The Invisible Infrastructure of University Venture Capital

Around 250 university venture capital funds exist worldwide. Some run quietly, attached to a single institution, largely unknown outside their own ecosystem. Thierry Heles has spent 12 years trying to change that, first as a journalist covering spinouts, then as the founder of “The Next Leap”, a media company dedicated to the sector.

His work raises a question that is harder to answer than it appears. Why does this asset class remain so poorly understood, even by the people operating inside it?

A sector that is larger than it looks, and less connected than it needs to be

Thierry Heles began tracking university funds in earnest around 2022, building what became one of the most granular pictures of the sector available. His findings at the time of our conversation: roughly 108 to 109 funds in Europe, with new ones still launching in continental markets. Globally, the number sits around 250.

The geographic spread tells its own story. In Europe, approximately 40% of top universities have access to a fund. Sometimes their own. Sometimes shared with others. In Australia, the proportion is almost universal. In the US, around a third of R1 institutions have one, which Heles found surprising given how the US is typically positioned as the default model for venture capital. His explanation is direct: Stanford does not need its own fund. Sequoia is down the road. The pressure to build internal capital structures has been greatest where external capital has not shown up, which is most places.

Japan is the outlier worth studying. A centralized government decision roughly 10 to 12 years ago established university funds as a priority. Capital was made available to get the structure moving. The result is a university VC ecosystem that Heles describes as "almost strangely mature." The University of Tokyo now operates two investment vehicles: University of Tokyo Innovation Platform (UTokyo IPC) and University of Tokyo Edge Capital Partners. The ASA Fund, run by UTokyo IPC and backed by Tokyo Metropolitan Government, goes further still: it invests in other university funds, acting as a catalyst for smaller institutions to raise capital and access expertise from a more established player. That structure, a university fund seeding other university funds, does not exist at scale in other geographies.

Who runs these funds, and who does not

The talent question inside university venture capital is structural. Heles is specific about the patterns he has observed. The GP role at a university fund almost always goes to someone with finance expertise. Duncan Johnson, who runs Northern Gritstone, the fund attached to Manchester, Sheffield, Leeds, and Liverpool, came from investment banking. That is the more common profile.

What is rarer, and what Heles argues should happen more often, is the practitioner route. The recent appointment at Oxford, where the new vice president of innovation is the founder of OrganOx, a company that reached a billion-pound exit, represents a different model. Someone who took a spinout from a university lab to acquisition, who understands fundraising from the company side and the technology development that preceded it, now shapes how Oxford approaches commercialization. Heles believes that profiles should be more common. The sector largely does not reflect it.

The distinction matters because the GP role and the TTO director role require different capabilities. They are complementary, and both are needed, but Heles is clear that the person who runs the fund should generally not be the same person who runs the TTO. Commercialization expertise and fund management expertise overlap at the edges but differ at the core.

For sector-specific funds, the calculus shifts. Stephan Christgau, who runs Eir Ventures, backed by six Swedish universities with a sidecar to UCPH Ventures in Copenhagen, previously managed Novo's corporate venture capital fund. He brought deep experience in pharma and life sciences to a fund that invests exclusively in life sciences. impec.xpand, affiliated with the Belgian semiconductor research institute, assembled a team with both venture capital and semiconductor backgrounds. When the investment thesis is specific, the expertise has to match.

For funds with a broader university mandate, Heles argues the generalist financial background matters more than sector depth. The deal flow that comes through a broad university fund will cross disciplines in ways that no single expert can anticipate. A quantum specialist in that seat may face a social sciences founder the following month. The GP needs to know how to raise and run a fund. The team around them needs to cover the technical depth.

The pipeline problem no one likes to discuss

One of the clearest structural constraints Heles describes is deal flow. A single university, even one of the most productive in the world, generates roughly 20 to 30 spinouts per year. MIT and Columbia are in that range. That is not a pipeline for a $500 million fund. It is barely sufficient for a $100 million fund when you account for the conversion rate from spinout to fundable company. Not everything that comes out of a lab should receive venture investment. The selection process itself is part of the work.

This creates pressure toward multi-university structures. Engine Ventures, which originated at MIT, expanded its pipeline to Harvard and then to Rice University and institutions along the East Coast. That expansion was not incidental. It was necessary to create the deal flow that a follow-on fund would require. The vision of a fund investing exclusively in its founding university's spinouts runs into arithmetic fairly quickly.

The governance question that follows is not simple. If multiple universities anchor a fund, each with partial ownership, the conflict-of-interest problem becomes real. A fund more controlled by a single institution will face pressure, explicit or otherwise, to prioritize that institution's pipeline. That bias problem does not resolve itself through good intentions. It requires structural separation.

Heles's position on this is direct: funds should be legally and operationally separate from the university. The University of Notre Dame ran an internal fund, recognized that the back-office requirements alone made the model impractical, and moved to an external management structure. That shift, from internal to external, is the lesson he draws for the sector as a whole.

Geography concentrates more than it should

The geographic concentration problem appears in multiple forms. Investors cluster in financial centers. Spinouts that are not near those centers have to come to them. SETsquared, a consortium of six universities across the UK's southwest corridor, Cardiff, Bristol, Bath, Exeter, Southampton, and Surrey, runs its investor day in London. Even with six universities presenting, the investors will not come to the institutions. The University of Colorado Boulder brings 10 to 12 startups and invites investors in, because a trip to Boulder for two spinouts is not a compelling ask for an investor based in Silicon Valley.

That structural gravity toward established financial centers is one reason why cross-border investment within university venture capital remains rare. Theodorus, a Belgian university fund, has an office in Montreal and is separating that operation into a standalone venture firm. VIVES, also in Belgium, has built partnerships across the Netherlands and Luxembourg, staying within geographic and cultural proximity. University of Tokyo Edge Capital Partners has invested in at least one UK quantum startup. These are exceptions. Most funds, as Heles observes, operate within the pipeline logic of the institutions that created them. Why look in Zurich when the spinouts you were built to back are in your own lab?

