A white knight with means to find holy grail

March 18, 2005

David Norwood, a 36-year-old chess grandmaster, made the best move of his life when he ditched the day job and decided to make his fortune exploiting academic intellectual property.

This may not immediately endear Mr Norwood, last estimated by The Times to be worth £48 million, to a typical academic on £30,000 a year.

But, as chief executive officer of the IP investment and development company IP2IPO, he has probably done more than any other individual to commercialise UK research. Moreover, many academics have benefited financially in the process.

Mr Norwood, a former captain of the England chess team, started IP2IPO in 2001. It has already helped to create more than 20 university spin-off companies and its market value has almost tripled to £300 million since floating 18 months ago. This week, Proximagen announced that it would be the fourth IP2IPO company to float on the Alternative Investment Market.

The genesis for IP2IPO was Mr Norwood's recognition that universities cared little about the intellectual property they generated and so failed spectacularly to see that it was a potential gold mine.

"Universities just gave intellectual property away. They thought it was a liability," he said.

"I used to go up to Oxford University and network with the professors.

There was almost a debate about whether it was the right thing to do.

Exploitation was a dirty word. Commercialisation - awful word! Now they realise that it is essential for academics to be involved in this process."

IP2IPO has been cautious in its approach to the sector and the deals it brokers. "Each one is a carefully considered move," Mr Norwood said, betraying the calculating mind of a chess grandmaster.

His lifelong passion for chess has shaped his life. He won his first chess championship at the age of six, and he said that the mental rigour of the game helped to develop his study skills. He went from a Bolton comprehensive to Oxford, where he studied history.

After graduating, he found life as a professional chess player increasingly difficult because top-class players from the former Soviet Bloc were flooding the tournament circuit.

He reluctantly took a job at a City bank, which had a theory that chess players made good traders. He hated it and moved on to a small private bank trading stocks and shares, where he became interested in small companies based on new ideas.

Meanwhile, his chess-playing friends, many of whom had studied science at university, had followed two career routes - either becoming wealthy after moving into the City or carrying on in research. The pieces were in place for some dazzling matchmaking.

Mr Norwood's first company ESL, which became Celoxica, was founded after he introduced a friend in Oxford's engineering department to a rich chess-playing friend. "It was incredibly high risk," he said. "Sometimes they (the resulting spin-off companies) would go horribly wrong and sometimes really well."

He realised that if he worked within universities he could be the first to hear academics' ideas and could then help them to raise money and found companies.

This led to a ground-breaking deal with Oxford's chemistry department. So Mr Norwood set up IP2IPO and invested £20 million in a £60 million chemistry building. In return, he negotiated a 50 per cent stake in any spin-off companies it generated in the following 15 years.

It caused shock waves in the university sector, and Oxford was accused of having sold out to the private sector. The financial sector was equally aghast that anyone would risk investing in a university.

Deals with King's College London, Southampton and York universities followed, all giving IP2IPO a stake in companies created over the next 25 years in return for investments of up to £5 million. Earlier this year, IP2IPO bought out TechTran, the company that owns all of Leeds University's intellectual property. In 25 years, Mr Norwood aims to own stakes in 200 companies.

During the ten years he has been involved with spin-offs, he has seen a sea change in attitudes to commercialisation, but he said that not all universities were converts. Mr Norwood said it was the vice-chancellors who were key to whether institutions could be successful at enterprise.

"It doesn't matter what type of university it is," he said. "It matters who's at the top - whether they're paying lip service to this entrepreneurial thing or whether they really believe in it.

"Some are brilliant. They say, 'I'll meet you for lunch tomorrow.' Others say, 'I'm busy. Marking finals papers. Until August.' They seem to relish the idea of delaying for nine months, by which time the idea's probably defunct."

But even the right vice-chancellor cannot make up for academics who misunderstand what spin-offs are about. "A lot of academics say they're really keen on the idea of creating a spin-off company. What you find when you've got the spin-off is that they're just looking for a cheap way of funding their research. Rather than writing grant applications, they think, 'I've got this nice company that'll give me £1 million a year'."

And Mr Norwood was particularly galled by a conversation with someone in a university technology transfer office who said to him: "But you're just in this to make money!"

"I wouldn't mind if it came from an academic," he said. "But it came from someone who is supposed to commercialise ideas. If people have got that attitude, you won't make money."


I GRADUATED FROM Oxford University

MY FIRST JOB WAS at the Bankers Trust in foreign exchange trading in 1992

MY MAIN CHALLENGE IS to help make the UK the leading centre for science and technology worldwide

WHAT I HATE MOST is people who don't try or are willing to give up without trying; people who wish people will fail at things; and people who enjoy seeing people fail

IN TEN YEARS I would like to be the CEO of a FTSE 100 company (hopefully IP2IPO).

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