Insight sept 2013 final

Business Insight Tuesday September 24 2013

Next step up Dr Olga Kozlova on how Scots companies can grow

Digital Dundee City raises the game with support for entrepreneurs

in association with

Tuesday September 24 2013 | the times

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Business Insight

Welcome

Support on the way to growth In this Business Insight, which has been produced in association with Converge Challenge, we look at the support that is available to encourage academics to become entrepreneurs and turn their research into successful businesses.

We also revisit Dundee to look at how the Waterfront development is progressing and how the city is building on its academic research and allying it to commercial development to establish itself as a world leader in video game development.

The infrastructure is being put in place to support start ups in the sector.

Dundee has also developed a world-class reputation as a centre for life science research and a place for life science companies to locate.

Staying with the life science theme, we look in depth at Edinburgh’s BioQuarter which is also establishing itself as a world beating centre for lifescience companies.

Converge Challenge, Scotland’s largest business competition and entrepreneurial training programme for research entrepreneurs is supported by the Scottish Funding Council plus the universities of Aberdeen, Dundee, Edinburgh, Glasgow, St Andrews, Stirling, Strathclyde, Heriot Watt University and the Royal Society of Edinburgh.

COVER IMAGE: JAMES GLOSSOP FOR THE TIMES

A meeting of minds merits real rewards Converge Challenge competition not only unites the nation’s academics and business entrepreneurs but can bring out the best in both groups, says Ginny Clark

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he step from academia to entrepreneurship can be a tricky one, but Dr Olga Kozlova, Enterprise Creation Manager at Heriot-Watt University and director of the Scotland-wide competition Converge Challenge, is convinced that we have the framework to support the scientists who have both the research, and the determination, to progress their ideas into full-blown businesses.

“Just as has happened in Cambridge, which has become the centre of a business ecosystem, Scottish universities are creating a cluster effect within the economy,” she says.

“We’re good at collaborating and Scottish universities work well together, attracting investment from large and small companies.

“Converge Challenge sits well in this, with people from the investment community coming in, and essentially helping in the formation of this cluster.”

When the 2013 winner of Converge Challenge is announced at this evening’s awards ceremony in Edinburgh, it will mark another remarkable year of achievement, not just for the project that walks away with a business start-up

package worth more than £60,000, but for all 30 participants.

The competition is run by Heriot-Watt University but provides students and members of staff at every Scottish university and research institute the chance to develop the commercial potential of their invention through a business mentoring and training programme. First whittled down to a top 10, six projects are then short-listed for the final prize, but for any of the groups or individuals involved in this annual competition, the programme itself will provide unique access to entrepreneurial support and development.

Kozlova, who has started her own technology company in the past and since then served as a mentor and non-exec to a number of start-ups, is an advisor to Heriot-Watt’s own spin-outs, and as part of Converge is focused on promoting and encouraging entrepreneurship at all of Scotland’s universities.

“The culture here in Scotland may not be truly entrepreneurial compared to the USA, for instance,” she says. “That kind of culture change takes time, but we have come a long way in the past ten years and it’s good that entrepreneurship is being encouraged by many organisations, and to have that ambition while still building the capacity. All those involved should keep talking to each other to ensure we are on message.

“There are well over 100 initiatives in Scotland to support enterprise, and I work with a number of other organisations, such as the Princes Trust, the Scottish Institute for Enterprise and the Saltire Foundation. We all promote each other’s initiatives and so as long as we work collaboratively, rather than compete, it definitely benefits Scotland plc.”

The particular focus of Converge Challenge is on supporting the formation of companies based on the ideas developed within the universities. The process of turning research into products or services is called “commericalisation” and there are three ways for a project to achieve it.

The most common approach is collaboration with an industrial partner, which is less risky for the university to engage in and enables scientists to secure extra funding for research and development.

Licensing, the second, is where a piece of research has led to a patent being filed and the innovative technology can be licensed to existing companies to take it on. It means a funding commitment from the university to get to that stage, but it is a business that is responsible for taking technology to market.

The potential rewards for a start-up, the third, could be much higher but it is also very high-risk and that is why the entrepreneurial scientists are in the minority.

“You need really solid intellectual technology behind a project to take it to spinout,” says Kozlova, who was previously the managing director of a biotechnology start-up. “It needs a clear and unique selling point and a very significant market opportunity to attract investment, but it can be the most rewarding.

“Most people in Converge Challenge

Dr Olga Kozlova is the director of the Scotlandwide competition Converge Challenge

Let’s profit from our intellectual assets

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Fergus Ewing, MSP

he key aim of the Scottish Government is simple. It is to create sustainable economic growth with opportunities for all to flourish. In order to realise this, we have developed our Government Economic Strategy, which sets out our priorities, policies and funding to support the economy. At the heart of this strategy sits innovation.

Scotland has a fantastic heritage of innovation and excellence in scientific research. The claim that Scots invented the modern world is not much of an exaggeration and that spirit of discovery is very much alive in the current

Scottish higher education sector, which is integrated, internationally connected and globally renowned for its research and development across a wide range of scientific and technological disciplines.

For example, our high levels of spending on research and development in higher education as a share of our GDP saw Scotland rank third highest among the OECD countries in 2011. In terms of citations per researcher this investment has a global impact. Scottish-based researchers rank third in the world after Switzerland and the Netherlands, ahead of all the G8 countries .

This supports the attraction of

funding from other sources: since 2007, Scotland has secured €505 million in funding from Europe’s Framework Programme 7, which represents 1.5 per cent of FP7 funding and 10 per cent of the UK allocation. On a UK basis, Scottish higher education institutions won £219 million in Research Council funding, accounting for 15 per cent of Research Council grant and contract funding awarded to UK HEIs, well above our population share.

To support this the Government has increased its budget for Research and Knowledge Exchange activities by 38 per cent from £263 million in 2007 to £364

the times | Tuesday September 24 2013

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Business Insight

JAMES GLOSSOP FOR THE TIMES

It’s those who are truly committed and capable who go through … it means we work with those who are determined

top 10 are in projects where they are going to go and form companies. Some will be successful, some will not — so the training element in Converge is important in helping students and researchers be more commercially aware. However, these are transferable skills that make them more employable whether they remain an academic or go into industry.

“The idea behind Converge Challenge came from my own experience of setting up a spin-out, so when I was asked to design this business competition, I knew first-hand the kinds of challenges many people face at this stage. Also, I didn’t want to recreate what’s already out there.

“Remembering my own difficulties, I knew that, while many people hoping to commercially develop a project will know their science, their research, really well,

We are taking advantage of our size … a Team Scotland approach

it is finding relevant things in the market place, getting in front of the customer that is so hard.

“For Converge Challenge I decided to focus on the practical aspects of helping our budding entrepreneurs to connect with their customers. This is about helping them to change the way they think, so they are not just talking about technical aspects but using layman’s terms to focus on what will be interesting to the user.

It’s also about developing basic business skills, or if someone is at a conference, knowing how to find the right people from their industry. It’s about engagement — how to write a business plan and make a pitch in 30 seconds or 10 minutes.

So, yes, Converge Challenge is a competition but it is also a training and entrepreneurship development programme.”

Now in its fourth year, Converge

million in 2012/13 — that’s over £100 million in cash terms.

But I would not be telling the full story if I did not highlight that Scotland, as in many parts of the world, has work to do to connect our intellectual assets with our company base. To realise our strategic aims, we must ensure Scotland’s world-class intellectual capital is used by its businesses. It cannot be driven from an academic perspective alone. This means, in addition to a Higher Education sector that understands business needs, we need to develop a creative business culture that focuses on growth and ambition: we need to bring these two together in a way that benefits business, academia and the Scottish economy as a whole.

We are, therefore, working on a range of measures to improve the capacity of

Scottish business to work with and make productive use of academic expertise.

As a compact nation, we are taking advantage of our size, which allows us to develop a “Team Scotland approach” to policy delivery. The Government works together with the Enterprise agencies and the Higher and Further Education Funding Council to deliver policies that will see a step change in the way in which business and academia interacts.

We are creating a Scotland-wide network of Innovation Centres that will provide solutions to demand-led problems facing industry by supporting innovation for future growth.

The University of Strathclyde is home to the first Fraunhofer Centre in the UK, working with a range of partners on industry-driven laser research and

already points to solid success, with 25 spin-outs formed out of 90 projects the competition has been involved with in those first three years.

“Converge Challenge entrants come to us at a very early stage in the development of their business,” says Kozlova.

“They need to find out if there is a market before they spend money on legals and premises, as it might be fantastic research that should be published but no one will pay money for it. They need a strong case if they are going to take a project forward.

“So it’s about due diligence. Most of the projects involved are past proof of concept but due diligence applies to the market and to the people.

“We make very high demands of our participants. In the first four months, they have to attend training, write a business plan and deliver an investor pitch. It’s those who are truly committed and capable who go through, and around 25 per cent fall off at that stage — it might be too early for their concept or just not for them. It means we work with those who are really highly capable and determined.

“I feel the programme has done really well. It is supported by all universities and open to students and staff, responding very well to Scottish Funding Council priorities about working collaboratively.”

As Scotland continues to grow and develop that culture of entrepreneurship, Kozlova stresses it’s key to keep young people interested and engaged.

“At conferences and events I would like to see fresh faces among the speakers, young blood — those who have had the courage to take their concept forward, but are still developing projects can be fantastic role models. At one event I organised a successful entrepreneur came along to speak to the students and he was great. The young people enjoyed what he had to say, though afterwards they said: ‘There’s no way I could achieve that!’ — as if it was too far out of their reach.

If you involve younger entrepreneurs, they might still be at a risky stage of developing a company but at least the students can relate to them. Young people need to see role models who will say: ‘We might fail, but we have the guts to do it.’

So let’s hear from them.” technology. We work closely with the Technology Strategy Board to ensure its competitive funds are made good use of in Scotland. And we will be announcing a fresh approach to knowledge exchange that will support spin-outs and increase demand for academic expertise. We are delivering innovation vouchers to industry that will subsidise the costs of research collaboration for individual businesses.

Commercialisation of intellectual assets is never easy, however Scotland is definitely moving in the right direction.

Of course, with additional economic powers at our disposal, such as responsibility for IP and for tax incentives or credits we could do a lot more, but that is a whole new article …

Fergus Ewing, MSP is Minister for Energy, Enterprise and Tourism.

Working together is not just academic Linda Urquhart

I

have a variety of perspectives on the commercialisation of research created by academics because of the different hats I wear. As a former lawyer and now Chairman of Morton Fraser, the sponsors of Converge Challenge, I see the need for the right kind of professional and business support to the academic community. Those involved in research are experts in their subject but rarely in how to turn their ideas into a sustainable business.

Equally, it’s not every lawyer or accountant who can understand the needs of these young businesses and it is important they get business advice, not just legal and accounting advice.

The range of advice required is wide, including how to structure investment and protect the intellectual property of the research, being clear where ownership sits. Keeping communication and documentation simple and straightforward for start-ups should be the aim.

As a board member of Scottish Enterprise, the most striking factor for me is the need to make clear where the demand for research lies, creating dialogue among business, universities and research establishments to allow exploration of real opportunities for commercialisation of ideas and stimulate demand for research in areas that will help businesses solve challenges. The creation of clusters of research and private sector collaboration such as Scotland’s International Technology and Renewable Energy Zone are an excellent way of facilitating this collaboration.

Through my roles at the CBI, I learned about other ways in which business and academia could work together, including Knowledge Transfer Partnerships. I’m not convinced how well known these potential links are in all areas of the business community. I can’t speak for the academic community, but I think there’s a role to be played in communicating and spreading the word about what is available and the benefits of business engaging with academics.

I am always interested in how organisations align their people with their strategy and start-up businesses are no different. The creator of the idea is rarely the person to single-handedly lead that idea on to business success, so how do they learn the skills and recruit the right people to take on that journey? There is a large number of private and public sector players working in this area.

Collaboration, availability of advice and signposting is critical to Scotland making the most of the wealth of potential we have in our research base.

Linda H Urquhart OBE is Chairman of Investors in People

Tuesday September 24 2013 | the times

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Business Insight

2013 Converge Challenge COURTESY OF EDINBURGH UNIVERSITY

The University of Edinburgh’s Old College. The university is part of Grow Export Attract Support

With real knowledge comes true ambition With the spotlight on Scottish technology the real question is: can academia and business achieve success together, writes Rob Stokes

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en of Scotland’s brightest technology prospects will make their business pitches tonight before awards are made in the 2013 Converge Challenge, the richest annual business competition and entrepreneurial training programme in Scotland. Indeed, it seems Scottish technology is flavour of the month, what with the prestigious European Tech Tour, a company ‘beauty parade’ in front of dozens of European

and US venture capitalists, having just staged the UK leg of its Ireland and UK visit in Glasgow with Scottish companies among those presenting.

Further confirmation of international awareness of Scottish innovation came in a report revealing how universities play a role in nearly half of the foreign direct investment (FDI) that flows into Scotland Grow Export Attract Support, by Universities Scotland, the representative body of Scotland’s 19 higher education institutions (HEIs), attributes this to the output of graduates and postgraduates, globally recognised R&D and innovation,

and HEIs’ role in creating the industry clusters, all of which investors appreciate.

The cup of joy overflowed as Edinburgh was placed seventeenth, Glasgow fifty-first and St Andrews eight-third in the 2013/14 world ranking of universities

by London-based Quacquarelli Symonds (QS), whose annual ratings exercise is much followed. QS consider no fewer than 2000 universities then ranks 800.

While most headlines in the commercialisation story understandably focus on spin-out companies, Knowledge Transfer from academia to existing businesses dwarfs this. Universities Scotland points out that HEIs help more than 26,000 companies annually to translate academic R&D into new products and processes.

While HEIs each have distinctive approaches to Knowledge Transfer, they also collaborate to promote what they have to offer in this regard.

For example, University Technology was launched in 2004 to showcase new technology opportunities from all of Scotland’s HEIs to companies and investors. As it tenth anniversary looms next March, its university-technology.com web portal is being improved.