That will change, Heles believes, as the larger funds, those that have raised 100 or 200 million and built up multi-year portfolios, find that sustaining deal flow requires looking further. Whether that change comes from individual fund decisions or from coordinated infrastructure is an open question.

The LP gap is structural, too

The conversation between universities and their potential LPs is underdeveloped. The reasons on each side are not mysterious. Pension funds, Heles notes, are the most conservative LP class by design. They require predictable long-term returns. Venture capital offers the possibility of outsized returns and the real possibility of capital loss. The 1-in-10 dynamics of a venture portfolio are not compatible with the mandates under which pension funds operate in most jurisdictions.

In Europe, pension fund allocation to venture capital, as a percentage of assets under management, sits at around 0.008%, compared with approximately 2% in the US. The gap is not primarily about risk tolerance. It is structural. Europe's capital markets are fragmented by country. A French pension fund invests in France. A German fund invests in Germany. Cross-border investment remains genuinely difficult, not merely unpopular.

The Uniseed example from Australia is instructive on how to move pension fund behavior. Peter Devine, who ran Uniseed for around 20 years, used an initial fee waiver to bring pension fund capital into the fund, giving the investors access to a portfolio they could then support with follow-on capital in the better-performing companies. His argument, which Heles recounts, is that in Europe, the lever might be government coverage of management fees. That could be enough to make the first investment logical for a pension fund operating under conservative mandates.

The visibility problem compounds this. LPs with exposure to university venture capital do not appear to have significant structures for learning from one another. The GP community has conferences, data points, and shared language. The LP community in this segment lacks an equivalent forum. Without it, alignment between what LPs expect and what university funds actually deliver will remain harder to build than it needs to be.

What the sector is still missing

Heles is building something in the gap between the fund managers, TTO directors, lawyers, and LPs who operate in university venture capital, and the wider world that does not know they exist. The media infrastructure that would make this asset class legible to those inside it and to the institutional investors considering it is still being built.

The structural questions, how to build funds that outlast a single university's pipeline, how to attract LPs whose mandates do not naturally fit venture risk, how to recruit and retain people at compensation levels universities often cannot offer, are answerable. They are being answered, fund by fund. The LP coordination layer that would accelerate that process, a structured space where LPs already in the asset class compare notes and align on expectations, does not yet exist at scale. In our conversation, Heles put it plainly: that coordinated LP space is the missing layer. That is the right framing. The infrastructure question is open. The people to answer it are already in the room. 

Timecode:

00:00 Welcome and setup

01:04 Origin of the podcast

02:31 Entering university VC

05:24 What makes it fascinating

07:48 Talent and career paths

11:12 Who leads university funds

15:49 Geography and mobility

17:38 Europe fund landscape

21:14 Global count and Japan

24:22 Cross-border ecosystems

28:47 Late-stage funding gap

29:52 Funding Scale Reality

30:15 Investor Geography Bias

31:36 Multi-University Fund Models

33:11 Building a Pipeline

34:25 Audience and Coverage

36:38 Policy Voices on Air

38:03 LPs and Investability

40:40 Pension Funds Risk Gap

41:37 Europe vs US Allocation

44:35 Incentives and Fee Support

46:25 Talent Paths and Pay

51:57 Fund Turnarounds Lessons

54:13 External Management Best Practice

55:34 No One Size Fits All

Links:

Karoly Szanto LinkedIn: https://www.linkedin.com/in/karolyszanto1/

Karoly Szanto Personal Website: https://www.karolyszanto.com/

University Venture Capital Coalition: https://univccoalition.org/

Guests:

Thierry Heles: https://www.linkedin.com/in/thierryheles/

The Next Leap: http://thenextleap.is

Transcript:

Károly Szántó: I wanna welcome Thierry Heles on our show. Hi, Thierry. Thanks for joining us today.

Thierry Heles: Thank you both for, for having me. It's a pleasure to, to be here and do this in person.

Károly Szántó: Thanks. I'm here with my co-founding partner, Thijmen Meijer, and today we are having a discussion about your journey and The Next Leap podcast. And we are curious to hear about what you have learned over your work, working with university fund managers. But before that, this is kind of a funny situation interviewing the interviewer, right? Because the first time we met actually was you made an interview with me. Now we exchange or swap... How do you say swap- Turn the tables ... switch. Yeah. Swap seats. Yes. So how did you end up doing your podcast? Where are you coming from, and what made you do this?

Thierry Heles: That is-- I will try and keep the answer short. I think I've always been interested in podcasts as a medium for like the last 20 years. I've done various podcasts over the years. I previously did a podcast for my former employer that was also kind of going out and interviewing people in this field, tech transfer officers, fund managers, those kinds of things. And just over a year and a half ago now, I decided to leave that job and kind of strike out and go on my own. Found The Next Leap, kind of build a media company that I thought I wanted to lead and shape it how I wanted to shape it.

And the podcast was kind of a natural way of both promoting myself and still maintaining those discussions, conversations with people in the field, like yourself. Having interviewed you last year. And it's just-- it's a really good medium, I think, to connect with people and give them the space to tell their stories because they can let their personality shine through, for example, rather than a written article, which is more heavily edited than a podcast conversation. Sure.

Károly Szántó: And why-- And how did you end up in the university venture capital segment or the innovation segment, let's say?

Thierry Heles: I ended up in it relatively randomly in that about 13 years ago I was just a freelance copywriter. And my old housemate from university reached out to me one day and was like, "We're looking for freelance journalists to write about spin-outs." And I was like, "I've never heard of a spin-out." "What is that?" But I had capacity at the time, and I joined, and I was pretty much hooked from the get-go.

Mm-hmm.

