Across the pond, where public companies have taken a much larger stake in tech transfer activity than they have in the U.S., a deal between two firms may signal industry consolidation. London-based tech transfer company IP Group will take a 20% stake in the much smaller Fusion IP in a £3.2 million ($5.7 million) agreement. A co-investment provision for the larger company will allow IP Group to take a share in any new companies incubated by Fusion. Sheffield, U.K.-based Fusion has exclusive arrangements to commercialize discoveries at the universities of Cardiff and Sheffield, which both spend approximately £90 million annually on research. Fusion’s investments are valued at £6.4 million, and each year the company creates two or three spinoffs — principally in the fields of information technology, engineering, and biotechnology. IP Group, which is more than nine times the size of Fusion, with a market capitalization of £140 million, also commercializes third-level research from a group of 10 universities, including the universities of Leeds, Oxford, Bath, and Glasgow.
“We as a company were quite keen to raise a small amount of additional money — a couple of million or, maximum, £3 million,” says David Baynes, CEO of Fusion IP. “We got money out there in the marketplace talking to institutions, but then we had a chat with the IP [Group] guys.” Those conversations convinced Fusion that the IP Group’s stake was a better deal. Through the co-investment agreement, any new deal funded by Fusion would create a company that is 12% owned by IP Group, 48% owned by Fusion, and 40% owned by the academic initially responsible for the commercialized discovery. In addition, IP Group offers an in-house recruitment team for tech start-ups and a capital markets team that raises money for portfolio companies. “Those are quite nice resources for us to be able to tap into,” Baynes says.
Source: Financial Times