Royal Society aims to boost the potential for commercial success Its title may not sound commercial, but when it comes to the commercialisation of academic research, the 230-year-old Royal Society of Edinburgh (RSE) has its head out in front, writes the society’s Gordon Adam. With its feet firmly planted in the bustling, historic centre of the capital, its major contribution to the commercialisation of research — both north and south of the Border — is its Enterprise Fellowship scheme that has registered a growing take-up and success since springing out of its roots in 1997.

Since then, more than 165 Enterprise Fellows have had the opportunity to form high-technology businesses and at least 60% of these are still trading. The roots date back to 1996 – when, with Scottish Enterprise and the Scottish universities, the RSE mounted a “joint commercialisation inquiry” that recommended a scheme to assist researchers to develop business skills and build businesses in Scotland.

Specifically, its aim was to boost the number of spin-out companies and to enhance commercial

understanding in the academic sector.

The RSE is itself “uniquely placed” to deliver such a scheme with a 1500-strong academic Fellowship representing “some of the best intellectual talent” in a wide range of disciplines.

Recognising this, the scheme has continuing support from three main funders, Scottish Enterprise, and two of the UK Research Councils, the Biotechnology and Biological Sciences Research Council (BBSRC) and the Science and Technology Facilities Council (STFC).

Applicants are evaluated for their entrepreneurial potential and the commercial potential of their idea, and those selected get support through a year’s salary, business training, development funding, and access to mentors, experts and professional advisers. New calls for applications are expected for fellowships starting in April 2014, funded by Scottish Enterprise and by BBSRC, the leading funding agency for academic research and training in the biosciences at UK universities.

the times | Tuesday September 24 2013

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Business Insight

“It’s a fantastic tool because industry can find everything in one place, which saves so much time and effort,” says Gillian Fleming, commercial manager at the University of Strathclyde, who manages a portfolio of technologies to take forward to a commercial outcome.

“That’s the feedback from people who work in industry R&D and whose job is to scout out what technologies in their domain universities are working on.”

Most enquiries through the portal are from UK companies but there is overseas interest, too; the next most prolific enquirer being India, which recently overtook the USA, says Fleming.

Companies registering with the site list their main sectors of interest and automatically receive updates and alerts of interest.

“They increasingly send us wish-lists of product developments they would like to see in the near future and ask if there is relevant research, so we are considering how to respond to that demand and to work more closely with companies,” says Fleming.

“We’re considering developing apps and have been working on standardising documentation. We are very open about the intellectual property (IP) on offer and already have standardised Non-Disclosure Agreements for those who wish to discuss technologies in more detail. Ultimately, we may have a standard licence agreement but are not yet at that stage.”

Some university IP is tough to commercialise through traditional licensing routes, maybe because it is at too early a stage in its technology-readiness development or too risky for an investor.

A university-technology.com ‘Easy Access’ channel offers such IP free through simple terms so companies may evaluate it rapidly and with reduced risk – although they are expected to pick up any remaining costs of progressing any patent protection.

“For Scottish SMEs in particular, we can work with them using Innovation Vouchers , Knowledge Training Partnerships (KTP’s) and consultancy to develop Easy Access opportunities in a different direction, maybe a different market segment or a different application,” Fleming says.

A new call opened last month for applications for standard Innovation Vouchers, a scheme funded by the Scottish Funding Council (SFC), the national body funding HEIs, to build relationships between SMEs and HEIs. To qualify

of high-profile international sporting events in Scotland in 2014.

A variant of the standard Innovation Vouchers is also available and is funded by the SFC and the development agencies Scottish Enterprise and Highlands and Islands Enterprise. It covers larger projects, paying up to £20,000 per project on condition that the company matches the grant in cash. “It’s been popular and successful too,” says Jordan.

Not to be left on the sidelines, Interface is accepting entries with a closing date of October 2 for its own awards, which reward excellence in business/academia collaboration.

“In this second year of the Interface Excellence Awards, we’re creating a unique debate around the awards night in Edinburgh on November 21 to explore what knowledge exchange is doing for Scotland and what might drive it on,” Jordan says.

Siobhán Jordan of Interface says business is asking for cohesion and harmonisation

There is a good knowledge transfer in place but the agenda is moving fast

for matched Innovation Funding up to £5000, with a minimum of £1000, collaborative projects must show they will lead to new products, services and processes of benefit to the business, the HEI and the Scottish economy.

The company’s contribution can be in kind as well as cash.

“Innovation Vouchers of this kind have been very successful,” says Dr Siobhán Jordan, director of Interface, a central hub offering a free service to connect national and international businesses to Scotland’s 24 higher education and research institutes, and which administers the Innovation Vouchers Scheme.

“We’re seeing growth of five per cent annually in the number of companies we support,” says Jordan, whose team encourage companies to consider academic support to help solve business challenges.

“70 to 80 per cent are new customers.

Scottish SMEs are getting into the habit of innovating their way through challenging economic times,” she says.

Interface finds that sectors showing a strong appetite for working with academia include: food and drink, where there is interest in developing new products and in reducing costs and waste; renewable energy companies; and leisure, sport and tourism businesses keen to exploit a year

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his will be timely. An announcement from the SFC was expected this month or next about the Single Knowledge Exchange apparatus to be established, following two years of discussion between the SFC, business, academia, government and development agencies.

A new National Policy Forum chaired by a high-profile figure will for the first time provide a platform to discuss highend ideas about knowledge transfer in Scotland and recommend what should be implemented.

Allied to this, a national support structure will comprise agencies including, among others, Scotland’s specialist Innovation Centres, Interface, and knowledge transfer leaders from industry liaison groups of development agencies.

A third strand of the new set-up will involve industry-led teams from key sectors looking at challenges faced by those industries and soliciting solutions from R&D providers in Scotland.

“Higher education and business interaction has improved enormously over a decade, primarily because of the incentives offered,” says Dr Ewan Chirnside, director of the Knowledge Transfer Centre at the University of St Andrews, but speaking as the chair of Universities Scotland’s Research & Commercialisation Directors Group.

Scotland comes first for its level of university-industry collaboration when compared to nine other advanced nations, including the USA, Germany and

Japan, according to the influential World Economic Forum’s Global Competitiveness report.

“One reason for Scotland’s good record is that universities work closely together and pool research resources, so if one institution does not have expertise, equipment or facilities it can signpost businesses on quickly to someone who does,” says Chirnside.

“There is a great deal of good knowledge transfer in place, but the agenda is moving fast,” he acknowledges. “SMEs account for around £150 million of R&D spend in Scotland, which is what universities and the new Single Knowledge Exchange apparatus will chase.

“So one of the key questions is whether there is the level of demand among SMEs for what large, research intensive universities do.”

Other issues are whether the smaller companies have the capacity, skills and money to absorb what is expertly delivered by university researchers and whether the new apparatus will make the environment for Knowledge Transfer more opaque to SMEs, he adds.

“Directors of Knowledge Transfer in universities know each other well and are well networked with key people in development agencies as well as our own academics and university Principals, but it can still be difficult for SMEs to find their way into all this information and technology. Will building a bigger front door mean it is easier to push open?”

Well Interface’s Siobhán Jordan says: “Whatever gets delivered out of the Single Knowledge Exchange, we have to get it right for business. Business has made it clear that it wants cohesion and harmonisation in the sense that the same best practice should apply to relationships with academia, no matter which institution is involved.”

Interface’s role will be to liaise with HEIs and businesses to promote best practice in the former and manage the expectations of the latter in their dealings with academia.

“One thing that encourages me is that through Interface’s efforts in getting out to meet businesses and stimulating demand, we are seeing a cohort of emerging firms that see universities as key partners in developing new products or processes or improving concepts at an early stage to save time and money,” Jordan says.

Whatever transpires, a new episode is about to unfold in Scotland’s knowledgeto-jobs quest.

The Enterprise: to boldly go where no company has gone before

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here do the best university companies come from? Is it from an alchemy of extensive research, market foresighting, intellectual property protection and recruited top management? Recent developments in the major support programmes agree. New spending in university commercialisation targets high-growth industry sectors and precompanies proposing to disrupt them.

However, tonight sees Converge Challenge Awards, the largest and most important business plan competition for Scottish universities, which all university start-up projects are encouraged to enter. The prize fund is impressive and press coverage for the winner is significant. Let’s look at the short list of ten projects still vying for this year’s top honour. Where do they come from?

The answer to that question provides

Grant Wheeler points to the speed at which start-up projects evolve

a stark reminder of how challenging it is to form a significant technology or knowledge-based company in Scotland.

A reminder, too, that heavy investment in research, patents, foresighting and management often comes to nothing.

Start-up projects and early-stage companies rapidly evolve in their markets as technologies, products, business models and management teams are exposed to the acute pressures of the real world.

Only some emerge from that apparent chaos and few resemble the carefully manicured enterprises presented in start-up business plans.

Once high-growth platform technology propositions evolve into niche service plays, while vague business ideas suddenly find their place to underpin companies with huge potential. That is the nature of the market. It isn’t just what happens. It’s what should happen.

None of the ten shortlisted in this

year’s Converge Challenge benefited from the significant programmes of funding available to the ‘right’ projects, whether from research councils or government agencies. Some received more modest funding, with the SE-backed RSE Enterprise Fellowship programme prominent. Around half boot-strapped their progress with support from host universities, the Business Gateway or perhaps benevolent friends or relatives.

The disparity in amounts available is significant and skewed in favour of highgrowth platform technology propositions — yet this year’s finalists have proven some very important points.

Entrepreneurs form the best companies and, while there is still a strong case for backing the best spin-out projects in sectors where we expect strong growth, that should not be at the expense of support for the most promising entrepreneurs. By encouraging enterprise and

supporting entrepreneurs in universities, we will see a volume of new companies formed. Some will look ropey. Some will be ropey. Some of those ropey companies will later flourish. And, yes, some of the vaunted ones will fall.

That volume of companies will reduce our exposure to the vagaries of the market and what it does to our lovingly crafted business plans.

We will see knowledge exchange and IP exploitation, on-going research interaction, job creation, student career opportunities and perhaps even a few exits (remember them?).

We will also see a return across the gamut of value indicators pursued by universities, research councils and government – perhaps not always where we expect to see it, but we will see it.

Grant Wheeler is Head of Company Formation and Incubation at the University of Edinburgh.

Tuesday September 24 2013 | the times

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Business Insight COMMERCIAL FEATURE: HERIOT-WATT

Connecting academia and business worlds

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eriot-Watt University (HWU) has a long tradition of working with industry and prides itself on forging innovative links between the commercial sector and the world of academia.

A recent report found the Edinburghbased institution generates an impressive £56.5 million Gross Value Added (GVA) for the economy each year through its commercial activities. The study, by BIGGAR Economics, stated it supports 605 jobs through these.

BIGGAR noted HWU’s “distinctive approach to industry engagement that directly enhances the competitiveness of the Scottish economy and is expected to generate significant benefits for Scottish businesses in the years ahead”.

HWU, which also has campuses in Orkney, the Borders, Dubai and Malaysia, opened as the School of Arts of Edinburgh in 1821. It has a global reputation for providing industry relevant education and training. Voted Scottish University of the Year 2011-12 and 2012-13, it has forged an impressive reputation throughout the EU as a leading institute for Technology Transfer and Research Commercialisation.

Commercialisation activities take place under the auspices of its Research and Enterprise Services (RES) department. RES consists of business experts from a variety of sectors and is the research development, knowledge transfer and commercialisation department for the university.

RES has two cores: Research and Legal Services and Enterprise Services. Enterprise Services develops collaborative links with industry through joint research projects, technology licensing and spin-out creation. It has moved beyond traditional knowledge exchange methods to focus on a beneficial, long-term, two-way relationship with industry and other partners.

Dr Ian Brotherston is Head of the Enterprise Services team. His interest in business, and its relationship with academia, emerged while undertaking an industry-sponsored PhD at Southampton University, followed by post-Doctoral work at the University of Texas, also industry sponsored. He then worked in business development and IP management in industry, before joining HWU. His expertise is in creating partnerships between HWU and businesses. He says; “Business development is trying to

find companies, sectors or groups who have particular issues where we have expertise, listening to the companies and understanding how these needs manifest themselves, and as appropriate putting the companies and academics together to create a project or proposal that is beneficial to all parties.

“HWU has core skills across the sciences and engineering, such as highvalue manufacturing, photonics, oil and gas, and areas such as financial mathematics, textiles and design and food and drink. We have many collaborative projects across these sectors and beyond.

“I think that the UK as a whole has a fantastic research base and it’s important that universities and industries work together to ensure that everyone gets the best from this asset. It helps universities

Dr Ian Brotherston, head of Heriot-Watt’s Enterprise Services team

generate more income but also ensures we stay relevant – that we’re doing things aligned to real needs while remaining curiosity-driven.

“We collaborate with companies from micro in scale to multi-nationals but in all cases we provide expertise that is not available internally to the organisation.”

Robert Goodfellow is Head of Technology Transfer and responsible for all of the university’s spin-out and licensing activities. An alumnus of HWU, having graduated in chemistry in 1994, Goodfellow went on to spend ten years in industry working for metallised film, foil and paper converter, API Group.

Today he specialises in providing commercial support to academics, guiding them through the processes involved in their research idea becoming a successful spin-out, start-up or licensed product.

HWU is one of Scotland’s leading university technology transfer hubs and Goodfellow engages with staff to identify, protect and commercialise its research.

He says: “We work very closely with academic researchers providing support in areas such as identifying sources of funding, ways of protecting IP and linking up with industrial partners. Based on the risk/reward, we assess whether to form a new spin-out or to licence the technology out. We manage the whole project, from innovation stage to licensing or spin-out company formation.”

The RES department was established 10 years ago. Its location in the middle of the campus maximises access to academic staff. “We’re an integral part of the university,” says Goodfellow, “which makes us more approachable and means our staff are spread over the institute.”

He points to laser development and manufacturing company Chromacity as a recent example of a successful spin-out.

Founded by members of HWU-based Ultrafast Laser Group and with a healthy sales pipeline, the company came third in last year’s Converge Challenge, becoming fully incorporated after this.