I focused on more the kind of the spin-out angle, so spin-outs raising money, spin-outs achieving exits for several years before I kind of became interested in university funds more specifically, and that's possibly also because that's how the sector kind of evolved. So you had Oxford Science Enterprises kind of being launched in 2015, 2016-ish. And then since then there's been a real explosion of university funds. And then in 2022, '23 thereabouts, I decided that I would sit down and kind of start researching these funds and figure out which universities actually have one, maybe what geographies are more advanced in this.

At the time I found some relatively interesting findings in that in Europe if you use a list of... I think I used the QS ranking of top universities. It was about 40% of the top universities in Europe had access to a fund. That wasn't always necessarily their own fund. It was sometimes a fund that was shared between multiple universities. In Australia it was almost all of them that had access to a fund. Wow. In Asia it was varied. Japan very advanced. Other nations in Asia maybe not so much.

And in the US it was about a third of the R1 institutions that had a fund, which was surprising to me because Europe was sort of slightly leading there compared to the US. Interesting. But then you could argue that in the US maybe they didn't necessarily... Stanford doesn't need their own fund because they're literally down Sand Hill Road. They got Sequoia and everyone else next door. They don't need to raise their own fund. Correct. depending on where you are, most cities don't have mature venture capital ecosystems. So they kind of had to go and do it on their own. And in Australia to a certain extent as well, no one really flies down to Perth to look at spin-outs down there.

Hmm.

Yeah.

If we, if we circle back, what does it really, what, what hooked you on to this, this, uh, this sector? What was it? I think what hooked me into the tech transfer spin-out aspect was- It, I would say it's sort of like you start seeing this almost invisible layer in society. Like, I went to a few universities, as a lot of people have, or have gone to at least one. No one ever mentioned a spinout to me, no tech transfer. think what hooked me in- into the- ... the tech transfer spin-out aspect was- It, I, I would say it's sort of like you start seeing this almost invisible layer in society. Like, I went to univer- I went to a few universities, as a lot of people have, or have gone to at least one. No one ever mentioned a spinout to me, no tech transfer.

And okay, I didn't do STEM. I did English and then... But then I went to a business school, and again at the business school, no one ever mentioned tech transfer, which I kind of thought was maybe like an obvious kind of way. If you study business, maybe that's a person that they would maybe want to have in a tech transfer office in some capacity. And then, yeah, when I kind of learned about this world, you kind of start seeing, oh yeah, like if an invention is made in a university it does get out. And I kind of always thought it gets out, but I never really questioned how that happens. I'm like, oh, someone finds a cure for this disease, and then obviously that will become a therapy or a drug. But how, I never really questioned.

Um, and then when you start scratching the surface, you find really common things like Gatorade, for example, started at the University of Florida, and it's called Gatorade because it was a drink made for their sports team, which is called the Gators. So like lemonade, they called it Gatorade. And you kind of start seeing these things just sort of everywhere, and you're like, "Wow, okay," like, and no one knows this is happening. But not everything, but a lot of things go back to university research. And then I was like, well, how does that bit actually work? How do they actually do that? It's a fascination that hasn't stopped as I've talked to so many people that work in this, and it's kind of a once you're in people tend not to leave. Sort of a lifelong obsession, or at least a 14-year obsession for me by now. That's long enough to- Yeah ... to confidently- Yeah call it an obsession. Yeah. Yeah. Yeah.

Károly Szántó: What I, what I really like, uh, in your work is that, uh, you are, you're somehow combining, um, um, like very sector-specific news, uh, following some of the key stakeholders, uh, maybe, um, joining to a new firm or heading up an innovation office. So it's not only about the firms, but the people as well, uh, so the network. And during this conversation, of course, considering that Thijmen is coming from talent acquisition and recruitment, we also want to better understand the talent pool that the UVC sector is working with. 'Cause it has its own characteristics as any industry.

And from my perspective, I'm really curious to learn more about your findings in terms of how new university funds are established, and do you see any patterns either geographically or stage-wise or from any angle? Um, so maybe we can, we can start, uh, or continue with the, the, the talent Part.

Thierry Heles: Sure. Yeah. Absolutely. I was wondering actually if you see any trends, because you're in the business already for quite a while, if there is any trends that are like very surprising to you because you keep track of quite some movements within the UVC and tech transfer worlds. Any trends that are very surprising to you?

I don't know if there are necessarily trends that have surprised me. Often what you see, especially in tech transfer offices, is kind of PhDs, post-docs maybe do an internship with a tech transfer office, and then they just kind of work their way up the chain. Um, very classic career, I guess, um, i- in a lot of niches. Um, occasionally I think you do get these, these really interesting stories that I think should be more of a trend. So Oxford recently, their, um... I can never remember if it's vice provost, vice president of innovation, one of those, vice chancellor of innovation. But the person who got the job now created a spin-out in 2008, I think it was, OrganOx, took it all the way to a billion-pound exit last year I think it was.

And now they've moved him from being a professor to being a head in charge of innovation. I think that should be happening at a lot more institutions to the people that have kind of gone through the whole process, kind of have it seen from this is the research, this is the spin-out, this is the exit. I understand- Yeah ... everything. I understand what it takes to raise money. I understand how to shepherd a technology all the way to, to an acquisition or an IPO, as it may be. Um, but often it's, it's not those people that, that, that get those jobs. Do you see mostly from outside of the UVC or the tech transfer office in, like, a typical market VC?

I mean, if you specifically look at UVCs, often it is the people that bring the venture capital expertise, the people that- Maybe investment banking expertise. So if I remember this right, Duncan Johnson who runs Northern Gridstone, the Manchester, Sheffield, Leeds, Liverpool University Fund, he came from investment banking. So it is people that have the, the finance expertise. Um, occasionally you get examples of people who've run a TTO and then have gone out and gone into VC. So you've got, um, John Flavin, for example, who created the Polsky Center, which is the tech transfer office at the University of Chicago, um, then left and set up Portal Innovations, which is now... It, it's raised a few funds but it's, uh, has gone on to the, the VC side.

