UCT tech transfer unit has developed 21 startups, 125 active technologies [Q&A]

Universities need to be creating new intellectual property (IP), as well as protect and mature it to facilitate industry adoption, says Dr Andrew Bailey senior manager of the University of Cape Town’s technology transfer office (TTO), Research Contracts and Innovation (RC&I).

Bailey (pictured above) adds that the role off academic institutions in Africa’s tech ecosystem shouldn’t stop there, he says universities should also be commercialising IP through the creation of spin-off companies or by licensing it to businesses.

And that’s what RC&I has been doing. “Currently we have 24 spin-off companies since 2004 (21 remain active) and have equity worth over an estimated R100-million in some of them. We have 125 active technologies in our portfolio and have received around R36-million in revenue since 2001 from successful commercialisation,” says Bailey.

The other key ingredient that feeds into the ecosystem, he says, are “well-trained graduates with an entrepreneurial mindset — or some exposure to the translation of research outputs into products and services in the market — this is of benefit to both large corporates as well as startups”.

The following Q&A with Bailey is part of a series Ventureburn will conduct with leading academics and organisations working on the continent, or overseas in facilitating tech innovation in Africa.

How should academic institutions be supporting innovators and startups?

It is a complex undertaking as one is looking at the needs of a range of groups within a university who have somewhat different needs — undergraduate students, as well as postgraduate students and staff. Often it is a blend of courses for credit as part of degrees, or extracurricular short modules.

UCT Career Services is helping students significantly and there is an entrepreneurship week annually and a number of programmes that help student entrepreneurs. The MTN Solution Space, located in the Graduate School of Business, runs three-month programmes for student entrepreneurs who are interested in social innovation.

For several years a variety of programmes in Science and Engineering have included courses on new venture creation in their curricula. In commerce there are undergraduate courses, as well as the Postgraduate Diploma in Entrepreneurship. The diploma is great as it provides the opportunity for experiential learning as student teams must develop products and sell them as part of the course.

UCT is also fortunate to have one of three Schools for Design Thinking that was funded by Hasso Platner, the founder of SAP. Others are in Stanford (USA) and Potsdam (Germany) and the Cape Town one brings an African flavour. The d-school brings together students from a variety of disciplines in teams that find creative solutions to problems by using specific methodology.

The thinking equips them for their careers to look at things from a different perspective and to really understand the user experience and then test the solution of key users and respond to feedback.

How is your institution working with the tech ecosystem, or supporting tech entrepreneurs?

Catalyst Lunches are a recent initiative to bring UCT inventors in contact with funders and industry. The lunches bring together between 20 and 40 people typically within a particular sector, but that sector is loosely defined so that a broad mix of interests and capabilities can interchange. The events are really successful with many positive outcomes for future collaboration.

The highlight is that they enable UCT researchers to engage with industry and funders in a “low-pressure” environment, as they are not actually pitching for funding or trying to secure contract research work. It is more a question of listening to needs and problems and learning about capabilities and opportunities.

The lunches are funded by the National Intellectual Property Management Office (NIPMO) and are held throughout the year.

Policy wise, what should government be doing differently when it comes to universities and their relationships with the tech ecosystem?

One of the key challenges is the availability of funding in the very early stages of technology development — which still needs to be done within the university environment to mature the technology post research — to a point where it will pique industry’s interest and be sufficiently de-risked and viable for them to take on.

The Technology Innovation Agency (TIA) has unlocked a great deal of potential by offering amounts of R650 000 available per university development project. Whilst this programme was off to a strong start and yielded considerable outputs, the number of projects receiving funding has more than halved and there are concerns in the community that the funding will be terminated, which will see the technology pipeline of universities reduce to a trickle.

Challenges in the South African funding environment are the minimal options available to access early stage funding and the time to secure such funding. Startups having successfully attracted first round funding can lose momentum and flounder due to the time that it takes for funders to process applications for next round funding.

Many have to scale back to a skeleton staff at these points and employees understandably tend to abandon ship ahead of retrenchments due to the uncertainty of funding. The net result is that market opportunities are lost and the time to market is lengthened.

NIPMO have been instrumental in assisting with the capacitation of TTOs in South Africa. The funding that they provide is valuable, but is directed at short-term startup interventions.

Acknowledging the fact that it takes years (often ten or more) for royalties to begin to accrue to a university, and that there are other pressures on the university budget, it would be great if support could be given on an ongoing basis, based on the current three-year cycle. This would provide job security within the sector.

UCT’s tech transfer office provides mentoring, business plan reviews, formal IP protection, and administers various forms of seed funding

NIPMO also provides a rebate of up to 50% on patent costs incurred by an institution. This is useful and aids universities in securing their IP. The Department of Trade and Industry’s (dti) Technology and Human Resources for Industry Programme (THRIP) funding, which requires industry and universities to partner, is emerging as an important activator for industry engagement.