Another successful spin-out, AccuFluidics, was runner up in Converge Challenge 2011. The firm develops microfluidics devices and chips for the life sciences industry.

Licensing activities have also proved lucrative, says Goodfellow, adding: “Since 2009 we’ve increased the number of licences we are doing by a factor of 10, with many going to SMEs.”

Going with the flow is right move

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ydrafact provides expert consulting and technical services to the upstream oil and gas industry from its base at Heriot-Watt Research Park. The firm has a worldwide reputation as a leader in gas hydrates, flow assurance, PVT and CCS consultancy and technical services. Its staff have more than 30 years experience and delivered more than 300 projects worldwide.

Managing Director, Professor Bahman Tohidi, recently attended the offshore Europe Conference in Aberdeen where delegates heard about Hydrafact’s worldleading technology Hydra. This plays an important role in extending the life of a North Sea reservoir by three years, producing an extra 2.8 BOE, while eliminating use of expensive and toxic hydrate prevention chemicals.

Hydra is revolutionising the way in which gas hydrate risks are managed.

Hydrafact was founded by scientists and the research ethos remains at the core of the company’s work. A key aim, says Professor Tohidi, is to continually push the boundaries of hydrate and flow assurance R&D, while providing first-class technical services to the oil industry.

Hydrafact, a Heriot-Watt spin-out, was launched by a group of researchers in 2006. The team had been conducting studies at Heriot-Watt’s Institute of Petroleum Engineering for a more than 20 years before this. Success led to the award of a Scottish Funding Council Research Development Grant in 2000, with the aim of creating a ‘Centre of Excellence’ in gas hydrate research and training, and the formation of the Centre for Gas Hydrate Research (CGHR) in 2001.

In 2006 the Hydrate Group received a major SRIF (Science Research Investment Fund) to establish the Centre for Flow Assurance Research (C-FAR) at Heriot-Watt. In 2009 the firm moved to its own laboratory and office building in the Heriot-Watt University Research Park. Professor Tohidi says: “We’re now developing our own IP and there are exciting options opening up from that.”

A new product has just been pretrialled in France: “It’s a technique that allows detecting early signs of hydrate formation and acts as an early warning device. Another IP deals with removal of expensive polymers from produced water, opening up new opportunities for more efficient, economical and environmentally friendly options for tackling hydrate problems. It’s an exciting time for Hydrafact.

Case study: Renishaw Group

Case study: Progress Rail

The Renishaw Group is acknowledged as a world leader in industrial metrology and spectroscopy.

Renishaw collaborated with HeriotWatt on a project to develop new noncontact techniques for surface shape and quality measurements.

Researchers devised new non-contact optical shape measurement techniques, which enabled a free-form surface to be measured accurately and quickly.

Dr Nick Weston, the Manager of Renishaw Edinburgh, says: “Renishaw

Progress Rail, a global provider of rail and transit products and services, successfully collaborated with Heriot-Watt after identifying problems within their business. The project’s objectives were focused on improving machining capacity, lead times and margins.

In response, Heriot-Watt identified a detailed plan to address the issues.

Through the joint project, Progress Rail experienced significant improvement in its manufacturing capabilities.

As a result, a new three year Knowl-

would not have been able to get so far in our research without Heriot-Watt’s interaction and research knowledge. It has given us a three-year head-start on our development.”

The project provided a laboratory prototype of a new optical scanner. This prototype is the first demonstration of the methods integrating optical fringe projection and photogrammetry with CMM technology.

To date, three patents have been filed and two have been granted.

edge Transfer Project (KTP) was awarded to investigate the implementation of a strategy for product engineering integration and knowledge capture.

The project led to cost reductions of 10 per cent through improved milling and drilling processes. Milling times were reduced by around 30 per cent through the use of new tools and the optimisation of cutting parameters.

New tooling also led to a 40 per cent improvement in drilling times and has improved health and safety.

the times | Tuesday September 24 2013

7

Business Insight

Business Forum

An ecosystem for entrepreneurs JAMES GLOSSOP FOR THE TIMES

The latest Times Scotland Business Forum convened in Edinburgh to discuss the issues facing commercialisation in Scotland, reports Graham Lironi

Should we look to support as many companies as possible to improve the chances of companies of scale developing or should we focus on growing start-ups or support companies that are 5-10 years old to enable them to take the next step?

T

he latest table of the world’s top 100 universities shows that three in Scotland have climbed up the rankings of the QS World University List.

Meanwhile the recent Which?

University report suggests that Scotland is one of the best places to be a student, if you are interested in extracurricular activities. The latter finding could be as important as the former with regard to fostering fertile ground for commercialisation through the creation of an entrepreneurial-friendly ecosystem.

With Scottish universities climbing the international rankings, are we already good at commercialisation or are we struggling to make the leap from the research lab into the boardroom?

Mervyn Jones notes that whilst there is a growing capability in Scotland among entrepreneurs identifying a market opportunity for their business idea, the real challenge is about growing companies of scale.

“There is a growing belief that we can create companies but do these business founders want to run a company or do they want to take their idea, prove that it works in the marketplace, ship it out and then go and do something else?” he asks, “because that doesn’t create companies of scale and Scotland doesn’t have enough large corporations who can buy those companies – which means that these technologies are likely to be bought internationally. Hence Scotland loses the opportunity of creating something of scale.”

Eleanor Mitchell says there are signs entrepreneurship is becoming more attractive to a wider range of people, often in response to the current economic climate, where the impetus is to make enough money to live as opposed to exploiting a global market opportunity.

Paul Hagan suggests that universities recognise they have a significant role to play in contributing to the economy and are getting better at it.

“Efforts to link businesses into academia and provide support are growing,” he says. “Competition within our universities with young undergraduates and entrepreneurs is increasing as well and all this helps foster change.”

Jim Hall notes there is no shortage of interesting work with great commercial potential emerging from universities, though there is a dearth of leadership and suggests, if we are to create businesses of scale, we need inventors, entrepreneurs

of initiatives such as ESpark, the Saltire Fellowship and Converge Challenge.

He says: “These initiatives are starting to drive entrepreneurs, making them younger and less attached to university, and that could be a huge change.”

and leaders to take key roles in development of these businesses.

Chris van der Kuyl suggests that the commercialisation sector in Scotland has changed radically over recent decades and that the ecosystem has improved dramatically.

“Though the ecosystem is not complete, like in Silicon Valley – we’re never going to have that in Scotland – what we can have is an absolute local focus but with a global reach,” he says. “We need to have experienced leaders who want to make things happen locally but can really work at how to take it to a global stage.”

Calum Paterson says that there are

Back row, left to right: Sandy Kennedy, Gordon Stark, Adam Brown, Chris van der Kuyl, Mervyn Jones, Calum Paterson.

Front row, left to right: Jim Hall, Dr Olga Kozlova, Magnus Linklater, Dr Eleanor Mitchell, Prof Paul Hagan.

Chris van der Kuyl is chairman of 4J Studios many positive aspects of the ecosystem in Scotland that make it a great place to set up in business.

“Universities in Scotland have done very well with regard to ramping up the volume of spin-out companies over the years and that’s very commendable

Around the table The Business Forum was chaired by Magnus Linklater CBE, columnist for The Times Scotland, who was joined by:

Dr Eleanor Mitchell, Commercialisation Director, Scottish Enterprise

Dr Olga Kozlova, Director, Converge Challenge

Calum Paterson, Managing Partner, Scottish Equity Partners

Gordon Stark, COO, Murgitroyd

Chris van der Kuyl, chairman, 4J Studios

Jim Hall, Director, Kelvin Capital

Sandy Kennedy, Chief Executive, Saltire Foundation

Mervyn Jones, Chair of Converge Challenge Judging Panel

Prof Paul Hagan, Director, Scottish Funding Council

Adam Brown, Director, Bellrock Technology

because part of the challenge of finding great companies is to have enough of them to begin with,” he says.

Olga Kozlova suggests the key is to make academics and students sufficiently commercially aware so that when they spin out a company they will not necessarily remain the CEO because that’s not necessarily where their skill sets lie.

“What they need is to be commercially astute enough to gain an understanding of the market; to interest enough people with experience to help them break into the market; to raise investment and to learn from this experience and then, once they’ve been successful, go and do it again – that’s what we’re missing.”

Adam Brown notes some of the most interesting ideas are not necessarily from professors and senior researchers but from graduates, and that competitions like Converge Challenge support that enthusiasm.

“Programmes like Proof of Concept really helped us build our team and I’ve heard many businesses across the UK express jealousy about the support framework we have access to in Scotland,” he comments.

Sandy Kennedy references an internationally renowned venture capitalist who suggested that, if Scotland got its act together, we could lead the world in this area.

Dr Eleanor Mitchell suggests the real challenge is finding people with the skills and experience to grab a business opportunity and grow it to scale, which led her to question how much of the £1 billion going into funding university research and commercialisation every year goes to developing or sourcing the entrepreneurial leadership to take businesses to scale.

Jim Hall says that there are business opportunities emerging from some of the technology coming out of that money into research – if we can get the right team around it and provide the right ecosystem to grow it.

Gordon Stark suggests there has been a move away from people going into the established route of academia then starting companies, through the emergence

Mitchell says that Scottish Enterprise had shifted its focus from supporting as many companies as possible to the companies it considers have the potential to scale.

“Our pipeline of opportunities has consequently dwindled since we set out our aim of companies achieving £5 million turnover in five years,” she says.

Hall says that it is ultimately all about leadership: “The business opportunities our investors back are those that have leaders with vision. Rather than the technology or the research – it’s all about the person bringing the business idea.”

Van der Kuyl suggests that peer review

Adam Brown is director of Bellrock Technology is essential. “The whole mission is to make entrepreneurship seem normal. One does not generate a successful economy by creating service jobs or public sector jobs: one creates a healthy economy by entrepreneurial activity and wealth creation – and, if we really want that to happen, it’s the creation of an ecosystem that includes the media, politicians, the general public and our education system understanding that this is vital.”

How do we nurture and support the entrepreneurs with ambitious vision?

How do we build management teams that have a vision and the capabilities to grow companies of scale?

Van der Kuyl suggests that organisations such as The Entrepreneurial Exchange and the Saltire Fellowship are crucial and play a pincer role in the ecosystem.

Rather than supporting entrepreneurs, Kozlova stresses the importance of training and mentoring business founders, as they typically have the drive and ambition. “That support is key because once they’ve succeeded in their first business venture, they can do it again.”

Van der Kuyl notes we now have the most amazing communication platform the world has ever seen at everyone’s fingertips. “Over the past five years I’ve seen businesses go from start up to multibillion dollar valued businesses, having started with nothing more than borrowed capital from their customers,” he says. “Scotland has to recognise that: let’s not talk about it, let’s get on and do it – everyone else is.”

Tuesday September 24 2013 | the times

8

Business Insight

Scottish Development International

It’s vital to have a lead role when all the world’s a stage Often it’s not enough to be successful in the domestic marketplace. True ambitions have sights set higher – and there is help at hand

I

nternationalisation can be the key to commercialisation as young Scottish companies seeking to live up to their technology’s full market potential must look beyond a domestic population of little more than five million and a limited stock of business customers.

“Our future prosperity as a nation will depend on us being able to compete internationally,” says Neil Francis, International Operations Director for Scottish Development International (SDI), the international arm of Scottish Enterprise.

“The Scottish domestic market is very small, but we have a very strong university sector creating world-class, competitive opportunities, so the markets for the

concepts emerging from these institutions are truly international in scope.”

The majority of companies supported through commercialisation by state agencies are already technology-rich, invest heavily in research and development (R&D) and employ many people with higher skills and education, so already fit much of the typical profile of international companies.

“Analysis tells us internationally orientated companies tend to be more productive, invest more heavily in R&D, employ a higher proportion of graduates and postgraduates in the workforce, and to pay higher wages,” Francis says, It is important technology companies develop an international mindset from the outset so that their businesses are

The move from national to international business is an exciting step which can significantly grow your business. At Smart Exporter, we can help you discover your export potential with our free advice and resources. Speak to one of our Export Advisers to get things off the ground.

Visit www.sdi.co.uk/exportadvice or call 0800 019 1953.

WE SPEAK FLUENT EXPORT.

Smart Exporter services are supported through substantial investment by Scottish Development International (SDI), Scottish Chambers of Commerce (SCC) and the European Social Fund.

established and run with internationalisation firmly in mind as a strategic goal, he adds.

“It is very important for companies at the embryonic stage of development that support is not compartmentalised. They need to build their capacity almost simultaneously across a number of key fronts: finding investment capital, management, talent and getting advice on internationalisation.”

Very often, he says, early support for internationalisation is a key factor in the product development cycle, adding: “Particularly for products that have a degree of technology richness, it is very important that the end customer is engaged throughout the development cycle.”

SDI can make a decision from as early as is required to use all areas of its business to support this process: “We can be in there helping to develop the international element of the business strategy.”

This can also bring an early dose of realism to the table when it comes to considering market potential.

Francis explains: “University spin-outs often go out and get some very high-level global market data that suggests that the potential market for their product is in the billions or trillions of pounds. It is a fine and encouraging starting point, but not very helpful in driving the business forward rationally.”

SDI can help by bringing in expertise to break down that high level assessment of the market to more ‘granular’ specific opportunities that the company can realistically address.

“Also, doing things internationally is different from doing them at home, so companies have to build the right skills,

Neil Francis, international operations director for Scottish Development International

What we’re trying to do is take down a layer to identify the precise opportunities

capacity and capability to manage international trading, and we have a lot of ways to support that development,” Francis says.

SDI’s Smart Exporter programme is targeted specifically at increasing the number of companies doing business outside Scotland and is focused around developing ambition, awareness, capacity and capability. Through it, companies learn how to start exporting; gain practical tips and advice on steps to take to realise export potential; access tailored support from a global network of advisers; discover which markets are suitable for their products and services; remove barriers to exporting successfully; develop an export strategy; get free access to workshops, forums and events in Scotland; and share tips and best practice with like-minded Scottish businesses.

As the internationalisation journey progresses, companies need products to support market entry, market expansion, and presence in markets.