Um, I- his name escapes me now, but I know that the University of, of Utah who ran the TTO there then went out. Keith Marmor, that's his name. Mm-hmm. Um, left and, and went into venture capital. Um, but often it is, it is the, the people who are already bringing some kind of venture capital expertise that are put in charge of, of those funds, either because the university sets up the fund and that's the people that they're looking for, um, or people who are in VC and become interested in this area and then either set up a fund with a university or, or look for a job, um, in that area.

But I think that's probably right. You probably don't want someone who knows how to commercialize to be the person that does the investments, because I would argue that they are slightly different skill sets. They're complementary and those people should work together. But the person who runs a fund should not be the person that runs a TTO, generally speaking. But the person actually, the GP that's start or the head of innovation at a VC, usually comes already with a deep tech background or somebody with... Because the university VCs are more long-term. It's a slightly different curveball than a typical market VC. Um, do you see any difference here or any...?

I mean, you certainly do get those people that bring that deep expertise. You have, for example, Stefan Chriscar who runs Eye Ventures, which is backed by six Swedish universities, and then they have a sort of a sidecar vehicle with University of Copenhagen called UCPH Ventures, and he previously ran Novo's corporate venture capital fund. So he brings that. And they've, they're, they're now focused on life sciences, so he brings that deep expertise of, of the sector, and he's got that pharma experience as well. Um, same with, with IMEC Xpand, for example, which is attached to IMEC in, the semiconductor research institute in, in Belgium. Um, that team kind of brought venture capital experience and, and semiconductor experience with them.

It really depends what your aim is for the fund. So if you have a fund like IO Ventures that's focused on life sciences, then you want the life sciences people. But if you set up a university venture fund that you just hope invests in your spin-outs, then it might not necessarily help you that someone has maybe run a quantum or done quantum investments before because they might get a social sciences person standing in front of them because that's that's the research that's come out. So I don't... You probably want a relatively comprehensive team, like you want the expertise on that team. You need people that are able to do the due diligence on those technologies.

But I don't know if the GP having the deep expertise in one sector is necessarily what's needed. You just want someone who knows how to raise a fund, run a fund. The financial background is really what counts in that position. And then someone who knows how to build a team that can pick up the expertise that you might lack. And do you see any international moves or is it rather geographically bound to the- I can't think of one. I would assume that within Europe it probably happens. I don't know if it really happens. If you're in the US you might not really... You kind of stick to the US. If you're in Australia, probably gonna stick to Australia. Although I know that Australia and New Zealand, they like to send people to the UK and do sort of a year overseas to kind of- gain expertise.

Which is kind of true in, not specifically in VC, but I think is part of their... You go overseas and you kind of see how things are done somewhere else. I mean, I know Károly, you... I think that happens with some people. They kind of go abroad and gain their expertise- Yeah ... somewhere else. Um- I think that's pretty, um... Well, not, maybe not very common but, but it's, um, it's a good way to, um, yeah, to, to take home some best practices- Yeah ... for sure and align with the, with the wider ecosystem.

Thijmen Meijer: Yeah.

Thierry Heles: And I know that's... I've spoken to a few people in, in Ireland, for example, that have gone to the US and they, they got their corporate VG- VP jobs- Mm-hmm and then they've come back with all that experience and they've learned how to build startups and get products into the marketplace. And then apply that from a TTO or from a UVC point. But I can't think of an example now where someone may have run a fund in- I don't know, in New York and then decided to go and run a fund in Germany. Mm. Not saying that that doesn't exist- Yeah ... but I, yeah.

Károly Szántó: So can you, uh, give us an overview about the, the market in Europe and then rest of the world? Like how many funds are there? What are the typical sizes? Uh, do, do you actually see, um, um, new funds, uh, being established or is it more like a stagnant number?

Thierry Heles: I've mostly been, been focusing my, my research on, on European funds, um, in the more recent months. There's over 100. I think there's about 108, 109 that I've identified so far, and I'm taking a relatively broad definition. So it's funds that are kind of actually attached to like one university, that one university set up, like Oxford Science Enterprises. Mm-hmm. Um, I am also counting funds like Comma Fund in Germany, which some might argue that are not university funds. Um, or things like a Leap Ventures which is attached to an incubator that's backed by the university, so it's- Yeah ... one step removed. Um, and yeah, there's still, there's still new ones being, being launched, um, certainly in, in, in continental Europe.

Um, in the UK there's a bit of a funding dearth at the moment. They're, they're, they're kind of struggling to raise new funds. Even funds that were announced one or two years ago have kind of struggled to- Mm ... find anchor investors. Mm-hmm. Um, which geopolitical realities, financial realities of, of the UK at the moment. Um, but no, so like the Elite Ventures that I mentioned, that, that was launched last year. Um, there was Delphinus Venture capital that was launched in, in Denmark. Um, PSV which is attached to, um, to UDenmark, they raised another fund not that long ago. Um, so, so yeah, new funds are, are, are still being raised. Size-wise it really varies. You get the relatively single digit small funds to the behemoths like the Oxford Science Enterprises which is a billion.

And then quite literally everything in between. 10 million, 50 million, 100 million. It's a reflection of the local ecosystems, I would say. The pipelines that they have access to. The LPs that they have access to. Often if the EIF comes in as an anchor investor, that's often a big chunk of cash which some funds want the EIF, some... Maybe some fund managers don't wanna have to deal with a public institutional investor. So there's those choices to be made as well.

Some funds prefer being backed by corporations because then that means they get access to that expertise. Like Oxford's, they're backed by GV, Tencent, kind of big corporate style, can bring the technical expertise and then also provide follow-on funding and can co-invest in the in portfolio. Um-

Károly Szántó: How many funds in your definition... So you say in Europe there are currently somewhere around 108 or so? Yeah, yeah. Um, how about US or the rest of the world? Um, how many of those are, are currently there?

