Deep in the heart of Oxford, the cogs are in motion to form more world-changing businesses. With the city abuzz from the Covid-19 vaccine success, academics are clamouring to make a similar impact. 

“These people are literally the best at what they do,” says Alexis Dormandy, boss of Oxford Science Enterprises, which helps academics turn research into start-ups. “They care about making a difference.”

Oxford University has produced more spin-outs than any other university in the UK over the past 10 years, totalling 156 companies. Cambridge, the second closest, created 140, while Imperial College produced 92 in third place.

But former Oxford academics bemoan wasted potential. 

“Quite simply, they should be doing way better,” says Benjamin Owens, chief strategy officer at biotech Peptone and former lecturer in medicine at the University of Oxford. “If you look at how much research funding medical sciences get, for example, and look at their output compared to somewhere like Stanford or Harvard, I guarantee you it will look absolutely terrible.”

Criticism has centred around Oxford University’s spin-out policy as a key reason for lagging US rivals. Until last month, it sought to take 50pc in companies created by its academics, although negotiated on a case-by-case basis. 

Professor Sarah Gilbert, founder of Vaccitech, which was spun out of the university’s Jenner Institute and helped to create the Oxford/AstraZenecaCovid-19 vaccine

Credit: David M Benett
/Getty Images Europe

Of this equity, half has been handed to Oxford Science Enterprises, an investment company backed by the likes of Google Ventures, China’s Huawei, and South Africa’s richest woman Magda Wierzycka. 

Yet now, following major changes, the university is taking a much smaller 20pc stake in most businesses derived from academic research. In some cases – where it has had no involvement in the creation and where “there is no patented or patentable intellectual property” – it will take 10pc.

Many professors and students are starting to make their moves – the aim is to follow in the footsteps of Vaccitech, a business spun out of the university’s Jenner Institute that helped create the Oxford Covid-19 vaccine. 

“I’m not sure all of them will give the world a vaccine,” Dormandy smiles. “But there’s a lot of hidden gems.”

“Take fusion power,” he says, “Making small low energy plants for the developing world – it would literally save more lives than the vaccine.”

The potential has been nestled in the university for some time and has, on the face of things, already started to translate into start-ups. 

“Amazing,” tweeted former Oxford professor Nando de Freitas, whose start-up was bought by DeepMind, in response to the changes. “I’m so happy for the departments, faculty and students.” 

Amazing ⁦@UniofOxford⁩ !! Oxford changes its start-up policy at last. I’m so happy for the departments, ⁦faculty and students, who I miss dearly. Bravo ⁦@CompSciOxford⁩ – truly number 1

— Nando de Freitas (@NandoDF) October 17, 2021

For Oxford, it is exactly the reaction they could hope to elicit; de Freitas had been among its biggest critics, accusing the university of “destroying UK innovation”. 

For him, and many others, the crux of frustrations centered around how Oxford compared to rivals. US universities take a 5pc to 10pc stake, and even approaches elsewhere in the UK have been more liberal. Imperial runs a system where founders can choose to either take support from the commercialisation arm and allow the university a larger stake, or shun the help and retain more.

Sources say such policies have been looked at by Oxford for some time. In the wake of a Telegraph article in 2017, when academics branded the university “the worst in the world  for commercialisation”, bosses embarked on a roadshow to assess how others spun out research. 

Dormandy says colleagues had been working on it for a while before he joined as chief executive of the Oxford commercialisation company earlier this year.

The university says the decision for the changes was one taken by the academic community, via a group of university staff, heads and other heads of governing bodies.

Not all of those individuals agreed. Insiders say some traditional academics and heads of departments were hesitant to make the spin-out process easier, arguing it could temporarily take professors and postdoctoral researchers out of teaching.

Former lecturer Owens says he experienced this attitude first-hand. “For a long time, there were big professors who had absolutely no interest in leaving their very cushy positions. They’d almost have this deep-seated aversion that it was grubby to commercialise the research.”

Those who wanted to create their own businesses without this pressure left, and found workarounds to use their research – termed “sneak outs”. 

Yet, increasingly, there has been more for heads of departments to worry about, making leaving more appealing. Owens left academia in 2015 to join the pharma industry after having been hampered in trying to spin out his research at Oxford. He says he got “so much grief” at the time. 

“Now, because there’s all these issues in academia with salaries and pension schemes and the lack of positions, almost everyone I know who has stayed is now asking me: how do I transition out?”

Venture capital heavyweight Hermann Hauser says Oxford University’s move is ‘helpful’, but ‘still not as good’ as Imperial’s offering

It was not just the academic community who were hesitant. According to insiders, some within the universities argued for taking as large a stake as possible in spinout companies, due to the potential investment upside. Ultimately, they failed to convince the majority and changes were agreed. 

Nathan Benaich, founder of venture capital firm Air Street Capital, says it all marks a step in the right direction. “But we need to go a lot further if we want to make the innovation ecosystem flourish.” He says the process across the UK needs to be “more transparent, permissive, and quick”.

But others are equally cautious over whether the changes go far enough. Venture capital heavyweight Hermann Hauser says the move is “helpful because it is formulaic, but still not as good” as Imperial’s version.

Behind the scenes at some former Oxford spinouts, there are grumblings of frustration. “There is no redress offered to founders who were exploited under the previous policy,” says one founder, who describes it as having been “unworkable and counterproductive”.

“It definitely does not go far enough,” they say, particularly for companies that the university has not been involved in, but has taken a stake.  

Oxford may feel such comments are unfair. In the end, for academics keen to make their mark, it may not really matter. 

“What most professors really care about is making an impact,” says Dormandy. “They aren’t actually massively financially motivated. What motivates them is seeing hundreds of scientists working on their bit of research.”