“Market expansion and presence rides on the back of deciding what the market entry strategy is,” says Francis. “SDI can help with ‘in market’ support through our exhibitions, trade missions and learning journeys.”

Forthcoming scheduled SDI organised trade missions include: India and Africa, both in February 2014.

SDI’s expanding network of dedicated international offices around the world are a key asset at the disposal of companies. Locations include Brazil, India, Canada, Dubai, China, Taiwan, South Korea, Singapore, Australia and New Zealand, Denmark, Norway, France, Germany, Japan, Russia, and USA. There is one in London too.

“They have staff on the ground and the majority are locally hired people who understand the local business environment, language and business culture in Beijing, Shanghai, Mumbai, Rio de Janeiro, or wherever,” says Francis.

“They can add real value to the company by helping them when they get to market, helping them to network, to meet potential customers, and other useful services. It is invaluable, particularly in emerging markets where the business environment and culture are very different to what companies will be used to in Scotland.”

There are large international opportunities for Scotland’s information & communications technology, life sciences, energy, engineering, food and drink, textiles and other key sectors, Francis says.

“But what we’re trying to do is to take it down a layer to identify the precise opportunities in, Asia or North America or wherever for companies in these sectors.”

Take oil and gas technologies honed in the North Sea. “The opportunities are exploding all around the world,” says Francis. “So it’s very important we understand the scale and the scope of these so that they can be matched with the skills and capabilities of our companies.”

To find out more visit www sdi. co.uk/export-from-scotland Or call 0800 019 1953 for free one-to-one support.

Dundee

Special feature

Tuesday September 24 2013

A 30-year strategy is transforming the face of the city Continuing major investment in the city ensures that it is well on the way to becoming a world-leading waterfront destination, discovers Rob Stokes

T

he transformational Dundee Wa t e r f r o n t Project is beyond half way in terms of investment made or under way in a 30-year programme to create a world leading waterfront destination for visitors and businesses by 2031. “It emphasises how the Waterfront is not just an idea,” says Mike Galloway, director of city development at Dundee City Council (DCC).

Going into 2013, DCC predicted £100 million of capital projects would complete or start this year to bring investment to date in the 240-acre, eight-kilometre long Waterfont beyond the £500 million mark for a project aiming to generate 9,000 new jobs.

Galloway says: “We’re so far ahead with the infrastructure that our main focus now is engag-

ing with developers and investors.

We are open for business and are developer-friendly.”

Investor interest has been buoyed by advance preparation underway on site for the £45 million V&A at Dundee museum and international design centre scheduled to be installing exhibitions in 2016. Notes of interest from builders are being lodged. The full tender goes out this autumn with a main contractor to be selected next spring. “It really is a game changer,” says Galloway.

Two new hotels are imminent: the 91-bed Malmaison Dundee boutique hotel will open in November with hotel space in Unicorn Property Group’s Customs House development at Dundee harbour slate d for

autumn 2014. The city will still need five more to add a total of 500 beds to its stock of 1,250, Galloway reckons. One will be over the new concourse at Dundee Rail Station.

“We’re in detailed negotiations with a potential operator — one of the new, funky chains — for that hotel,” he says.

“We would like to see the other four being across the board on capacity and price. That would include mid-market affordable, and we have a fantastic site next to the V&A that is the best hotel opportunity within the Waterfront.”

Maybe the city’s first 5-star? “I’m not sure that Dundee needs a large 5-star hotel,” says Galloway. “But we might be happy with a really well-designed and packaged 4- or 4.5-star.”

Demand for hotels is not just down to the V&A effect, Galloway stresses. “We were lacking capacity, particularly for busi-

ness tourism, even before V&A.” Dundee’s Caird Hall, for decades a main venue for conferences and political conferences, has dropped down the UK rankings through relative lack of break-out exhibition facilities. “We’re about to rectify that and need hotel space to get Caird Hall back on that circuit,” says Galloway.

The V&A bolsters Dundee’s bid to become UK City of Culture 2017.

With the decision due in November, Galloway says: “V&A adds to our case but we aim to show how we would use the City of Culture opportunity to further develop our existing cultural sector within Dundee and its economy.”

Around a third of space at the core of the Waterfront is for residential developments, including

riverside flats that are already being built and are selling. “But there is certainly scope for other developers to talk to us,” Galloway says.

Dundee is a strategic site for servicing the offshore renewables industry and has high hopes of manufacturing, assembly and maintenance jobs for offshore wind and marine energy once project operators are satisfied that UK government policies make these projects viable.

The deep-water Dundee Port has operators lined up in principle while two major sites next to it are cleared, connected to main road networks, and consented for two 40,000 square metre manufacturing sheds. “Dundee’s ready to go on this. We’re looking for up to 9,000 jobs from the wider Waterfront project while offshore wind could be to Dundee what oil is to Aberdeen,” Galloway says.

Tuesday September 24 2013 | the times

II

Business Insight

Special feature

Vibrant new District 10 sees city really raise its game A building made from recycled shipping containers will be home to dynamic gaming companies, writes Rob Stokes

B

UILDING 1, District 10 is a funky new icon of Dundee’s status as a hotbed for digital and creative media in general, and games software in particular.

Made from 37 recycled shipping containers, it has 15 units to let, each housing four people, a communal kitchen with seating and a bookable meeting room and is aimed at early stage creative industry companies.

Development agency Scottish Enterprise expects to receive keys in October to the building nearing completion in the Seabraes area, and hopes they unlock not only the door but the creation of a vibrant creative quarter in up to eight more similar buildings on District 10.

Jointly funded by Scottish Enterprise, the European Regional Development Fund and local charity the Mathew Trust, which assists creative companies, District 10 is all about putting like-minded companies together to work, share ideas and collaborate on projects.

“We’re anticipating that most tenants will be from the games sector but it is open to creative industries in general,” says Isla Robb, project manager at Scottish Enterprise. “It will suit early stage companies that are maybe working in a University or out of a garage or a bedroom.”

As Dundee relishes this prospect, new sculptures on a site at Seabraes pay tribute to Lemmings, the characters at the heart of a computer game that helped to put Dundee on the industry’s map in the 1990s. Another such game, Grand Theft Auto, was released last week in a new version, though it is now owned by a US company.

If these are reminders of a sometimes delusional past when it was imagined that games industry behemoths would spring from the Tayside turf as if sown

with dragon’s teeth, the city has much to boast about in these more realistic times.

Well-known games companies in Dundee now include, among others, Denki, Dynamo Games, eeGeo, Guerilla Tea, Ninja Kiwi Europe, Outplay Entertainment, Stormcloud Games and YoYo Games.

Having a critical mass of games projects is important to attract the best international talent who want to hone skills across a wide range of projects and who are the raw material for spin-outs from other companies.

“We’re excited about the scope that District 10 will offer as an early-stage location for digital media companies coming out of the Universities,” says Mike Galloway, director of city development at Dundee City Council (DCC). “We would hope that Phase I will be successful and that we will roll it forward into Phases II and III.” DCC recently committed to install a new footbridge to create a connection from the University of Dundee, down through District 10, over the railway and Isla Robb is project manager at Scottish Enterprise

to the river front. “This will put District 10 right at the heart of a new corridor from the University to the River Tay,” says Galloway.

The University of Abertay Dundee in particular has nurtured a generation of digital media graduates and companies throughout the UK in a leadership role as teacher, innovator, co-ordinator and promoter for the industry.

A £2 million Prototype Fund — administered by Abertay University and sourced from the University, the Scottish and UK Governments, and the European Regional Development Fund — has made grants to more than 70 UK companies and is currently awarding its final grants to another six to eight companies, according to Paul Durrant, director of business development for Abertay University.

Among start-ups helped by the fund is Dundee’s Stormcloud Games that devel-

ops games for many platforms: Xbox360, PS3, Wii, DS, and mobile browsers iOS and Android. It is currently attracting attention through its Mr Shingu’s Paper Zoo app, a collaboration with Japanese website www.origami-club.com, which teaches kids to design origami (folded paper) animals that can be cared for virtually online or turned into real paper versions.

Discovery and success in international markets like Japan is a major opportunity for Stormcloud who have also been working with exports and inward investment agency Scottish Development International (SDI).

“Stormcloud are experienced industry guys who worked previously for other people,” Durrant says. “It’s a classic case of how the Prototype Fund helps a talented team to create original IP before they seek further funding to take the game to creation and launch.”

Durrant says the fund is talking to partners about raising more prototype finance and also looking to raise equity funds to further develop some companies whose prototypes were backed previously.

“We are able to use the learning from the fund to illustrate to investors and banks the challenges and the opportunities around investment and debt finance for businesses operating in a hit driven market,” Durrant explains The Prototype Fund also helped the UK government argue that UK tax credits for creative industries should not fall foul of European Commission rules on state aid. “The government was able to draw on data from our funded companies to show the fragility of companies working in this space,” Durrant says. “We generate knowledge and data to feed into policy development, and this is also part of the University’s knowledge exchange agenda.”

The annual Dare to be Digital (daretobedigital.com) event run by Abertay University this year attracted more than 13,000 members of the public over four days in Dundee, a record attendance for the international video games development competition.

The Prototype Fund and Dare to be Digital are an important part of the University’s commercialisation and knowledge exchange agenda. “We support company growth and talent development on the one hand and our courses benefit

Building 1, District 10 is constructed from shipping containers.

Tenants will be offered a minumum term of six months

from the proximity to real business and industry engagement on the other and this contributes to our UK leadership in accredited courses,” says Durrant.

Dundee is also showing the way for crossover companies combining knowhow from the digital media sectors and others.

These include Vivomotion, a 2D and 3D digital animation company created by cell biologist Dr Mhairi Towler to develop tools for communicating life sciences to academics and laypersons. Towler gained confidence from The Enterprise Gym, a University of Dundee business start-up training initiative for graduates.

“It’s a good example of skills being transferred from a successful digital media sector into life science and vice versa,” says Dr Allison Beattie, co-ordinator at BioDundee, the life sciences support and promotional organisation.

Guerilla Tea, a Dundee based mobile, handheld and online games company has meanwhile won a contract from Cancer Research UK to create a game app to help identify genetic causes of cancer with a view to accelerating development of potential new cures.

The game will ask people worldwide with smart phones to spend five minutes helping to analyse Cancer Research UK’s gene data through a fun-to-play game that will launch in the UK later this year.

Dundee City Council supports digital media sector development through: collaboration with SDI to meet the information and property needs of inward

the times | Tuesday September 24 2013

III

Business Insight

tish government’s eProcurement plans to raise efficiency and increase value for money in public procurement. “We’re pushing to ensure that Dundee has as high a level of digital infrastructure as possible,” says Alan Dobson, DCC business development officer, who is coordinator of digitaldundee.

He added that DCC is developing an app with Dundee Leisure & Culture and local award winning developers to help push tourism across the city. It will be available free of charge on smart phones as a dynamic way to find out what’s on.

Into this ferment of activity, a number of starry-eyed newbie companies will soon be checking out Building 1, District 10. Those who want in will be offered a minimum lease of six months and a flexible maximum of around two years.

“Obviously, if we have empty units, we will not ask people to vacate after two years,” says Isla Robb. “But if there’s a queue by then, we would hope that existing tenants would be more capable of moving on to larger premises.”

Broadband connectivity in Building 1 will be ADSL initially, as soundings suggested tenants would not bear the high cost of optic fibre for a single building.

Robb explains: “Also, BT plan to put superfast broadband into the area next year.

If this lives up to its billing, that will be great. If not, we could look at upgrading the IT provision for Building 1 if needed.”

Scottish Enterprise also plans to hold events in the building to assist companies with operations such as marketing or finance. “They are just along the road from us and we’re keen to see this sector grow,” Robb says.

The shipping container solution has been used before — most notably in Gröningen, Netherlands but also in the UK — as a lower cost, rapid way to provide commercial space.

investors; the locate-dundee.com website; financial assistance such as Dundee Development Grants for start-ups and the Dundee Small Business Finance providing loans to SMEs; and through signposting companies through the Business Gateway service to sources of help which, in the case of potential high growth companies, include Scottish Enterprise.

DCC is one of seven partners in InteractiveTayside.com, an initiative run by Scottish Enterprise to encourage collaboration, develop new commercial opportunities, and promote Tayside’s digital capabilities nationally and internationally.

A web hub for information, with links for projects and information related to Dundee — digitaldundee.com — meanwhile works with SMEs to identify how they can harness technology to improve business processes and increase competitive advantage.

It is run by DCC in partnership with University of Dundee, Abertay University, University of St Andrews, NHS Tayside, and electronics company NCR. DCC has also had input to the Scot-

The fund is talking to partners about raising more prototype finance and equity funds to develop companies

A

s the first building of its kind in Dundee, the cost is slightly higher than it might otherwise be because of the learning curve for the architect and the main contractor.

“We would expect future buildings to be more economical,” says Robb. “The bottom line though, is that it is affordable, flexible and just looks good, which should appeal to creative industries companies looking for something a bit different. We already have 15 companies keen to view it. I am not naive enough to think they will all want to sign up, but we have sent Heads of Terms to two already.”

On rents, Scottish Enterprise has to charge market rates to avoid distorting the local market. Nonetheless, says Robb, the target market of early stage creative industry businesses, and the restricted use of the building, means rents can be at the lower end of the market range and with rent-free periods being offered in proportion to lease periods, though with a service charge on top.

“As some of the companies have never taken a lease before, we are making it easy by quoting monthly rents per unit rather than per square foot, but obviously with their own electricity and IT consumption on top,” she adds. Because the units are very small, tenants should qualify for rates relief even if it is their only office premises and even if they combine two units, she says.

Scottish Enterprise has land available at District 10 and hopes that developers will conclude that the market is a good one to be in. “In an ideal world, developers will build the next phases,” says Robb, “but if no-one comes forward, and there is still demand, Scottish Enterprise may do it anyhow.”

Healthy boost for Dundee’s thriving life sciences sector

W

hen the £12.5 million Centre for Translational & Interdisciplinary Research (CITR) is completed this autumn it will be another totem for Dundee’s fast growing life sciences cluster. The CITR at the University of Dundee will expand the latter’s drug discovery capacity and allow for expansion in the future.