Thierry Heles: Around the world I would probably put the number at about 250-ish. Again, it kind of depends on how you define it. Like in the US you could possibly argue that Osage University Partners is also very much in the uni VC field because they focus on university startups and spin-outs. That's, that's their whole premise. But then they are an entirely independent venture capital firm that just has partnerships and access to- Mm ... TTO pipelines. Um, but yeah, I would say around the world about 250, which most of them kind of concentrated in, in Europe and then the US, um, and then to some degree in, in Japan, which is sort of a shining light in, in Asia because they are-- They have a, a, a almost strangely mature university VC ecosystem. Um- Yeah, I was gonna

Károly Szántó: ask, uh, how did, how did Japan, um, you know, become, um, you know, so active in this segment?

Thierry Heles: So they decided about 10, 12 years ago that universities should have funds to invest in their startups through there. There was a centralized government decision. And then there was capital available to kind of get the whole thing going. Um, and that's really worked almost phenomenally well, um, to the point where now you have, um, you-- Well, University of Tokyo has two. Um, they have University of Tokyo Innovation Platform, and they have University of Tokyo Edge Capital Partners, which is more of like an external venture capital firm- Mm backed by the university. But UTokyo IPC, they run a fund called the ASA Fund, which was originated by the Tokyo Metropolitan Government and backed by the local government. That now goes out and invests in other university funds.

So they've kind of as well as investing in their own spin-outs, they've become kind of a catalyst for other university funds. Which is not really something you see in other geographies. Maybe others will catch up. But that's then enabled maybe smaller universities to raise funds, and then at the same time also kind of get that expertise in from a much more mature, bigger fund that really knows how to how to build ecosystems. Um, and then you, through that, get access to co-investors. Like it's, that's that flywheel that everyone always talks about. Like you kind of-

Károly Szántó: Yeah. Yeah. And where, where do you see, like, um, connections between ecosystems is another, um, interesting part of, uh, of this sector. Some-- And of course, the, it also relates to, uh, the definition of an ecosystem. So, uh, looking at it from here, UK is one ecosystem, but it's not. We all know that. So there is, uh, there is the Oxford-Cambridge, uh- Yeah ... area or, uh, what is it called? The Golden triangle. The Golden Triangle. Yeah, Oxford, Cambridge, and London. Yeah. And then on the north, uh, The Corridor.

Thijmen Meijer: Yeah.

Károly Szántó: Yeah.

Thijmen Meijer: Uh,

Károly Szántó: so those are large ecosystems, but they are-- Like you can say the UK has the most advanced, uh, ecosystem in the university venture capital sector in Europe, probably, if, if you define, um, from that perspective. Yeah. But then the UK ecosystem is connected to, uh, traditionally very strongly to the US and, as you mentioned, to Australia and New Zealand. Um, and now we talked about Japan. Uh, not that they need to be connected to, I don't know, Europe. Uh, but I think they have a fun time with their initiatives. But is there any connection between these ecosystems? Do you see any... Or is it more, um, happening on, um, uh, say, um, opportunistic basis? It just happens, but it's not organized.

Thierry Heles: I think it was, it was University of Tokyo Edge Capital Partners. Um, but they've invested in, in the UK as well. Oh. In, in, um, I think it was at least a quantum startup. But th- from their point of view then, well, there's a technology that we're interested in, we're gonna go and invest over there 'cause that's a startup that's doing great things, um, to then bring that expertise back to Japan because it's a sector that, well, everyone wants to be... Well, everyone used to be wanting to lead in quantum- Mm-hmm ... now it's leading in AI. But but quantum's not gone away. Um, so, so those kind of very broad international investments happen.

There's, um, Theodorus, which is a Belgian university fund. Um, they set up an office in, in Montreal in, in Canada. Um, now they're spinning that fund off into a separate venture capital firm. Um- Mm ... so you do get those kind of cross-border investments. You do also get, um, the more kind of regional multi-university funds. So VIVES funds is a, is a good example set in, um, located in Belgium. Um, but they've also got a partnership with the University of Luxembourg where- ... um, we are now... Well, we're not at the university, but in, in, in Luxembourg, and they've got partnerships in, in the Netherlands.

Mm-hmm.

So they've kind of expanded sort of across the, the Benelux, which culturally quite close and geographically, um, all kind of close as well. Um, but they're still, I would say, it's still the exception. I'm not saying these funds don't talk to each other, because they probably do talk to each other, but it, it's still, it's still very, very rare to see them kind of expand beyond their own. And that's partly, I think, because often when you have kind of a, a classic university fund, uh, uh, like using the narrow definition of this was set up by one university- Yeah ... often the university then goes, "Well, we're creating a fund for our spin-outs." Why go out and- "Why, why are you going to Zurich to find a pipeline?" Yeah. Um, I think that will change.

I think as the ecosystem matures- Mm-hmm ... it will change, and then especially with, with the bigger funds, um, where you, you know, you might have raised 100, 200 million. You might have that pipeline that's been built up because there hasn't been funding, but can you sustain that pipeline or do you then need to go and look at opportunities elsewhere? Do you need partnerships with other universities? Um-

Károly Szántó: And have you seen any, uh, late stage, uh, university investor funds? Because I think... So we just had, um, a nice discussion, uh, with and about, uh, EIF's, uh, new, uh, initiatives, uh, like the ETCE 2.0 Um, and also there are many other initiatives on the deep tech, uh, late-stage investments. There is clearly a, a funding gap. But, uh, have you seen any university funds that are investing late stage? Because that would be quite unique. Maybe Oxford has one. Yeah.

Thierry Heles: Oxford maybe invests more in the later stages now, now that they've got 10 years of having built a, a, a portfolio. Um, I think often it's, it's a question of capital- Yeah capacity. Um, especially if you're talking deep tech where the funding requirement's just exponential. Um, you might get away with a few million early on, but then you very quickly reach 50, 100 million - Easily ... dollar requirements or euro requirements. Um, which obviously that's not one investor putting in that money. You need, you need a consortium of investors. Mm-hmm. Um, but I think that's significantly harder for a university to- Mm ... to pull off. Yeah. Um, and I think often the problem that universities have is that they have great startups, great spin-outs, and they don't get anywhere because the investors are in the Golden Triangle.

