Return to search

3i R&D white paper

In November 3i launched a white paper outlining its findings of research undertaken into the spinning out of commercial companies from R&D opportunities in academia and the R&D facilities of corporates.

Laurence Garrett, director of 3i’s Cambridge office, notes that while corporates may shy from spinning out companies, which are essentially wrapped around R&D activity the corporate may no longer wish to pursue through fear of losing qualified researchers in fact this can be short-sighted. Garrett says it’s possible that researchers may be more attracted to work for corporates if they know that should their work no longer be of value to the corporate, due to a change of strategy for example, they have the option of continuing their research by participating in a spinout company.

The loss of good research staff, however, is as much an issue for academic institutions as for corporates. There is a worry in some quarters that the pendulum at some academic institutions has swung too far in favour of effectively sticking an equity wrapper on a piece of intellectual property (IP) rather than seeking to licence that IP. This may be down to a combination of facts, equity fever and watchful government eyes perhaps.

Garrett says the reason for undertaking the report was four-fold. “Firstly, there is a huge market opportunity for investment and for innovation. Eighty per cent of R&D spend within corporates and universities never gets exploited. It’s a huge market opportunity. Secondly, there is a good correlation between innovation and spinout activity being an important factor in economic growth. Thirdly, it’s difficult to do, so the more you can understand the factors the better. Finally, if you can align all the parties – the founders, innovators, operators and academics – you can make very successful companies.”

The research threw to light a number of facts including that 80 per cent of R&D activity in the UK is not being exploited and that in the US academic technology transfer added $40 billion and 270,000 jobs to the economy up to 1999. In Cambridge alone over the last ten years 1,500 companies have been created concentrating on innovation and they employ some 40,000 people.

Other findings that will not surprise include that location matters – specifically the US west coast is still streets ahead of Europe – and that it is still quite a daunting task to find good management teams to lead these R&D spinouts.

The white paper drew on 100 experts from around the world and for its part 3i qualifies to undertake such a piece of research by virtue of having funded 70 spin outs from academic and from corporates since its inception.