The One About the Magnetic Gorilla
December 2018
It is Christmas time, time for Christmas-crackers and the sometimes contrived riddles that they contain. There is a popular one that reads as follows:
Q: "Where does a 600-pound gorilla sit?"
A: "Anywhere it wants to."
In 2015, a £320 million pound gorilla landed in Oxford in the form of Oxford Sciences Innovation, a new private company that had been set up to invest in spin-out companies from the University of Oxford. Osi the gorilla thrived in its Oxford habitat, announced a substantial weight gain of £230 million in 2016, and now tips the scales at a whopping £600 million of money raised.
Osi the gorilla initially took up residence in the University’s newly refurbished library, and is now settled in more purpose built accommodation near the railway station. Osi is a sociable animal and held a number of parties to befriend the locals and try to win friends and influence people. This was partially successful, but as you can imagine with a large gorilla at a party, and moving about the University’s fragile historic buildings, there were some issues. Some of Osi’s handlers from London were called and started making more regular visits which helped settle things down.
After around six months it was discovered that Osi had special magnetic powers. Osi was able to entice and attract more and more Oxford scientists to set up new spin-out companies to develop their research, with the ready availability of a first dollop of funding and the promise of more and more to follow. By the end of 2017 Osi had supported 48 companies and invested £83 million, shedding a few pounds. [That’s enough about the gorilla – ed.]
There is no doubt that Oxford Sciences Innovation is having a substantial impact on technology transfer activities at the University of Oxford. The rate of formation of new spin-out companies has increased dramatically. In the decade before 2015 there were about five new spin-outs a year, with a peak of seven. Since the OSI launch party in May 2015, the University has announced 60 new spin-out companies, averaging about 17 a year, with OSI investing in the vast majority of these.
OSI has its own money to invest, but that is not the only thing going on. OSI has a phenomenally powerful network of other investors and industry contacts. These are helping to develop the Oxford innovation community locally and to spread the word about Oxford’s investment potential around the world.
Oxford University Innovation is the University’s wholly owned technology transfer company, tasked with managing the interface between OSI and the University. (I worked there from 2000 to early 2016.) As OUI reported in mid 2018: “Since 2011, Oxford companies have raised just shy of £1.9bn in external fundraising. What’s particularly notable is that £506m of this has been over the past twelve months alone. A full third of the 160 spinout companies OUI has created over its 30-year history have been formed since 2015. That post-2015 cohort are now landing sizeable Series A rounds. With more Series A rounds on the way and the inevitable Series Bs appearing in the not too distant future, we expect to break the £2bn mark in the near future, and to be well beyond it by Q2 2019. For the financially curious amongst you wondering how much of that £506m was OSI, it was around 6% - underlining the breadth of investors coming into town at present.”
This is the OSI global network effect at play (together with other factors, notably the strength of EIS funds focussed on university technology companies).
With somewhere between £400m and £500m of its cash still available to invest there is a long way to go in the OSI story. The University has a direct interest in the financial success of the company, and many Oxford researchers have attached their reputations and potential fortunes to those of OSI. One early lesson from OSI is that it is easy to play the spin-out numbers game with easy access to vast amounts of cash. As the years roll on these companies need to learn how to scale-up, which has become the very welcome new chant of the commentariat, and create real value. The investors in OSI are also no doubt waiting to see how it scales-up.
For now, the gorilla is sitting where it wants to, and beating its chest.
Happy Christmas, Season’s Greetings and Best Wishes for 2019.
Q: "Where does a 600-pound gorilla sit?"
A: "Anywhere it wants to."
In 2015, a £320 million pound gorilla landed in Oxford in the form of Oxford Sciences Innovation, a new private company that had been set up to invest in spin-out companies from the University of Oxford. Osi the gorilla thrived in its Oxford habitat, announced a substantial weight gain of £230 million in 2016, and now tips the scales at a whopping £600 million of money raised.
Osi the gorilla initially took up residence in the University’s newly refurbished library, and is now settled in more purpose built accommodation near the railway station. Osi is a sociable animal and held a number of parties to befriend the locals and try to win friends and influence people. This was partially successful, but as you can imagine with a large gorilla at a party, and moving about the University’s fragile historic buildings, there were some issues. Some of Osi’s handlers from London were called and started making more regular visits which helped settle things down.
After around six months it was discovered that Osi had special magnetic powers. Osi was able to entice and attract more and more Oxford scientists to set up new spin-out companies to develop their research, with the ready availability of a first dollop of funding and the promise of more and more to follow. By the end of 2017 Osi had supported 48 companies and invested £83 million, shedding a few pounds. [That’s enough about the gorilla – ed.]
There is no doubt that Oxford Sciences Innovation is having a substantial impact on technology transfer activities at the University of Oxford. The rate of formation of new spin-out companies has increased dramatically. In the decade before 2015 there were about five new spin-outs a year, with a peak of seven. Since the OSI launch party in May 2015, the University has announced 60 new spin-out companies, averaging about 17 a year, with OSI investing in the vast majority of these.
OSI has its own money to invest, but that is not the only thing going on. OSI has a phenomenally powerful network of other investors and industry contacts. These are helping to develop the Oxford innovation community locally and to spread the word about Oxford’s investment potential around the world.
Oxford University Innovation is the University’s wholly owned technology transfer company, tasked with managing the interface between OSI and the University. (I worked there from 2000 to early 2016.) As OUI reported in mid 2018: “Since 2011, Oxford companies have raised just shy of £1.9bn in external fundraising. What’s particularly notable is that £506m of this has been over the past twelve months alone. A full third of the 160 spinout companies OUI has created over its 30-year history have been formed since 2015. That post-2015 cohort are now landing sizeable Series A rounds. With more Series A rounds on the way and the inevitable Series Bs appearing in the not too distant future, we expect to break the £2bn mark in the near future, and to be well beyond it by Q2 2019. For the financially curious amongst you wondering how much of that £506m was OSI, it was around 6% - underlining the breadth of investors coming into town at present.”
This is the OSI global network effect at play (together with other factors, notably the strength of EIS funds focussed on university technology companies).
With somewhere between £400m and £500m of its cash still available to invest there is a long way to go in the OSI story. The University has a direct interest in the financial success of the company, and many Oxford researchers have attached their reputations and potential fortunes to those of OSI. One early lesson from OSI is that it is easy to play the spin-out numbers game with easy access to vast amounts of cash. As the years roll on these companies need to learn how to scale-up, which has become the very welcome new chant of the commentariat, and create real value. The investors in OSI are also no doubt waiting to see how it scales-up.
For now, the gorilla is sitting where it wants to, and beating its chest.
Happy Christmas, Season’s Greetings and Best Wishes for 2019.