And even you have in, in the UK, you have, you have this, um, group of six universities called Z Squared, which is sort of the southwest corridor. So from like Cardiff, Bristol, Bath, Exeter, Southampton, uh, Surrey. Was that six? Did I forget one? Mm-hmm. No. Um, but even they have to run their investor day in, in London. Like, they have to take their spin-outs there because- Hmm ... even with six universities, the investors are like, "Well, if you're not coming to us, then..." Right. Hmm. And that's, that's, I mean, that's, that's true kind of everywhere. Like- Hmm ... I know in, in the US, um, the University of, um, Colorado Boulder, they run a, an investor day with kind of other local institutions where they bring their best- Mm-hmm 10, 12 startups, and then they bring the investors in because the investors don't wanna go to Boulder to look at two spin-outs. Yeah. Um, because, you know, why are you not coming to Silicon Valley? That's where we are. We're not getting on a plane. Yeah. Broadly speaking, I'm sure there's investors- Yeah ... out there that, that do. Yeah. Um... So that,

Károly Szántó: yeah. Uh, I mean, I see, um, kind of the same bottleneck, uh, in the UEC sector, meaning, um, there, there needs to be, uh, a massive deal flow available for a fund. And usually one university is not capable of, uh- Mm-hmm ... generating such a deal flow. Um, and I think it wouldn't be even fair to- Uh, expect, uh, all universities to be able to, you know, spin out like tens of, I don't know, in 50s- Mm-hmm uh, every year. Yeah. So naturally, I would expect more UVC funds to be covering multiple, uh, universities. Yeah. Um, but that's a different, um... That requires a different, uh, approach and different, uh, uh, tools to get there to launch such a fund.

Thijmen Meijer: Yeah.

Károly Szántó: Uh, not that it's easier or more difficult, I don't know, but, um, it's just very different. Yeah. Because, uh, none of the universities can hold ownership or, or all of them need to. Uh, otherwise there is the bias problem. Like, uh- Yeah ... uh, if one university controls the fund more, then there is always of conflict of interest and priorities- Yeah ... can collide, so that's an interesting one. But-

Thierry Heles: You almost need that vision kind of from the, from the get-go, even if you set up the fund as... So, like Engine Ventures, for example, which came out of MIT. Even there you kind of need to go, "Okay, we're setting up this fund. It will be..." I think it was called The Engine at the time, now like an incubator attached to it as well. We'll put money in, and then it very quickly also expanded to kind of Harvard University. Um, and it started backing spin-outs out of Rice University and that kind of, that corridor kind of down past the, the East Coast. Mm-hmm. You know, they've, they've been raising-- They, they've raised follow-on funds because that created a pipeline. Um, but it, it was because MIT didn't go, "We're setting up our fund. Our fund will invest in our spin-outs." Mm-hmm. You said 50 spin-outs. Even MIT, Columbia, they- Yeah ... produce, you know, 20 to 30 spin-outs a year. Yeah. That's not a pipeline for a $500 million fund. Definitely not. Not-

Károly Szántó: You're not... Yeah ... not, not even for a 100 million fund- Yeah ... because out of those, out, out of that 20, not- You're not gonna invest in all of them anyway There's not- Yeah a 100% conversion rate, uh, from spin-off to fundable. Yeah. Yeah, so definitely. How do you define the relevance of, uh, what you are doing, uh, for your audience?

Thierry Heles: So I would say my, my audience is, is people within innovation ecosystems, so that is, that is the TTOs, that is the investors. Um, that's also the legal experts because they are also part of it. Someone needs to write the contracts. Yeah. Um, someone needs to do the due diligence, someone needs to make sure that patents are filed and all those things. Someone needs to negotiate licensing agreements. Um- So yeah, kind of people who, who work in innovation sy- ecosystems in, in, in the broadest sense. Um, and within that, uh, my coverage mostly focuses on what's happening in tech transfer offices and what's happening in university funds. Um, currently primarily news articles, so new funds being raised, people moving around the industry.

The podcast then interviewing, um, people who run funds, people who run TTOs, lawyers, um, hopefully in future also successful spin-out founders because I think that's also an interesting story and not one that gets told that much. Like how did you take this company from an idea in your lab to an IPO or an acquisition? Mm-hmm. Um, or maybe not. Might maybe it failed. That's also interesting. You know, why, why did it collapse? Mm. And I want it to be a resource for people who work in this field so they can come to it as they're hopefully learning something new, finding out how maybe things are done at other funds or at other tech transfer offices- Mm um, through the podcast and, and in future also through kind of more in-depth feature articles, case studies, um, which I've got lined up and maybe they'll be out by the time that this podcast goes out there. Ooh. Hmm. Um, that depends on the timing. Um, but yeah, more in-depth kind of- Hmm ... articles as well as the, the timely news articles. Um, but yeah, you mentioned people earlier. I think it's the, the people that make this industry, and that's partly why I track where, who's going where- Mm-hmm ... because that's interesting, you know?

Thijmen Meijer: Absolutely. And are you also planning to bring in policymakers?

Thierry Heles: Yes. Um-

Thijmen Meijer: Or people working in and around this?

Thierry Heles: Yeah, I would be very interested in having policymakers on as well. Often I found, especially with people who actively work in government, unless they are the politician, which I don't know if I want a politician on the podcast, often they're not quite at liberty to talk freely because

Thijmen Meijer: Yeah

Thierry Heles: they're often civil servants, and they have, especially in the UK, they got quite strict rules about they can't be seen as the voice of the government. So yeah, it depends whether I will convince myself that having a politician on the show is a good idea. I don't know if I would necessarily look forward to having to ask the same question 15 times and getting evasive answers. But no, I would be very interested in people who work in the policy area in this. I know there's people that sometimes maybe sit more on the outside trying to influence policy through think tanks or through consultancies, but maybe not the government people themselves. If someone- sends me an email and goes, "I wanna be on this," I might not say no. But- Mm. I don't think they would be my first target to, um, to reach out to.

