The UK VC Fund supports European student startups

Where will we find the pioneering deeptech entrepreneurs of tomorrow? Well, many of them will come out of the best universities in the world, armed not only with doctorates, but also with technologies and business ideas developed during their studies and research projects. For VCs, there is an opportunity to invest in postgraduate student work early. If, of course, they can identify founders whose ideas have commercial potential. The Creator Fund believes it has found an effective way to do this.

Earlier this week, the UK start-up venture capital fund announced plans to expand its student-focused investment operations across Europe, from the Estonian university town of Tartu in the east to Madrid to the west. Nothing unusual about that. You might think. But in a European context, The Creator Fund does something a little different. With the aim of detecting entrepreneurial talent at the doctoral level, it trains other graduates to think and act like VCs in terms of finding prospects and analyzing offers.

So what does this mean in practice? Well, Jamie MacFarlane came up with the idea for The Creator Fund when he was studying for an MBA at Stanford. “While I was there, I saw a class of American venture capital funds investing in university research. I thought it was a game-changing model,” he says.

He returned to Brittany. where he founded The Creator Fund in 2019 with the intention of adopting the Silicon Valley model of investing in students for the UK ecosystem. “We spent three years developing this model in the UK,” he says. In effect, this meant creating teams that could work within universities to find offers. The aim was to look beyond the usually suspect universities such as Cambridge and to widen the network to encompass a wide range of institutions.

team building

Building a team of PhD-level “VC students” was crucial to the plan. These were the people who would be at ground level, mixing with other graduates in the mess halls, labs, and bars. Once chosen, they were trained in the VC way of thinking. “We put everyone on a ten-point program,” says MacFarlane.

And according to him, the selected ones have already acquired all the really difficult knowledge. They are after all educated to a high standard in their chosen fields. Know the mysteries of the investment world – business valuation, capitalization tables, etc. – is relatively easy. In addition, PhD students are centrally supported by the Creator Fund team.

To date, the fund has made 27 investments in sectors such as AI, life sciences and advanced technologies. Among them, two in Europe, namely Turing Biosystems based in Lyon and Enlightra in Lausanne. Turing uses AI to identify cancers, while Enlightra has developed laser technology for super-fast data transmission.

Now officially launched in Europe, Creator Fund is active on 32 university campuses and aims to fund – in its own words – a new generation of deeptech unicorns. Typically, the fund invests between £100,000 and £700,000.

Motivated teams

But what exactly is The Creator Fund looking for? Well, it’s not just the technology, but also the committed founders. “The biggest mistake European investors tend to make is to focus on technology and bring in an outside management team,” MacFarlane says. “What we are looking for are massively motivated founding teams.”

Is that a bit too much to ask? A PhD student may be a scientific genius – or at least quite smart when it comes to his subject – but that doesn’t necessarily mean that business acumen will be part of the skill set.

MacFarlane says the idea that researchers aren’t commercially minded is a myth. Many, he says, have business ambition in their DNA. “Some go back to college after a few years in industry because they see a PhD as a way to start a business,” he says.

Spin-outs and student startups

MacFarlane is keen to distinguish between spin-outs and student startups. Spin-off companies typically involve university investment, faculty participation, and institutional licensing of intellectual property. In the case of a student startup, the founders will be students and the university will not have the same right to intellectual property. Indeed, there may be no IP to negotiate. “We have 27 companies, and 55% don’t have academic IP,” McFarlane says.

But what about deadlines? One of the risks associated with deep technology is the time it takes to commercialize research. MacFarlane says that’s not always the case. He cites Turing Biosystems, which already has significant revenue working with the pharmaceutical industry.

The truth is that some research can be commercialized quickly, while others will be a long-term gamble. In this regard, The Creator Fund aims to create a mixed portfolio with different horizons.

So what are the investment prospects at the university level? Well, it must be recognized that the commercialization of research is crucial for the development of deeptech and The Creator Fund is not alone in this field. For example, the Plug and Play Tech Center invests in university startups, not only in the United States where it is based, but also in Europe.

For his part, MacFarlane sees universities across the UK and Europe providing a rich source of new and groundbreaking ventures.

Leave a Comment