That future looks rosy. 18 per cent of Scotland’s life science companies are in Dundee; the sector employs more than 4,000 people in the city and Tayside.

These figures are useful marketing statistics for BioDundee, a public-private partnership operating since 1997 to strengthen the sector and promote it internationally.

Its partners include: University of Dundee; University of Abertay Dundee; James Hutton Institute, a leading UK agricultural research organisation; and Dundee City Council, which manages BioDundee. New companies are choosing Dundee, says Dr Allison Beattie, co-ordinator and business development officer of BioDundee. Two recent inward investors include: Advanced Pest Solutions (APS) offering ways to control biological pests; and Integrated Magnetic Systems Ltd (IMSL) developing novel “magnetic proteins” based on IP licensed exclusively from ITI Scotland, a publicly-funded organisation supporting market-driven R&D programmes, and from US headquartered New Century Pharmaceuticals.

“BioDundee is very successful in highlighting to international companies just what the city has to offer,” Beattie says. “World class research excellence in Dundee is what underpins the marketing — if you do not have that, you may as well forget trying to become a biosciences hub.”

She believes that the single-gateway approach represented by BioDundee serves the sector well.

“People know they can contact us to find potential collaborators across Dundee and Tayside and that we are also aware of what is available across Scotland and work closely with (development agency) Scottish Enterprise, Scottish Development International and other partners.”

BioDundee can point to a number of appealing locations in the city. The Dundee Technopole behind the new

CITR hosts: the research side of cancer biopharmaceuticals firm Cyclacel; preclinical contract research organisation CXR Biosciences; and the Dundee Incubator, the University of Dundee’s offices and laboratories for science and technology spin-outs.

New Incubator tenants this year include: Ex Scientia developing data analytics and machine learning for drug design and pharmacogenomics; Kinetic Discovery Ltd offering drug discovery services; and MicroMatrices Associates developing novel ways to classify, predict and screen for potential toxicity of new chemical compounds.

“It’s a real community,” says Beattie, “and that goes for life sciences in Dundee too because of its compact size.”

Dundee Medipark is a joint venture between Scottish Enterprise Tayside and Ninewells Teaching Hospital and hosts BBI Solutions, Cypex Ltd, BBI Detection and the Institute of Medical Science and Technology. Medical diagnostics company Axis-Shield, clinical trials support company Onorach, and newbies APS and IMSL are on the neighbouring Dundee Technology Park.

“All these companies know each other, attend networking and marketing events together, and feel part of a community they can tap into each other’s networks and contacts,” says Beattie.

Advised by its steering group of company directors, technology transfer representatives from local institutions, and members of local professional services including Scottish Enterprise, BioDundee also invests in strategic training to nurture sector growth.

“We ask companies what they need that no one else provides. For example, we recently offered project management training and asked directors where this could be best applied in their companies to be most effective,” says Beattie.

BioDundee is a referral point for grants from a number of sources and for companies to gain easy access to IP from Dundee through its Innovation Portal and from other Scottish universities.

Heavy investment in the biodundee.com website is now proving its value. “We have an extensive business directory and are inviting companies to control their own pages and multimedia content,” adds Beattie.

Tuesday September 24 2013 | the times

IV

Business Insight COMMERCIAL FEATURE: UNIVERSITY OF ABERTAY DUNDEE

Computer games are worth more to the UK economy than film or music, and since the 1990s the University of Abertay Dundee has been a key contributor to growth, says Frank Simpson

T

he computer games industry is a huge international business that is returning to its roots, with a resurgence in small, independent companies mirroring the successes of the UK’s bedroom developers who became millionaires in the 1980s and 1990s.

New routes to market, powered by the app stores linked to billions of mobile phones and the easier access to publishing on the next Microsoft and Sony consoles, make reaching a global audience much more achievable for small companies.

Dundee is a key UK location for game development, with an intense concentration of small, skilled companies. The city, with fewer than 150,000 residents, is home to over 50 studios — more than one in ten of all British games companies.

At the heart of this cluster is Abertay University, the first university in the world to teach a dedicated Computer Games Technology course, which is now recognised as the UK Centre for Excellence in Computer Games Education.

That first milestone came in 1997, after the local games industry had rocketed to international fame with Lemmings and Grand Theft Auto. Both titles were led

by Dave Jones, an Abertay student who founded DMA Design and later sold it to Rockstar Games.

“Having a fledgling, but highly successful, games industry meant the demand for artists and programmers was huge in the late 1990s,” explains Paul Durrant, director of business development at Abertay University. “The myth and legend that surrounded DMA Design’s success was beginning to attract global interest and in the university we found that our new games course was attracting talent from across the UK and beyond.”

The focus on building a start-up culture launched two major projects at Abertay in 2000, the game design competition Dare to be Digital and the graduate enterprise incubator Embreonix.

Another local success story, Digital Goldfish, was born from that incubator — with the company being bought by its New Zealand partners Ninja Kiwi last year, after selling millions of copies of its Bloons games and hitting the top of Apple’s US app store chart.

“Without a doubt, we wouldn’t be here today without the support of Embreonix.

There was no formal plan to start Digital Goldfish until we heard of Embreonix, so you could say it was Abertay’s project that made us come up with a business plan,” says David Hamilton, who is now Director of UK Operations for Ninja Kiwi.

“To think now that we employ 22 staff in Dundee and have been trading successfully as a business close to nine years goes to show how vital it is for universities to be supporting start-ups.”

The Dare to be Digital competition was set up to give students an intense simulation of working in the games industry, challenging them to build a brand new

Press start for start-ups Kaitlin Walker and her sister Grace with Abertay students Hannah Watts and Ellen Brown at Dare to be Digital Dare to be Digital, Dare Protoplay in the Caird Hall

game in just nine weeks. At the end of that fierce challenge the student games are showcased to thousands of members of the public at Dare ProtoPlay, the UK’s biggest indie games festival.

“Dare to be Digital is a completely unique opportunity to get into the games industry. There’s nothing like it anywhere else in the world,” says Colin Macdonald, Channel 4’s Games Commissioner.

“Those nine weeks at Abertay University, building a game from scratch, putting it on show to thousands of members of the public, is worth a few years’ experience within the industry. The talent that it attracts from around the world is hugely impressive, which is why Channel 4 presented a £25,000 prize for the second year running to complete one of the Dare games and commercially release it.”

More recently, Abertay University’s Prototype Fund has responded to the huge new opportunities for start-up companies to reach global audiences, but also the challenge of raising the risky early-stage finance that banks and investors shy away from.

“So far we’ve supported around 70 companies based across the UK, offering grants up to £25,000 to cover wage costs while the business finds its footing and works on a new game, or a prototype to attract further private investment,” says Abertay’s Durrant.

“This is a challenging, fast-moving sector for a university to support. The nature of small creative businesses is that they are non-demand led – they operate in a hit-driven market and the ingredients of success are incredibly hard to define.

“Technology platforms and business models change rapidly and the value of their intellectual property is often an inextricable mix of the creative talent of the founding team, their game idea

Paul Durrant, director of business development at Abertay University

and the business model.”

The spread of different work at Abertay, which also includes the most industry-accredited courses in the UK and the Moving Targets project researching the challenges of creating content for 21st century audiences, may look like an unconventional approach for a university.

However, Durrant argues that it has actually created a “joined-up approach to skills and talent development, digital culture, research and enterprise support that has had a major impact on the UK games ecosystem”. That success has been recognised in major reports, including the UK Government’s Next Gen Skills Review which held Abertay’s work up as the gold standard for educating the creative entrepreneurs the nation needs for the future.

The difficulty is in generating early returns to reinvest in running these projects while companies are still waiting for their first hit, quite unlike traditional technology commercialisation where investors are attracted to the perceived security of patents.

“Scotland has yet to have a world-beating games success where the IP is created in Scotland, the development team is based in Scotland and the majority of the revenues flow back to Scotland. We believe that our joined-up approach to games talent development and commercialisation will be part of this success story not if, but when, it happens,” Durrant adds.

One Prototype Fund-backed company that is hotly tipped as a future success is Guerilla Tea, creator of games and apps for the city’s Beano and Dandy comics.

“The Prototype Fund was absolutely critical to our current success,” says Chief Executive Mark Hastings. “The Prototype Fund gave us our first opportunity to take a step back from the contract work we

were dependent on and actually develop a game; an asset that we owned and added value to the company.

“Guerilla Tea is currently working with Cancer Research UK to develop a game that we hope will one day lead to new cancer treatments. This is obviously incredibly exciting for us, and not something we ever imagined we would have the opportunity to do.”

For Durrant, the next question is how the collection of different funding sources available from the UK and Scottish Governments, plus various support agencies, can be harnessed together in support of a creative industry that could drive huge economic growth.

“The very strength of the ‘joined-up’ approach is also a challenge because it depends on funding from sources that are less well aligned. In Scotland, as in the rest of the UK, education, enterprise and cultural funding and strategy are not very well connected.

“Some kind of differential funding is the key. This was recognised in the Scottish Affairs Committee’s video games inquiry in 2010 when UK Culture Minister Ed Vaizey went on record supporting Abertay’s track record and the need for such funding.

“We’re still working towards that, but the need — and the massive potential for this sector, to create jobs, business revenues and attract inward investment — is absolutely clear,” he adds.

For the next Angry Birds or Grand Theft Auto to come from the UK, be owned by a UK company and bring its revenues back to its creators, the question is if Abertay University’s joined-up approach can inspire seamless funding support from education, economic development and cultural agencies across the UK.

the times | Tuesday September 24 2013

9

Business Insight COURTESY OF UNIVERSITY OF EDINBURGH

Network is key to making ideas reap real rewards

L University of Edinburgh Informatics building

Investment pays off

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he Scottish Funding Council, which has an annual budget of £1.5 billion has the over-arching aim of improving higher and further education.

One of the four main strands of its investment is “research and knowledge exchange”. Much of its £250 million share is aimed at pulling academia and business closer together.

Here, the SFC’s director of research and innovation, Professor Paul Hagan, tells how both sides’ attitudes to commercial collaboration are changing – and also benefiting Scotland’s economy.

How do you measure the success of your mission to grow the academia-business relationship?

Since 2006 we’ve funded an organisation called Interface, the commerciallyfocused “glue” between our universities and small and medium-sized enterprises such as university spin-outs. SMEs can call Interface, or visit one of its five city offices, and say: “We have a problem and need someone in the universities to solve it” – and Interface will find that expertise for them.

If their case is well made, the next stage is the granting of an SFC “innovation voucher” to buy research services worth up to £5,000.

The number of these issued helps us measure the success of our mission.

And we can see this growing rapidly.

Interface has been hugely successful in the past few years in stimulating SME engagement with the universities.

Is this open only to university spin-out companies?

You need not be a spin-out and you do not have to telephone every university and seek out the right person or right

Professor Paul Hagan says there is a significant advent of innovation centres

department to help with a particular problem. Interface does the groundwork, as well as providing that voucher to kick things off. Often the problem can be solved at this initial stage, but if more research is needed and things look promising, a relationship has been established and there can be additional funding.

Admittedly, most current respondents are university spin-outs because their people are familiar with the academic research culture, having been embedded in it; but the door is open to all and we’re spreading the message. There have been more than 700 contacts between the parties on projects that would otherwise not have happened. So we’re changing the view of the business community, and specifically of some SMEs who might not have realised how universities could be of assistance to them.

Researchers’ attitudes are changing too?

Undoubtedly. Up to a few years ago I was dean of life sciences at Glasgow University and one of my biggest challenges was having research translated to support business and industry, for the culture then was: we don’t do that kind of thing; that’s applied research; we do pure research.

However, attitudes on both sides have changed dramatically in the past decade.

Now we have a new culture of collaboration. Along with enterprise agencies,

universities and businesses, we are working hard to keep up the pace.

I don’t think we have yet totally exploited our research base to fully support business and industry, and that’s the drive now — to secure and develop these links maximally between the parties and provide added value to Scotland’s proposition by combining that expertise with business expertise and capacity to take something to market.

But doesn’t Scotland already have entrepreneurial spirit? Some big names spring to mind…

But do we have enough? We have a number of leaders such as Hunter, Farmer and Souter, but you can never have enough vehicles in place to support and encourage the next generation of innovators and entrepreneurs. Converge Challenge is a good example of what we can do in that respect.

What else?

Well, there’s the significant growth of innovation centres, which we’re funding to the tune of over £100 million, where we have large businesses, SMEs and academia coming together to work on industry demand-led challenges. Three have already been established in the fields of stratified medicine, sensors, and digital health, and five more are coming soon — in aquaculture, construction, industrial bio-technology, data science, oil and gas. They don’t have physical locations, to avoid unnecessary big spending, but they are key focal points designed to harness all our research strengths into multi-institutional collaborations.

So Scotland could soon be a seriously booming country?

It might not be that soon, but I believe we’re changing the landscape to make such a scenario possible. And that’s very, very exciting.

aurence Howells is a zealous champion of Scotland’s growing commercial confidence led by innovative thinking and the burgeoning collaboration between business and academia.

In an office block near Edinburgh’s Haymarket station, the interim chief executive presides over the Scottish Funding Council’s broad strategic plan for improvement in all areas of tertiary education; but he is particularly positive about the evolution of Scotland’s place in the global marketplace, eased by a new appreciation of its “cohesive” network of universities and their researchers.

“It is proposed,” he says, “that collaborative projects should lead to new services, processes and products that will benefit the company, the institutions and the Scottish economy.”

He cites a recent exercise to create a “smart” jampot label that tells you how long it’s been opened. “That’s challenging enough for a researcher and he or she then has access to an area of research to explore in other ways. Think Laurence Howells believes cohesion is a ‘secret weapon’ for our universities

about the benefits to society when variations are developed in, say, pharmaceuticals — pills can go off, can’t they?”

The Southampton University maths graduate — who once worked in London with the British Museum and Waltham Borough Council — believes “cohesion” of Scotland’s universities promises to be the secret weapon, winning greater success north of the border than south.