Károly Szántó: Like, what makes, uh, an asset class, uh, underwriteable, investable from, from an LP perspective? And, and also there are, you know, there are many types of LPs, so- Yeah it might be, it might differ from an investment bank, from a, a pension fund, and, and so on. Um, but by, you know, by becoming a bit more visible f- uh, for the LPs, um, it will actually also, it, it would help, uh, a great deal the ecosystem. More clarity, better understanding, uh, and the incentive is already there. Yeah. I think it, it, the impact that I would expect is alignment, better alignment- Yeah ... with LP expectations, so, um, but that requires, um, some more visibility from the LP side, some more communication probably. Um, and I totally respect that, um, many LPs are not interested in this, uh, asset class.

Um, all good, but then the ones that are already investing, I think they could also learn from each other. I don't know how connected some of these LPs are, but I bet, uh, not all of them are connected. Yeah. Um, by the way, that's why we want to, uh, um, organize a GPLP, uh, event only for university venture capital funds because that layer is kind of missing to- Mm ... to have, um, a 100% relevant space. And, and I think it could be, uh, you know, it's a media channel or an event or both. Uh, these things, uh, strengthen each other. Mm-hmm.

Thierry Heles: Yeah, I think that would be, that would be a really good place for these people to come and, and tell their stories. Um, and yeah, why, why they have invested. And I, yeah, I think you're right. A lot of them will have very different reasons- Yeah ... why they've backed it. Sometimes it might be place-based. You wanna support your local ecosystem. Sometimes it will be purely financial. I know in the UK they've been trying to convince pension funds to invest more in venture capital. Hasn't really worked. They've changed the rules, and it hasn't really happened, partly because they aren't forcing pension funds to do it. So pension funds are like, "Well, I'm not being forced to put money into university venture funds." Pension funds are probably out of all the LPs the most conservative. I don't want them to gamble with my

Károly Szántó: pension. As, as they should be. That's just- Yeah,

Thierry Heles: yeah. They, they need to be conservative ... that's just respect They wanna invest in something where they go, "This will return X percent over the next 25 years." Whereas if you invest in a venture capital fund, there is a risk that the money will disappear. Hopefully it won't. Hopefully you will get the outsized return. But it is that 1 in 10. Sure. And if you, if you don't hit that 1 in 10, then the fund maybe just returns the cash to the investor. Maybe the investor loses out on some money, and yeah, that's not what pension funds want to do. Yeah. It's too much. Um- Too much risk It's too much risk ...

Károly Szántó: for them. Yeah. But, but then how, how would you explain the, the incredible difference in ratio of, uh, capital allocated by pension funds to, um, to venture capital funds between Europe and US? The, the, the percentage of assets under management by, um, pension funds in Europe, I don't remember the exact number, but 0.- It's very, very low ... 0.008. Whereas in, um, in the US it's like, I don't know, 2%.

Thijmen Meijer: Yeah.

Károly Szántó: It's a huge difference. So I don't think they are, uh, more risk-taking. There must be something else to it. I don't know.

Thierry Heles: That's a tough question, and I haven't, I haven't spoken to US pension funds. Mm. Um, it might be cultural. It might be because venture capital as an asset class is significantly... Well, maybe that, that's not right. It's not more mature in the US because it's also mature in Europe, but it's been around for significantly longer. 60, 70-ish years Silicon Valley has been around. And obviously it started very small. It's a really hard question why in the US they might-

Károly Szántó: kind of a rhetoric question also. Yeah. And I don't, I don't think anybody knows the exact, uh, answer to that. But, um, drawing from that, if we knew the answer, uh, would be, um, yeah, would maybe help, uh, for the Euro- European ecosystem. I'm pretty sure- Yeah ... some of, for example, EIF is, uh, nudging, uh, the, the big LPs in Europe- Yeah ... to co-invest along with, uh, with EIF. Um- But it's not really happening,

Thierry Heles: Is it not because in the US there is a more structured capital market? I mean, there's just one, right? And here in Europe it's a bit more fragmented on the capital markets side.

Károly Szántó: That could be one- Mm-hmm ... yeah, because i- in Europe, exactly like, like you also said, Thierry, that, uh, many of the LPs invest locally, like in, in, uh, like in France or in the UK or in Germany. That's what I mean locally. Um, and that's all good, and that's where Europe is a fragmented market, uh, is a disadvantage- Yeah from that perspective. It is still

Thierry Heles: incredibly hard to invest cross-border. It is.

Károly Szántó: It, uh, uh,

Thierry Heles: They talk about the single market, but it doesn't exist for venture capital. I mean, the pension funds, I know in Australia, Uniseed was sort of a really big venture capital fund that's been around for 25 years. Um, they convinced pension funds to invest by, I think, initially waiving fees, so the pension fund didn't have to pay fees. Um, so they got the pension fund investment, and the pension fund then got access to a portfolio where they could then funnel more investment into the- Mm-hmm ... the good startups, um, later on. And I had Peter Devine on my podcast a while ago who ran Uniseed for about 20 years.

And his argument was, if you wanna have pension funds invest in Europe, maybe that's where the government should step in, go, "We'll cover the management fees." Because then that could be several million on top of what the pension funds put in. Um, that could be the lever that you wanna, that you wanna pull. You go, "Well, you'll save 5 million if you invest however much." Um, and that can still be maybe instead of 0.01%, it could be 0.1%. That would already be- Yeah ... tenfold, um, increase. Would already be making a difference. Mm-hmm. Um, but then what government in Europe at the moment wants to... None. None. Yeah. Yeah. Um, it's... Yeah. I, I think pension funds are probably the, the toughest nut to crack. That might not be who you wanna go after.

