The role of patient capital in commercialisation

Anthony Francis

Last year in the UK “patient capital” overtook venture capital as the prime source of investment for high tech start-ups.

In Australia the environment has changed with NISA and recent initiatives to ignite our creation of start-ups. The gap however remains between idea and commercial business.

A group of entrepreneurial Universities have got together to try to resolve this problem by creating unIPartners. An early stage public listed company to invest and grow start ups from these Universities.

This session will explain how the model works and how unIPartners resolves many of the key issues in the process such as:

• Separation of investors from the spin off companies themselves – creating patient capital.

• Having unIPartners as a listed company to enable shareholders to sell there stock on an open market rather than invest in private companies.

• Becoming attractive to large institutions, super funds as the stock is traded and has a defined value.

• Capacity to fund early commercial experiments in the Universities working through the commercialization offices.

• Adding the commercially assessed factors to projects – teams and sales before seeking co-funding.

• A model for large corporates to invest in innovation – both in unIPartners and directly in its subsidiaries.

The author through Flinders Partners has adopted this model without some of the key benefits of a public structure, but with the same principles with spin-offs such as Clevertar and ReTimer. In the session, these examples will be discussed explaining the role of patient capital.

We will explore how unIPartners unique investment model addresses the problems of the innovation gap. By creating a “proof of concept” or “play” capital pool that is not assessed traditionally to create understandable value is a key step of the process. These early stage funds are effectively controlled by the TTO’s of the member Universities to develop investable opportunities. From there in stage 2 a flow on fund invests further and is intended to add the key ingredients for commercial success.

From an equity perspective unIPartners never owns more than 50% of the stock, so Universities and the researchers become true partners in the new companies. It also allows for the recruitment of an entrepreneur and a commercial milestone such as first sales, distribution or a partnership.

Stage 3 then explores how additional investors are attracted and then the options begin to evolve of trade, sale, listing the subsidiary itself or other future exit event.

Through this process the model effectively creates a customer for more research.

The session will also explain how the model becomes a catalyst for:

• Innovation to be come “investable”

• Entrepreneurs to be attracted to lead start-ups as their remuneration could include public company stock.

• Researchers to become more engaged through holding equity in the new spin offs.

• Accountable innovation.

Profiles of the investee companies under construction will also be explored together with the funding model that has been designed for each and the development pathway to give a more in depth understanding f how it is working. Companies that will be profiled will include:

• Clevertar

• FlinCare

• Spors

In each of these cases, the value adding steps and processes to achieve them will be explored.

The session will conclude with both the future plans of the model; it’s need for collaborative partners and its planned development pathway. We will also explore how the UK has successfully grown the model and the future of patient capital globally.