He doesn’t believe England is doing as well as Scotland in terms of operational joined-up thinking; this backed by active cooperation between business, Interface, enterprise agencies, and universities increasingly pulling and pooling together, especially within the new innovation centres.

“Pools? Scotland has something like 10,000 researchers to draw on in the life sciences. Just one of its remarkable forces to be reckoned with. You really don’t get that sense of cohesion south of the border.”

It adds up to a better future The Scottish Funding Council is the national body responsible for funding further and higher education in Scotland’s colleges and universities. It invests around £1.6 billion in colleges and universities each year.

It works with colleges, universities and its partners to lead and support change in

further and higher education, which improves the life chances of learners and supports jobs and economic growth.

Building on a successful system of learning and research in Scotland, it works to ensure it is capable of meeting the challenges of the future and delivering benefits for Scotland.

Tuesday September 24 2013 | the times

10

Business Insight

Commercial report

There’s a will … and with help there’s a way

If nature abhors a vacuum, business likes it even less and that’s why Scottish companies are reaching out beyond boundaries, reveals Neil Donaldson

I

t is a long journey for technology companies from product concept to market and the orthodox view in most developed economies is they need a great deal of support along the way to help them deliver on their potential.

State support to help spin-out and start-up companies scale up and grow falls under three main headings in Scotland: the capacity and skills of the people running the business; growth finance, with a particular emphasis on funding internationalisation; and supporting development of the technology itself.

“We have a lot of great technologists in Scotland,” says Dr Eleanor Mitchell, head of commercialisation at Scottish Enterprise, the development agency. “We also have a lot of people who are ambitious about taking technology to market.

What we do not have is a lot of people who are experienced in doing that.”

There are good examples of people who have done just that, but they remain thin on the ground, says Mitchell.

“So we need to attract in management with that experience or invest in developing our people and exposing them to the experiences that will help them get up to speed quickly on how you do things like sales and marketing in an international environment.”

Support mechanisms for this include access to matched funding to help firms engage experienced management for a period to see if both managers and company are a good fit with one another.

There is help to identify these individuals through the international networks of Scottish Enterprise and Scottish Development International, the exports promotion and inward investment agency.

Prominent among these is GlobalScot, a worldwide network of leading Scottish business people and experts with an

affinity for Scotland who can identify new business leads, access local market information and open the door to key contacts in major organisations.

There are several ways that Scottish Enterprise helps managers of early stage companies to face the challenge of growing their business.

For recently incorporated businesses, ‘Building an Entrepreneurial Company‘ is an annual programme of one or two-day entrepreneurship masterclasses that are delivered in partnership with economic and community development agency Highlands and Islands Enterprise. These are delivered by globally experienced practitioners who have faced similar challenges to their audience and can help to engage them in working through the elements of building and growing entrepreneurial companies: entrepreneurial new product development; developing an entrepreneurial brand; entrepreneurial sales strategies; financing an entrepreneurial company; entrepreneurial leadership; and entrepreneurial marketing.

For the most ambitious early-stage leaders, Scottish Enterprise runs an annual competition for supported places at the prestigious Entrepreneurship Development Programme, a one-week course held at MIT Sloan Executive Education in Boston, Massachusetts, each January.

The next Leadership Learning Journey will be held in San Francisco

We have a lot of great technologists … we also have a lot of people ambitious about taking technology to market

For more established businesses, the Leadership Essentials programme gives key decision makers in growth companies access to leadership training and advice.

They learn what leadership and communication styles work best for them and have the opportunity to develop an action plan for a business issue currently affecting their companies. Half-day workshops spread across eight weeks explore the importance of leadership in strategy, innovation and market development.

Currently priced at £400 plus VAT per person, the next Leadership Essentials programme is in Edinburgh, starting on October 1, with plans to run a programme later in the year in Aberdeen.

On completion, participants are introduced to Business Mentoring Scotland, a one-to-one mentoring service provided

by Scottish Enterprise in partnership with Scottish Chambers of Commerce, which matches an experienced mentor with the business leader to work with the business for up to 12 months. Business Mentoring Scotland also offers group mentoring and ‘Take Three’ mentoring, where up to

three members of a company’s management team, or three leaders from separate businesses, band together for mentoring on the same or similar themes.

Leadership Learning Journeys help raise ambition and global awareness in senior Scottish company leaders by taking them to meet senior people from inspirational global organisations such as Ralph Lauren, Google, Bloomberg and even the FBI. An illustration of the connection between effective leadership and business growth is the feedback from a Leadership Learning Journey held last year, with 87.5 per cent of participants reporting increased turnover and 75 per cent increasing profitability as a direct result of their participation.

The next Leadership Learning Journey is in November and will be held in San Francisco. Business leaders will have the opportunity to participate in sessions with Stanford University, Leapfrog, Iron Creative and Anchor Steam Brewery, as well as tapping into the expertise of GlobalScots based in Silicon Valley.

the times | Tuesday September 24 2013

11

Business Insight JAMES GLOSSOP FOR THE TIMES

Scots firm solves global challenge Predicting which drugs will prove safe and effective in patients is no easy matter – but a Glasgow-born company is making a big money-saving impact on the problem. Given that the average cost of developing a drug is now over $1bn and averages 12 to 15 years, anything that raises the chances of clinical success can save pharmaceutical companies millions, and Biopta Ltd addresses a major productivity challenge for its clients in the industry.

Which is? That 90 per cent of drugs entering clinical trials fail to reach market, mainly because effects predicted in animal-model lab tests don’t translate into real clinical benefits in patients.

Biopta’s solution is to use ethicallydonated human tissues and proprietary instrumentation to demonstrate efficacy before expensive clinical trials.

Formed by Dr David Bunton and Professor Chris Hillier as a spin-out from Glasgow Caledonian University in 2002, Biopta has grown into a leading-edge life science business with centres in both Glasgow and Maryland, USA. Dr Bunton, as chief executive, explains how it has benefited from a change in the clients’ mindset: “Pharma companies previously relied on in-house expertise to conduct the full R&D process, but most now seek partnerships with specialist outsourced labs that can deliver

Scottish Enterprise and Highlands and Islands Enterprise deliver the annual Scottish EDGE competition that awards prizes worth up to £50,000 from a £2 million Scottish Government fund to support entrepreneurs in young businesses. Winners also receive a package of support from The Royal Bank of Scotland. The fund is open to small, young Scottish businesses which, with support, could reach or increase sales by £400,000 inside three years, or £200,000 in Highlands and Islands.

Scottish Enterprise sees internationalisation as an important feature of commercialisation and stresses it prominently among criteria that may persuade it to support young companies.

“For companies to scale up, they need to address a large enough problem or market opportunity that will give them room to grow and that comes mainly from beyond our own doorstep,” Eleanor Mitchell explains. “So understanding from the start where a product fits into a market, and the scope and scale of that market, allows companies to set them-

selves up to deliver into that potential.”

On finance, Scottish Enterprise can direct the companies it works with towards a wide range of funding sources in Scotland, the United Kingdom and Europe.

Increasingly too, Scottish Enterprise’s investment arm, the Scottish Investment Bank (SIB) is an important source across the company funding cycle through its Scottish Venture Fund, Scottish Seed Fund, Scottish Co-investment Fund, and the Scottish Loan Fund which provides mezzanine finance for new and established companies on a fully commercial basis.

The Scottish Seed Fund (SSF) provides equity funding between £20,000 and £250,000 for early stage Scottish companies with growth or export potential and which are usually in the final phase of product development or commercialisation. SSF investments are up to 50 per cent of what the company is seeking: it must already have found the rest before applying and must show that other funding sources have been explored.

“SIB has a critical role to play in early stage finance,” says Mitchell. “Many of

what were once early-stage investors have moved away from the riskier, very early stages and there are not a lot now supporting commercialisation at these stages of the funding cycle.”

This is certainly true of venture capitalists and a great deal of business angel money is currently invested in keeping existing portfolio companies going through testing times where investors find it hard to exit at prices that would represent an acceptable return, if at all.

“With not much free cash floating around, SIB’s matched-funding mechanisms help what capital is available to really get a bang for its buck from these early stage companies,” says Mitchell.

While this is valuable, it is also important to understand because investors have moved up the risk chain there are important roles for Scottish Enterprise and the Scottish Funding Council to play in the very early stages, Mitchell argues.

“The question is how we can combine and focus our support to give companies and academic ideas the finance and interDr Eleanor Mitchell is national focus that they need to truly unhead of commercialisation derstand market opportunities and go after at Scottish Enterprise them,” she says. “That’s why a lot of our own and the Scottish Funding Council’s investment is going into those very early stages.”

Awareness of Scotland’s potential for technology commercialisation is not confined to the country itself.

Scottish Enterprise is part of the Regional Entrepreneurship Acceleration Programme (REAP), a Massachusetts Institute of Technology (MIT) project that brings together regions from across the world that acknowledge how supporting and promoting early stage entrepreneurial activity and technology company growth is a vitally important part of investment in their economies.

“It’s given us the opportunity to benchmark Scotland against various other places such as Finland, Spain and parts of Mexico,” says Mitchell.

The two-year REAP programme is now drawing to a close and is expected to publish a report of its activities and conclusions next year, which is likely to make interesting reading in Scotland.

unique skills and know-how, as well as drive down development costs”.

He is quick to acknowledge that prespin-out support, such as the Scottish Enterprise Proof of Concept scheme, was essential in allowing the founders to develop their unique platform technology and conduct early market research. This was followed by various types of grant support from the agency, including two SMART awards, as well as funding from other investors.

Biopta’s early pre-clinical human data is increasingly being sought by companies wishing to improve their chances of clinical success, and its finance director, Elaine Ferguson, comments: “We provide not just the laboratory tests but also the interpretation and context to the findings, which creates a high-value product and repeat business. The pharma industry is now more outward-looking and realises that collaborations with experts can generate enormous benefits.”

Seen as expert in human tissue research, Biopta now makes 90 per cent of its sales overseas. It opened a laboratory in Maryland in 2011 to better serve US clients and expand access to ethicallydonated tissues. It recently won further backing for its research through a European collaboration for SMEs (Eurostars) aiming to develop a new generation of drugs for treatment of psoriasis.

“REAP has led us to understand that much of what we are doing in Scotland is held up across the world as being first class,” Mitchell says. “Many of the countries involved in the programme see the Scottish Investment Bank as something that would be very valuable for them to have in place in their own countries and we are talking to a lot of them about how we went about putting SIB in place.”

In its 2013-16 business plan, the funding allocated by Scottish Enterprise for commercialisation support from its own resources is £8 million in the current financial year and £7 million in each of the succeeding two financial years.

“It’s not just about money going in to support technology development,” Mitchell repeats. “It’s really critical that the people are there and understand how to get access to the funding required to take that technology all the way through to market.”

One way Scottish Enterprise evaluates the potential for global growth in an early stage company is whether the company has the potential to achieve a revenue stream of £5 million in five years or attract investment of £10 million in the same period.

“Quite a lot of the opportunities that we have supported in the past have not delivered this level of impact and so we’re adapting our approach to address the underlying reasons,” concedes Mitchell.

With the state moving more to plug the funding gap in early-stage finance, how much appetite does, or should, Scottish Enterprise have for risk when it is committing taxpayer’s money to technology companies, many of which are by definition and the light of experience higher risk?

“We have to walk a tightrope to some extent,” says Mitchell. “We support early stage because not many other people do, but it is not an uncalculated risk. It comes down to understanding what risks are in the opportunities, how to mitigate risk, and when to stop investing if things are not delivering on their potential.

“But it is absolutely something that we have the appetite to do in a controlled and managed way.”

Tuesday September 24 2013 | the times

12

Business Insight COMMERCIAL FEATURE: UNIVERSITY OF DUNDEE

University on a mission of discovery At the University of Dundee collaborations are making a hugely positive impact — not just for the staff and the entrepreneurs but also for the local economy

John Mackenzie, Head of Knowledge Exchange at The University of Dundee

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he University of Dundee prides itself on a progressive and dynamic outlook. It is ranked 55th in the world for Medicine and Life Sciences and is one of the top 200 universities globally. Research and Innovation Services (RIS), the university’s technology transfer office, encompasses its thriving commercial activities. Along with dealing with record £136 million research awarded in the past financial year, RIS deals with grants and contracts, intellectual property (IP), licencing and spin-outs among many other pieces of business.

The university earns on average circa £1 million per annum in licensing income and has several high profile research collaborations with industry including the Division of Signal Transduction Therapy (DSTT), a collaboration between the Medical Research Council Protein Phosphorylation Unit (PPU), the University of Dundee and five leading pharmaceutical companies; AstraZeneca, Boehringer Ingelheim, GlaxoSmithKline, Merck-Serono and Pfizer.

RIS’s Head of Knowledge Exchange, John Mackenzie, who has a background in accountancy and business advice, has specific responsibility for the university’s spin-out portfolio, guiding ventures through all the challenges involved before, during and after company formation.

Mackenzie also manages the Dundee University Incubator (DUI). Located next to the University of Dundee’s city centre

campus on the Dundee Technopole, it provides lab and office space for fledgling technology based companies.

“The central location offers the advantages of an efficient business setting with easy access to the university and its facilities, whilst providing the right environment for companies to grow within a community of like-minded technology entrepreneurs. This is the real client value proposition of DUI,” states Mackenzie. Aside from including some its own spin-out companies, it also contains technology start-up firms that aspire to collaborate with the university.

Mackenzie describes his university’s

relationship with industry as always looking for a ‘symbiotic partnership’ that has mutual benefits for all parties involved.

To achieve this, he explains, it’s important to be clear about each party’s motivations and objectives.

With the advent of Easy Access IP, RIS would take this a stage further by placing the emphasis much more on people than process. He says: “Our mantra is ‘easy engagement’. Doing business, whether it be with spin-outs, SMEs or multinationals, always comes down to people more than process, and instilling a sensible and pragmatic approach in doing the deal we can — that is what we strive for.”

Case Study: MicroMatrices Associates

Case Study: STAR-Dundee

MicroMatrices Associates, which provides mechanism-based risk assessment products to the pharmaceutical and chemical industries, was awarded a £20,000 BioKT Grant by the Innovation Portal.

