Sheffield plans £10m fund to invest in spin-offs

Sheffield University is planning to float the life sciences arm of its technology-transfer business next week in a move that could raise £10 million for entrepreneurial academics.

In what is believed to be the first university venture of its kind anywhere in the world, Sheffield plans to float Biofusion, the company it set up to handle its life sciences intellectual property, on the Alternative Investment Market on February 2. The money raised would be used to invest in Sheffield spin-off companies.

Under the deal, the university would not need to wait to find an external investor if an academic came forward with a marketable idea,but could help to develop the idea immediately.

Bob Boucher, the vice-chancellor, said: "There is, of course, no guarantee of a successful flotation, but we are very optimistic about the prospects.

There is absolutely no alternative. There is no public funding available."

Although the Government has made available tens of thousands of pounds as seedcorn funding for new companies, there are few sources of funding for the next phase, during which spin-off companies mature to a stage that would attract the interest of venture capitalists.

David Catton, managing director of Sheffield University Enterprises and an architect of the float, said: "What we're trying to do is back our own judgement.

"If we have the money, we should be able to do the job. We will have taken the risk out of the companies, so we can later go to the venture capitalists with confidence."

He said academics could expect more support from the university because it, as well as any external investor, could benefit from an increase in the value of a company.

The university would retain 49 per cent of the shares should the float be a success. Sheffield's future plans include floating other subject-area packages and offering services to other universities.

* IP2IPO, the independent technology-transfer company, tightened its hold on the academic sector last week by taking over the company that exploits research from Leeds University.

IP2IPO paid £16 million for TechTran, which has a portfolio of 15 spin-offs. Last year, it purchased a 20 per cent stake in the company.

Set up in 2001, IP2IPO already has 25-year research exploitation partnerships with Oxford, York and Southampton universities and with King's College London.

Leeds was the first institution to entrust all its technology-transfer activity to the private sector when it went into partnership with TechTran two years ago.

TechTran was set up by investment company Axiomlab, which has suffered a rocky few years - Jit floated in 2000 and delisted in 2003.