About a year ago, Prospect published a series of views on where to consider investing given the world’s troubles. Diane Coyle, economist, wrote: “In the longer term, though, there’s only ever one sound investment: innovation. It’s the engine of growth, the source of real returns.” This struck me as a commonsense way to look at things for a private investor who can bear some risk.
But backing new ventures early to capture the gains possible when an innovative idea turns out to have major commercial potential—Google, for example—is among the riskiest ways to invest, simply because many ventures will disappoint for each one that soars. Even if you can accept that kind of risk profile, where do you look for a way to invest in innovative start-up companies?
One place is university research departments, which have attracted a lot more attention over the past few years. Coyle’s remark popped into my head again in mid-February. A small technology company called Oxford Nanopore said it would soon launch a device the size of a USB stick that could sequence a human genome in hours and cost less than $900, far cheaper than its nearest competitor. Among the names on the shareholder register as a “patient, long-term investor,” was Invesco Asset Management, whose head of investment is Neil Woodford, a favourite for thousands of British retail investors via the Invesco Perpetual Income, and High Income, funds.
Invesco is among a small number of big names that crop up frequently as backers of high-tech university spin-out companies. In December, it bought into a £25m share issue by Tissue Regenix, a Leeds University spin-out company specialising in regenerative medicine. But the scale of its interest in this area is made clear in its 45 per cent-plus shareholding in Imperial Innovations, the company set up to commercialise scientific research from universities including Imperial College, University College London, Oxford and Cambridge. Woodfood’s firm supported a share issue by Imperial Innovations just over a year ago that raised £140m to invest in high-tech businesses.
This increase in investment firepower is critical, as Susan Searle, CEO of Imperial Innovations, made clear when I interviewed her late last year. Searle is a veteran of British efforts in technology transfer and commercialisation, and argues that for a long time good business people would not work on turning university research into commercial propositions because there was too little money available to…