This allowed it to undertake a programme of collaborative research and development with the university’s Drug Discovery Unit.

MicroMatrices was formed in 2011 by Simon Plummer, pharmacological scientist, whose first degree was taken at Dundee University. The company was looking for affordable, adaptable laboratory premises in a location convenient to the Drug Discovery Unit.

“The Incubator provided everything we needed in this respect. Once in the facility several excellent university collaborative opportunities were presented to us by the Innovation Portal team, one of which, a BioKT grant, has been succeeded by a three-year KTP project, allowing us to significantly expand our R&D activities at a much faster pace.

This enhancement of our R&D portfolio has had a substantial positive impact on the development of our business over the year, and is in large part

STAR-Dundee, founded by academic entrepreneur Prof Steve Parkes, is a role model spin-out company Mackenzie cites as an example of what can be achieved. “STARDundee is a well-kept secret in Dundee and is rocket science!” quips Mackenzie.“The company was spun-out in 2002. It has organically grown out of the university’s Space Technology Centre, and specialises in space wire, a network technology now adopted by most major space organisations globally.”

STAR operates in a niche area and has grown steadily. Having been located within a cramped office on campus, the firm went on to take up residency in the DUI. “STAR moved into the Incubator where they proved themselves to be dynamic tenants who fitted in well with their neighbours.

The Incubator was ideal as it provided a location which sustained a relationship with the university. STAR has now graduated from the Incubator. We want to see companies grow and graduate into the market place.

thanks to the collaborative agency of the Innovation Portal,” says Simon, now Managing Director of MicroMatrices.

Mackenzie also points to Design in Action’s (DiA) “Chiasmas” as being another key commercialisation initiative born out of Dundee. A £5 million Arts and Humanities Research Council funded Knowledge Exchange Hub, DiA is Dundeeled and involves six Scottish universities and art schools. The commercialisation is delivered through a series of design innovation events — Chiasma — that bring together people from business, academia and design, selected with skills to identify and solve complex problems. The best ideas can be awarded funding of up to £20,000.

Although much has been achieved, Mackenzie is not complacent.

He says: “A continuous improvement approach has to be embraced. Everyone has to come together to align ultimate goals. We’re currently reviewing how and where the Portal sits and is funded, how the Incubator sustains itself and how RIS operates – there’s no standing still.”

Mackenzie believes his business mentoring experience benefits his role today. “I can well appreciate in particular the challenges that exist with spin-out and start-up businesses, and I have great admiration for those embarking on this particular quest,” he says.

“Spin-outs, in particular, are tricky pieces of business. You have the passion and inspiration of the academic, you have the investor who is driven to make money and you have the university. For the university the main driver is public good and isn’t necessarily about making money. As a civic as well as international university we take our responsibilities seriously, so there’s job and wealth creation for the local economy and, of course, getting a product or process to market that will benefit society. By working towards the principle of aligning everyone’s interests, I believe we create a much more seamless transition from academia into business.”

Mackenzie is a skilled mentor to academics, students and businesses, many of whom are unaware of the time scales and frustrations involved. “Early on I learned the biggest complaint from those wanting to spin-out a company was ‘why didn’t you tell me what was ahead of me’ and ‘why did the licence deal take so long?’

“We specifically address this early in the process to expedite matters in so far as we can. We have to be mindful of the interests of our institution and our academics, but we’re also there to enable commercial opportunities. Those students and academics who are enterprising in nature need to be encouraged and we need to help them realise their entrepreneurial ambitions, while retaining them at the university”.

To date, the university has spun-out 35 companies, 24 of which are still in existence.

From humble beginnings they’ve bought their own property from the university and sublet back to it some space for research groups. The university receives dividend and royalty payments. Employing over 14 mostly PhD qualified staff, STAR is a great example of the ‘commercial circle’ and the company continues to collaborate with the university, as well as provide employment opportunities for the university’s brightest students.”

Another important aspect of the university’s commercial activity is the Innovation Portal, which functions as a gateway to Dundee’s three higher education institutions; Universities of Dundee and Abertay Dundee and The James Hutton Institute. Established in 2007, the Portal allows industry to access expertise. It improves the competitiveness of Scottish SMEs by bringing together firms with scientists, technologists and engineering experts keen to apply their expertise to industry. It also supports company innovation with a range of grants and funding.

the times | Tuesday September 24 2013

13

Business Insight Special feature: Edinburgh BioQuarter

Europe’s fastest growing academic medical centre is leading the way in the symbiosis of research and business

Aerial shot of Edinburgh BioQuarter, the 100-acre campus set to become a leading cluster of research

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cotland’s thriving life sciences sector is spread across many locations, principally — though not exclusively — in and around the main cities. If one location is a ‘flagship’, however, then it must be Edinburgh BioQuarter.

The 100-acre campus looks destined to become a leading European cluster of biomedical research and commercialisation, with the support of Scottish Enterprise.

As described elsewhere in Business Insight, the most important feature of the BioQuarter are the professionals managing its commercialisation efforts.

However, its evolving stature is underlined by growing occupancy of its BioIncubator suites of offices and laboratories at number Nine, Edinburgh BioQuarter.

The building known simply as ‘Nine’ offers the environment and support to spur development of spin-outs and growth businesses. It also has space for larger, fully developed companies.

The ground floor BioIncubator has 145 sq ft to 344 sq ft offices and walk-in laboratories of 248 to 710 sq ft – though individual units may also be combined in both cases. Research facilities provided in common to BioIncubator tenants include: -80C freezers with back-up cooling, ice-making machines; lockable gas cabinets; piping for three different gasses as well as separate gas handling in the loading bay and storage area; storage for liquid nitrogen; and an emergency generator. Nine is classified as ‘Very Good’ in the industry standard BREEAM ratings for best practice in sustainable building design, construction and operation.

The first floor suites are for companies at the next stage of development and have larger offices and laboratories. There are meeting rooms and social space on the BioIncubator and first floors.

Nine also has shell and core space from 1,140 – 49,708 sq ft (that’s 106 - 4,618 sq m) ready for occupier fit-out and capable of accommodating office and laboratory formats.

Edinburgh BioQuarter is much more than ‘Nine’ however. It will eventually offer up to 1.4 million square feet (130,063 sq m) of flexible accommodation for academic, commercial and healthcare activity.

The list of Edinburgh BioQuarter’s joint venture partners underline its ambitions and the confidence in its future.

They are state development agency Scottish Enterprise; the University of Edinburgh, one of the world’s top 20 universities in the 2013 ranking by London-based higher education and careers information specialists Quacquarelli Symonds; NHS Lothian, the regional arm of the National Health Service; and the New York stock exchange-listed Alexandria Real Estate Equities Inc, the largest Real Estate Investment Trust focused on property developments for the life science industry.

The quality of academic research and healthcare on the campus is the engine for Edinburgh BioQuarter. Nine’s current next-door neighbours are: the 900-bed Edinburgh Royal Infirmary, one of Eu-

Aboard the flagship for our nation’s life sciences

Edinburgh BioQuarter is Europe's fastest growing academic medical centre, bringing together scientists from the University of Edinburgh and NHS Lothian with commercial research companies to accelerate the development of brand new drugs, diagnostic tools and medical devices to treat diseases.

rope’s leading teaching hospitals; the University of Edinburgh Medical School with its 250 researchers and clinical teaching staff; The Queen’s Medical Research Institute, part of the University’s College of Medicine and Veterinary Medicine (CMVM) and home to 650 people conducting research related to inflammation, cardiovascular disease and reproductive health; and The Anne Rowling Regenerative Neurology Clinic.

Other world-class research clinics within the CMVM include: the Scottish Centre for Regenerative Medicine (SCRM); the Centre for Neuroregeneration; the Euan MacDonald Centre for Motor Neurone Disease Research; the Centre for Multiple Sclerosis Research; the MRC Centre for Inflammation Research; and the Centre for Clinical Brain Sciences.

The £54 million, 9,000 sq m SCRM building hosts research and development of novel regenerative treatments for human diseases, such as multiple sclerosis and heart and liver disease, and is part of a £600 million joint investment in stem cell biology by the University and the Scottish Government. It has a unit for producing stem cells at Good Manufacturing Practice (GMP) grade.

On September 9 the MRC and the Uni-

versity of Edinburgh announced that the MRC Centre for Regenerative Medicine, which is hosted in the SCRM will receive £10 million to build an extension to the building.

The Centre for Neuroregeneration within the School of Biomedical Sciences in the CMVM researches nerve development, injury and repair. In collaboration with the Euan MacDonald Centre for Motor Neurone Disease (MND) Research and the University’s Centre for Multiple Sclerosis (MS) Research, it is doing pioneering work to unravel what causes MS and MND. The Euan MacDonald Centre for MND Research offers research into the causes of MND and into potential therapies, clinical services for MND patients, and training for clinicians and research leaders.

The Edinburgh Centre for Multiple Sclerosis Research, based at the SCRM, is a multidisciplinary translational centre combining basic and applied research to study the causes, consequences and treatment of MS. The University of Edinburgh/Medical Research Council (MRC) Centre for Inflammation Research, based in The Queen’s Medical Research Institute,

involves clinical and non-clinical researchers identifying targets for drugs and delivering translational benefits.

Its research is focused on three key areas: immune modulation and regulation of inflammation; tissue remodelling and regeneration; and imaging inflammation.

Also in The Queen’s Medical Research Institute: the University of Edinburgh/ British Heart Foundation Centre for Cardiovascular Science; the MRC Centre for Reproductive Health; and the MRC Centre for Regenerative Medicine.

The Centre for Clinical Brain Sciences (CCBS) is a virtual centre, not a physical location, bringing staff together from different parts of the University to conduct basic and applied research into the causes, effects and treatment of major brain disorders such as bipolar disorders, cancer, MS, MND, prion disease, schizophrenia, stroke and epilepsy.

The Anne Rowling Regenerative Neurology Clinic, named after the mother of Harry Potter author J K Rowling, opened in 2013 with the help of a £10 million donation from the writer. It is the Edinburgh hub for clinical trials into neurodegenerative diseases, while its laboratory research is focused on stem cells, a particular strength of Edinburgh.

Tuesday September 24 2013 | the times

14

Business Insight

Edinburgh BioQuarter

This is where teamwork Programmes to generate revenue from research depend on many elements, not least of which is the notion that people work best together, writes Rob Stokes

I

n 2010 Edinburgh BioQuarter’s commercialisation team was set up to scout out and commercialise scientific and clinical research and ideas from the University of Edinburgh’s College of Medicine and Veterinary Medicine (CMVM) and NHS Lothian. It broke the mould.

“I cannot think of another UK university that has implanted industry people in a college of medicine and told them to make things happen,” says Mike Capaldi, commercialisation director of Edinburgh BioQuarter, with overall responsibility for its programmes to generate revenue from research, foster spin-out companies, and encourage innovation.

Edinburgh BioQuarter’s goals are to: position Scotland in the world’s Top 10 hubs for life sciences research and development; generate a net (Gross Value Added) economic impact of £1 billion by 2029; and to attract private investment of £250 million, while creating 6,000 on-site jobs out of a total of 6,800 Scotland-wide.

“The key thing is we have a team with more than 150 years’ collective experience in the pharmaceutical, biotechnology and finance industries,” Capaldi says.

“We put this alongside the CMVM to see what would happen and have discovered lots of good stuff people had not regarded as having commercial potential or might not have wanted to commercialise.”

He adds: “As a group of industrialists, the commercialisation team has been able to explain how there is market demand for some of this and how it can be turned into products and services the pharmaceuticals industry would want, whether through licensing and collaboration or by spinning out companies.”

Capaldi himself illustrates the point.

He is a scientist and life sciences entrepreneur with more than 28 years of experience in the pharmaceutical and life sciences industries in the UK, Europe and the USA. He was formerly CEO of a number of high-profile UK biotechnology companies, among them spin-outs from Nottingham and Oxford universities, and held senior management posts with well-known life sciences companies.

The business development team headed by Dr Diane Harbison supports researchers to work with industry on revenue generating deals including research collaborations, consultancy agreements and fee-for-service contracts.

Harbison joined from Pfizer, the world’s largest pharma company, where she spent 10 years, the latter part of it as a member of Pfizer’s Global R&D business development team. Her side of the commercialisation team has people dedicated to supporting and forging relationships with the CMVM’s cardiovascular, neurosciences and regenerative medicine teams and attends research seminars on site to keep abreast of what is developing.

“I have seen a big change in mind-set among CMVM’s academics,” says Har-

bison. “A major catalyst for that was the deal we did with GlaxoSmithKline (GSK) not long after I joined the Edinburgh BioQuarter team.”

Edinburgh researchers are generating new candidate drugs for acute pancreatitis with GSK as part of the company’s Discovery Partnerships for Academia programme.

Other researchers on the Edinburgh BioQuarter campus are testing novel drug compounds with Belgium’s Galapagos NV and collaborating with Sweden’s Galecto Biotech on fibrosis research.

“People see the positive impact the GSK collaboration has had on all aspects of the research of the scientists involved,” says Harbison. “Also, studies show a high impact scientific paper can have an even greater impact if it involves collaboration with an industrial partner.”

This is highly valued by scientists and clinicians whose funding is based on the impact of their research.

“Now when we ask if researchers would be prepared to present to a company visiting the site, the answer is almost always yes,” says Harbison.

O

Dr Diane Harbison has seen a change in mind-set

ther collaborations involve global drugs company AstraZeneca. In fact, there are now so many of these deals there is no comprehensive published list and another major collaboration will be announced shortly.

Capaldi says: “The visibility of Edinburgh is rising. The more industry becomes involved, the more other companies become interested, and that raises the attention of venture capitalists (VCs).”

VCs intrigued by the potential deal flow can talk turkey with a seasoned investment and company formation specialist in Bill Blair, head of business creation within the Edinburgh BioQuarter commercialisation team.

