.
Professor Jonathan Seville, the research engineer who developed the technology, is now based at the University of Surrey but remains on the company’s board as technical adviser. The management team and advisory panel have a mix of people with in-depth business experience and technical expertise. As Griffiths says: “You need the planet-sized brains of the university profs on the technical side, and if that is then matched by the commercial nous of people who have been in industry for many years, then the chances of success are greatly enhanced.”
The omens for Recycling Technologies are good. But it’s just one of many spin-outs that arise from UK universities every year: in 2012-13, figures from the Higher Education Funding Council for England (Hefce) show that 150 formal spin-out companies were established. In the same period, intellectual property developed in universities brought in £87m, and 955 patents were granted to them.
Not all spin-outs are successful, however. Some promising spin-outs falter at the “valley of death” stage when they require an increase in the level of investment to become viable. Recognising this, the government has just announced the launch of a £3.2m fund that will help researchers at five universities to commercialise their ideas more quickly.
So how does a clever idea or invention from an academic undergo the transformation into a successful business? Many universities now have departments or even businesses that help academics turn their ideas into commercial propositions – a process known as technology transfer.
The University of Oxford’s wholly-owned subsidiary, Isis Innovation, is the biggest technology transfer unit in Europe. Oxford has a strong track record in creating spin-outs with staying power: its most notable success story, the computer games company NaturalMotion, was spun out in 2001, and acquired in 2014 by US company Zynga for $527m (£338m).
The most common method for commercialising research is through licensing patents to existing businesses, says Andrea Alunni, seed investment manager at the company – and Isis Innovation currently manages a portfolio of 1,500 patents. If an academic has an idea that is a suitable candidate for a business, however, Alunni and his colleagues help find a team to run it: the inventors (and the university) will become shareholders of the new company, but will normally stay in their academic position and the managing director will be found from outside. “The amount of work that goes into setting up a new company to flourish and succeed is enormous,” says Alunni.
It is only when a managing director is in place, and a prototype of the product has been developed, that investors are approached for initial seed investment. Isis Innovation is able to draw on a network of about 200 angel investors who are interested putting in seed level funds, but there are still “many hurdles to jump” in the two or three years before incorporation, says Alunni.
It’s not impossible, however, to create a spin-out without investors, depending on the product. Fabio Ciravegna, professor of language and knowledge technologies at the University of Sheffield, is one of those who has seen his initial idea make the transition to a successful business, K-Now – which collects and analyses real-time data so it can be acted on immediately. A second company, the Floow, which specialises in data collection, storage, management and enhancement company, has been spun out of K-Now.
Ciravegna never sought external funding for K-Now, and the initial funding of £10,000 came from the university and the researchers. The company benefited from having experienced directors who were appointed by the university, he says.
K-Now’s Kite product was originally developed to help out in flood management: members of the public can submit water-level readings, and that data is then analysed to manage people’s movement. But it has also been used in the management of large-scale events such as the Glastonbury festival: by analysing people’s comments on social media in real time, it’s possible to pinpoint and respond to problems immediately.
The Floow, only three years old, has grown rapidly. Its key product is an app on a driver’s mobile phone that sends information about the driver’s behaviours to the insurance company. The amount of data collected means that the company is able to tell whether the behaviour is typical or unusual (such as taking a corner too fast). It will also offer feedback to drivers about their driving: whether they are braking too hard, for example. “The point of this is not to monitor the person per se but to help people understand the way they drive,” says Ciravegna. “If you drive better and not have many accidents, your premium is lower, and the insurer earns more.”
The company already numbers several big insurance firms, such as Direct Line, among its customers. So what does Ciravegna think is necessary to make a spin-out successful? “Passion is extremely important but it’s not enough,” he says. Luck plays a role, he adds, but he also agrees with Griffiths about the need for people with business experience, such as the Floow’s co-founder and CEO, Aldo Monteforte, who can “open the doors to the decision-makers.”
In times of austerity, it’s easy for promising spin-outs to fall by the wayside. But what of Recycling Technologies? Will it still be around in five years’ time or will it be one of those that stumbles? Griffiths is confident: “I fully anticipate being a multimillion-pound turnover company entirely likely floated on the alternative investment market.”
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