The programme moved back to the dti who subsidise research and development (R&D) leveraging industry investment by as much as 90% (most commonly small and medium sized businesses pay 25% of the total cost) and with the money coming via the industry partner, in terms of the IPR Act the partner can own the IP arising from the project.

There is strong interest in this programme and UCT is partnering with an increasing number of companies. This is also a springboard for new startups to significantly leverage their investment in research or technology development that their companies require.

Government procurement can provide those critical “first sales” for startups, that will increase confidence in their products or services. Funding from different government departments need to be aligned and linked for their instruments to be effective.

The creation of Industrial or Economic Development Zones where there are preferential tax benefits (including customs duties) are important to establishing new ecosystems, but there is also a need for “virtual zones” that are focused on embedding new sectors in the country — such as hydrogen fuel cells in South Africa.

Virtual zones would foster development that is occurring across the country, without the need to relocate to receive the benefit.

Establishing Centres of Competence at universities is an excellent government initiative — they are more “applied” and closer to industry than Centres of Excellence, which tend to focus more on basic science. Government needs to reward researchers for innovation, i.e. the application of inventions in the market place, and not only publication.

How does the UCT’s technology transfer programme work, what have been some of its highlights?

RC&I supports through formal IP protection, fundraising and administering various forms of seed funding, as well as business plan review and mentoring.

We maintain relationships with a variety of funders, know their offerings so that we can provide advice and also we have links to various incubators that are in our ecosystem.

RC&I will be celebrating its 20th anniversary next year, but over the years it has gained momentum and capacity.

Several key inflection points were: the establishment of a fund to support IP protection at the university in 2002; the move from reactive “service” orientation to proactive scouting for intellectual property and active pursuit of its development and ultimately its commercialisation; a “Pre-Seed Fund” for small, but impactful, investment by the university to support technology development in 2008; support received from NIPMO that enabled strategic projects to be conducted and the staff compliment to be expanded to include two senior staff roles focused wholly on technology commercialisation (2010); and finally the creation of an “Evergreen Fund” by UCT that made three multi-million rand maiden investments during 2017 that will spur on three startup companies.

The machinery is in place and exciting opportunities are emerging at an increasing rate.

How are other technology transfer offices in South Africa performing?

Since the IP Rights from Publicly Financed R&D Act came into place in August 2010, all SA universities need to have a TTO, or be a member of a regional one. As a result, the TTOs are at a spectrum of stages of development depending on their age.

Reassuringly benchmarking of best practices against those of leading institutions internationally indicates that the South African practices and approaches are up to standard and really only differ in terms of scale, or maturity.

There TTO community is close-knit, share tools and case studies as well as expertise. This is frequently done under the auspices of the Southern African Research and Innovation Management Association (SARIMA).

Training programmes have been developed to increase the pool of trained technology transfer professionals. Through course accreditation, through SARIMA membership of the Alliance of Technology Transfer Professionals (ATTP) one can become a Registered Technology Transfer Profession, which has international recognition.

In the Western Cape, the regional TTOs have met quarterly at the different institutions and this “forum” is a vibrant platform for sharing best practice, jointly addressing challenges, identifying synergies and developing the region.

TTO initiatives are very dependent on their environment — UCT links into various existing incubators that are in close proximity to the university, or incubates companies within departments where specialist equipment can be accessed easily.

Stellenbosch and NMU have both successfully established business incubators in their environments, providing support to businesses that are even outside the universities.

CPUT is driving an initiative to ensure that specialist prototyping or technology development facilities — such as fine chemical production, specialist manufacturing, food labelling and support for nutritional claims — is available within the Western Cape, a useful platform for all institutions.

What can be done to improve how TTOs commercialise research and innovation?

Another challenge that we face is making industry aware of the technologies that are available that are coming out of universities. The scale of output has increased, but local universities may well represent a new source of technologies, historically these may have come from foreign principals or overseas vendors.

The DST Innovation Bridge event if a good step towards showcasing technologies at all the SA universities as well as startups under one roof. A portal is being launched that will hopefully become the go-to place to find out about technologies available, without the need to visit each university’s website.

Communicating industry needs to researchers is also fundamental to innovation success. This focuses research on core interest areas and directs it into a space in which it is likely to have impact. Increasingly funders are asking about the “impact” that the research will make and how this will be achieved. This is driving thought and planning for practical application of research outputs and innovation.

Ensuring that “frictionless” funding is available from the seed level is important – universities, themselves are working collaboratively to establish a Universities Technology Fund by raising private-sector and philanthropic funding to cover this critical space, as well as that of high-risk early-stage investment.

The views expressed in this Q&A are those of Dr Andrew Bailey and are not necessarily those of the University of Cape Town.

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