Blair was formerly investment director at Scottish Widows Investment Partnership, one of Europe›s largest asset management companies and part of Lloyds Banking Group, which invests indirectly in life science VC funds and directly in life science companies in the UK, Europe and the USA. He is also a founder of Edinburgh-based biopharmaceutical start-up company UB Pharma, which is developing cancer drugs.

Blair’s staff at Edinburgh BioQuarter have so far supported seven companies to spin out of academic and NHS research and ideas.

They are: Pharmatics, an innovator in data mining for drug development; Cytomos, whose device for sorting cells in lab studies will create a step-change in early-stage drug development; cell care company Coolgenics; NeuroORG, which translates understanding of the human brain into new tools and approaches for business leaders, managers and organisations; social enterprise ipSOX which produces fashionable covers for personal insulin pumps; and i2eye Diagnostics Limited and Aquila BioMedical.

Blair’s team recognises that not all academics wish to give up their jobs and, where it exists, security of tenure, to build a company. “We have a flexible approach,” Capaldi says. “We can bring in a management team and can also package up technologies from different parts of the university into a single company.”

While the commercialisation team and BioQuarter project partners Scottish

Enterprise can introduce entrepreneurs to a range of public funding sources, including a significant contribution from Scottish Enterprise and private investors, there was a breakthrough in January when US-headquartered VC firm Rock Spring Ventures (RSV) decided to open an office in Edinburgh.

Seasoned new technologies investment specialist Sinclair Dunlop, a Scot, is managing partner and founder of RSV, a family of VC funds investing in early-stage, high-growth life science and health technology companies in the UK and USA, “We worked closely with him to make it happen and the tipping point came when Scottish Enterprise and the participating universities agreed to put money into a RSV fund,” says Capaldi.

The development agency’s contribution meant that by first closing, the VC had commitments for more than half the £50 million it was looking to raise for a new, Edinburgh based fund focusing on earlystage life science and health technology companies and is working to raise the rest.

RSV enjoys a preview of every prospect that the Edinburgh BioQuarter commercialisation team works on and has signed non-disclosure agreements with three as yet unidentified companies based on the BioQuarter.

Dr Mary Canning, who took a PhD in molecular biology at the University

of Edinburgh, oversees due diligence on prospects from the VC’s Edinburgh offices. Aside from Scottish Enterprise, investors committed to the fund include the Universities of Edinburgh, Aberdeen and Glasgow, the European Investment Fund, and Strathclyde Pension Fund.

Spin-out and start-up companies from all three universities will have access to the new fund, whose main focus will be on novel approaches to the research and treatment of major diseases and on healthcare technologies. Chemistry, biological science and related software developments in physics and informatics will also figure.

“RSV’s commitment to Scotland and the fund builds confidence that if a VC is willing to locate here then there must be something going on,” Diane Harbison says. “Bill Blair is certainly seeing an increase in the number of VCs that want to talk to him about our opportunities.”

With mounting evidence of the value of the Edinburgh BioQuarter approach, Capaldi’s team is working to spread the word more widely and rapidly.

Shona Cameron, head of marketing and communications at Edinburgh BioQuarter, is an experienced NHS healthcare communicator recruited this year as BioQuarter places pilot advertisements on websites of key trade publications such as BioCentury, BioWorld, Genetic

the times | Tuesday September 24 2013

15

Business Insight

can make a difference Case study: Aquilas BioMedical Aqulias BioMedical, based at Nine in the Edinburgh BioQuarter, spun out of the University of Edinburgh in August 2012. It offers contract pharmaceutical research involving preclinical assays for developing and testing drugs across four therapeutic areas: multiple sclerosis (MS), autoimmune disease, inflammation and analgesia.

Founded by Dr Howard Marriage, Edinburgh BioQuarter’s ‘Entrepreneur in Residence’, along with Steve Anderton, Professor of Therapeutic Immunology at the University of Edinburgh/MRC Centre for Inflammation Research, Aquila has been developing its range of services and building up its scientific and commercial team, which currently numbers five.

“We’re now looking to expand our services, offering other models of potential interest, aligned with world-leading academic experts for the pharmaceutical industry to use in the drug development process,” says Chief Operating Officer Clare Doris, pictured above right, who is also a neuroscientist and experienced contract research manager.

“It’s a very attractive proposition for pharma companies downsizing their internal R&D to access high quality biology insight through focussed interaction with academics around key mechanism of action questions.”

Aquila BioMedical is a go-between, paying academics fee-for-service as consultants on projects that the company conducts and manages

for pharmaceuticals clients. Services rendered by academics include design of drug studies and interpretation of results alongside the in-house scientific expertise among Aquila’s own staff.

“We are now revenue-generating and have clients in the USA and Europe,” says Doris. “The client base ranges from one-person, virtual biotechs to wellknown international pharmaceutical companies.”

Aquila has had a friends and family round of investment and a private investor is also on the share register. It will shortly seek business angel investment of around £500,000 to bring in business development and marketing support and to add to its range of assays.

Its five-year vision envisages building to around 25 employees, with three or four new therapeutic service lines to accelerate growth and reach annual revenues up to £3 million.

Case study: i2eye Engineering News and Bite Size Bio. “This is one aspect of our revised marketing and communications strategy to raise awareness and enhance the profile of Edinburgh BioQuarter.

“In this case we specifically wanted to target the pharma industry and let them know about the excellent research and innovation happening at BioQuarter,” says Cameron.

Tasked with encouraging University researchers and NHS clinicians to embrace commercialisation, the Edinburgh BioQuarter commercialisation team also organises conferences; ‘Going Pro’ commercialisation seminars sponsored by professional services firms advising on patents, company formation and management, and human resources issues; quarterly networking events that bring together scientists and clinicians with leading life science entrepreneurs, executives

We can bring in a management team and can also package up technologies

and financiers; a BioQuarter Annual Conference drawing life sciences professionals from around the UK to discuss a particular therapeutic area; and through an annual innovation competition to dig out ideas.

The 2013 BioQuarter Innovation Competition was won in July by anaesthetists from the Royal Infirmary of Edinburgh who received £12,000 to help patent and commercialise an invention to ease surgery for patients hard to fit with standard airways that help people to breathe while anaesthetised. Other winners from among more than 50 entries shared £18,000 between them.

The fourth annual competition will launch in January 2014 and the previous three have generated more than 100 ideas. “It’s been a rich source,” says Capaldi.

“Two of our spin-outs were from ideas that came out of it and we are actively working on a few more commercially interesting projects from the same source.”

Summing up, he says: “I would say that the majority of principal scientific and clinical investigators in the CMVM now think it’s a good thing to work with industry, particularly as the pharmaceuticals industry seeks to work more with academia and barriers break down.”

The future looks bright and could even see Capaldi’s team itself spin-out as a supercharged commercialisation and investment organisation.

Staff at the Edinburgh BioQuarter, which aims to be among the world’s top ten hubs for life sciences

brain tumours to give clinicians better When the Edinburgh BioQuarter cominformation with which to manage treatmercialisation team saw how researchment and hopefully improve outcomes. ers and clinicians at the University of i2eye has orders from leading paediEdinburgh were assessing the vision of atric eye centres globally. Five years in patients who found it difficult to keep development, the visual field analyser their heads still, they sensed a business is “a generation ahead of anything else opportunity. currently on the market”, according to The result was the April 2012 spin-out company CEO Peter Estibeiro. of i2eye Diagnostics Ltd, the company Seed behind the investment world’s first in January ‘visual field 2012 from the analyser’ for management children and team and vulnerable Glasgowadults. based venture Its technolcapital firm ogy, SVOP Kelvin Capital (Saccadic was followed Vector in autumn Optokinetic last year Perimetry), with another responds to Vision research at i2eye Diagnostics funding round a patient’s led by Kelvin Capital after all targets had natural reactions to movement and light been met by the company. to produce an accurate analysis of their i2eye’s technology is selling into a visual field without the patient needing market estimated to be worth around to keep still, understand the test, or talk £175 million with roughly the same level to the tester. of potential in both Europe and Asia.

All a patient need do is watch bright, The story of i2eye vividly illustrates eye-catching graphics on a video the value of using commercialisation monitor while their gaze is tracked to teams with industrial backgrounds to identify any anomalies and generate a get close to researchers and actively standard visual field map. scout out ideas that could spin out into An early use of SVOP will, according companies. to i2eye, be for monitoring children with

Tuesday September 24 2013 | the times

16

Business Insight

Looking to the future

Moving forward is a must With so much already achieved and so many exciting new projects in the pipeline, the future for Edinburgh BioQuarter looks brighter than ever

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rojects already in the pipeline will see a string of spin-outs, collaborations, industry investment, new research centres and healthcare developments in and around Edinburgh BioQuarter in the coming months and years.

“It’s really busy,” says Dr Mike Capaldi, commercialisation director of Edinburgh BioQuarter. “The prospect list of companies we’re talking to or see as opportunities for potential collaboration has more than 100 names on it. The company commercialisation pipeline has 13 companies we are actively working on with a view to spinning them out over time.”

Having spun out seven companies in the first three years of the five for which it is receiving public funding, Capaldi’s team could spin out more than seven in the next two years alone, he says.

These include Tissuestik and FibromEd. Tissuestik won the 2012 Bioquarter Innovation Competition and is the brainchild of researchers at the MRC Centre for Reproductive Health at the University’s College of Medicine and Veterinary Medicine’s (CMVM).

They knew that cross-contamination of human tissue samples could lead to misdiagnosis, inappropriate surgery, and to life-long checks on patients, and could expose healthcare providers to litigation.

So they devised a simple device to prevent cross-contamination in handling tissue.

“It’s hugely important medically but also for forensic services too,” says Dr Diane Harbison, head of business development with the Edinburgh BioQuarter commercialisation team. “It springs from the fact that scientists and clinicians here do things every day so they can see ways of improving,” FibromEd generates hepatocytes, liver cells, for drug toxicity testing and is based on Edinburgh’s excellence in stem cell biology. Its method, which transforms skin cells into large numbers of hepatocytes, creating batch consistency so drug companies can be sure the cells will process drugs in the same way each time they are used in tests. This allows for better reproducibility of results. It also allows batches to be made up from people who have an adverse reaction to a drug so new treatments may be screened to see if they would have a similar effect.

“It’s a really exciting company,” says Harbison. “There’s been a really positive response from organisations that FibromEd is talking to about how the technology could be used.”

Also in the pipeline are: a company focused on drugs for the treatment of

rarediseases; an enterprise pursuing new drug formulations to treat cancer pain; and another medical device company in the mould of i2eye Diagnostics Ltd. BioQuarter is a 25-year project of expansion involving the university, NHS Lothian and industry as the bio-cluster grows. Eight years in, news of openings and expansion just keeps flowing.

On September 9, for example, the Medical Research Council (MRC) and the University of Edinburgh announced that the MRC Centre for Regenerative Medicine (CRM) has been awarded £10 million to extend the Scottish Centre for Regenerative Medicine (SCRM) building which hosts the MRC Centre of Regenerative Medicine at Edinburgh BioQuarter.

A new laboratory, the UK Regenerative Medicine Platform Centre for the Computational and Chemical Biology of the Niche, will host an artificial system mimicking the environment around stem cells in body organs. It will allow greater control over the way stem cells are grown and converted into cells that may potentially repair damaged tissue.

It is a United Kingdom resource based in Edinburgh and will be available to all UK regenerative medicine researchers at basic cost to speed development of new therapies.

A large informatics institute is to move on to the second floor of Nine, the multioccupancy building that has a BioIncubator on the ground floor. “We’re talking to companies that will take other space in Nine,” says Capaldi.

“Some of the companies in the BioIncubator are now expanding and will probably move up on to the first floor,

thereby opening up capacity in the BioIncubator,” he adds. These include leading stem cells company Roslin Cells and MHC Scotland, the Scottish subsidiary of Mölnlycke Health Care, the Swedish wound care company.

The University and NHS Lothian have plans to put additional buildings on Edinburgh BioQuarter within the next two to three years. Research centres on the way include The Brain and Body Institute (2016) while The Royal Hospital for Sick Children is scheduled to be on site from 2017.

The future for collaborations is bright too. “People see the deal flow that comes out of the university and recognise that because we have GlaxoSmithKline here and other large corporates looking at what we are doing then there must be something there,” Harbison says.

“The buzz about what we’re doing and achieving will help us to get more collaborations,” she adds. “It also means the venture capital community sees these partnerships and the company spin-outs and finds it more worthwhile to get on the plane. Over the past couple of years, the number of VCs that have visited has increased extensively.”

The commercialisation team at Edinburgh BioQuarter is a five-year initiative and, three years in, is considering options for the future.

“We don’t think we’ll have a problem keeping it going,” says Capaldi.

“There are other models in the UK such as Imperial Innovations Group plc, Fusion IP plc and IP Group plc, and that is the sort of thing that we’re starting to think about. We have pulled together a really experienced team that has been of

Building Nine at Edinburgh Bioquarter, which is soon to welcome a major informatics institute

We would eventually look to raise venture capital so we could invest in companies

Dr Mike Capaldi

huge help to the University and the NHS and there’s no reason why we cannot start to help other people.”

Imperial Innovations, Fusion IP and IP Group are all university commercialisation wings that are listed on the Alternative Investment Market and raise funds to invest.

This model would allow the Edinburgh BioQuarter commercialisation team to spin out to work with additional universities or parts of the NHS. “It’s obviously open to negotiation, but it’s my vision of where this can go next” says Capaldi.

“Part of that is that, like Imperial Innovations and Fusion IP, we would eventually look to raise some form of venture capital so we could invest in companies as well as spinning them out. It would help to keep the life sciences sector in Scotland moving forwards.”

The model appeals to Harbison.

“We’re lucky in the UK to have the Medical Research Council and the Wellcome Trust who have access to translational funding but that all takes time to apply for, and access to funding is always a constraint,” she says.

“I have seen many opportunities in the CMVM that we could not commercialise as quickly as we would have liked or that have had to be put on the back-burner,” she adds.

Having access to further funds for business development, partnerships and licensing and for company formations would be “hugely beneficial” for both the CMVM and NHS, she says. “We could likely increase our deal flow significantly and the same would be true of the company creation side.”