Károly Szántó: Definitely they are the toughest, uh, one. You might

Thierry Heles: You might wanna go after the corporations, maybe institutional investors, maybe local governments. Yeah. It's a very typical, uh, like career ladder or, or horizontal moves, basically. Yeah. I don't think there's anything- Too weird going on. No. Um, you, the, you see the, as I said, maybe the, the, the sideways moves from people coming in with industry experience, um, or people who maybe have run a TTO then moving into the investment side- Mm-hmm um, or maybe moving into a spinout themselves, becoming spinout CEO or CTO. Mm. Um, that's probably the, the weirdest you see.

Um, and then as I mentioned, occasionally you get someone like the person at Oxford who's done the spinout and now is, is in charge of innovation. I don't think I've ever seen someone who maybe was a banker who then suddenly got put in charge of a TTO. Yeah. Like, the, their, the skill sets are too- Yeah. Indeed ... too different.

Thijmen Meijer: Yeah. So o- out of the box candidates would not survive here, would not work.

Thierry Heles: You want a certain skill set to run a fund or to run a TTO. That might be the industry expertise. That might be maybe you have the legal expertise. Maybe you, you were a patent lawyer. Um, I know for example at the, um, University of Alaska Fairbanks, the guy who runs the, um, the TTO was, came through it from a, from a legal background. Um, but again, it does kind of relevant to then what you're doing, and then you build a team around you that has the other skills, that maybe has the science- Yeah expertise.

Thijmen Meijer: Mm-hmm. But do you know any, um, any TTOs or, or UVCs that have any kind of talent strategy w- internally or any-

Thierry Heles: Often I think they do it through internships. So they have sometimes more or less structured internship programs. Sometimes they have master's students. Often it's kind of PhDs or, or post-docs. Partly I think it's interesting for the students because if you do a PhD or a post-doc these days, the odds are you will not become a professor. Academia is- Yeah ... yeah, th- there's limited career opportunities, um, just because universities are underfunded pretty much everywhere and- Mm-hmm yeah. So, so funneling them in to a tech transfer office is often quite an interesting way of using the expertise that the university has taught them for their PhD, for their post-doc. Mm-hmm.

Um, and then they often, especially if they are post-docs in, in labs that maybe have already commercialized something, they've kind of seen the process, um, whether they were actively involved in it or whether it was others.

Thijmen Meijer: And do you see any short- shortage of talent, like, throughout the, these 240, uh, funds as you mentioned? Job openings that have been open for X amount of time?

Thierry Heles: Yeah. If they are open for a long amount of time, it's often because- especially if it's TTOs, it's because they're not paying as much as maybe you would get if you were in business development in a corporate. Mm. And then often you get perks that maybe people earlier in their career enjoy, like you might get to travel a lot. Whereas if you work in a university tech transfer department, your travel is probably if they have a satellite campus Yeah ... that, that's then maybe you, you go to, like, a few relevant conferences, um, and the pay is just not... So if it's the money that you care about and if you are earlier in your career, you might because you might wanna build a nest egg, you might wanna have a family, you might not wanna have just finished your postdoc and then be on a $50,000 salary somewhere.

But then it also depends. In the US, you know, if you work for a university, you often get healthcare benefits- Mm-hmm ... that outweigh significantly what you might get somewhere else. Um, so yeah, that's the, the, the job openings that are there often just... I- it's often because they are, they're very low paid. Mm. Um, but then I often also see people that run tech transfer offices kind of commenting on, on job posts on, on LinkedIn going, "You're underpaying your staff." Mm. But it is a university and you can't- Yeah.

Károly Szántó: They also don't have the means to- They don't have the, the

Thierry Heles: means. But yeah, if you put out a job ad and you say, "I want someone with seven years experience, I'm paying $60,000," good luck with that. I think once you're in it, a lot of people just don't leave, and a lot of people when they retire, they still sort of stick around and they might run training courses and, and those kinds of things. Like, uh, people tend to wanna- Mm-hmm ... stick around and, and give back. Um, also because that is, it is a community. Like, universities sort of compete with each other, but if you're in tech transfer, it's a very collegial community- Mm ... because you're all trying to do the same thing- Mm um, and you don't really control what kind of technologies come through the door. Like, that's-- You have no impact on, on the research that's being done, um- Yeah ... short of contracted research that you might be- Yeah ... negotiating, um, the contracts for. And do you have any success story that, that one specific individual turned a fund, uh, you know, uh, from a bad performer to a g- a proper performer?

Let's look at uniseed in, in, uh, in Australia. For the first 13, 14, 15 years, they didn't really have a blockbuster exit. Like, they just... They also-- They got formed just before the dot com crash. Mm. And then they had to make it through the global financial crisis. Like, they d- they had a really bad first decade of just having to deal with things that were not their doing- Mm um, just the economic climate. Um, but i- initially, a lot of the, the funding that went to, to the startups, the startups then worked with the university labs, so they paid researchers, they paid PhD... They had PhDs. So the universities got a return on their investment outside the millions and millions in, in capital returns. Um, so it was an underperforming fund in, in capital terms for a long time, but the university still benefited because what they put back, what they put into the spin-outs, it fed back into their labs.

Um, it helped their researchers. It, it led to commercial relationships. So it was still, for the universities, enough of a success, um, which I think is, is, is why it was allowed, allowed to keep going- Mm because universities benefited. But it's really hard to kind of get funds to admit that they failed. I think that's true in venture capital in general. You don't really go out and go, "Oh, yeah, my return is .3X." No one would put that on LinkedIn or publicly admit it. You hear the blockbusters. Um, or if the fund maybe didn't go well, then it just sort of- Disappears ... quietly- Yeah ... disappears and, and you never hear anything again. Um, and they just, they don't raise another fund. Yeah. I mean, what's interesting is y- you do have the, the universities that have tried to run internal funds. Um, so uni- the University of Notre Dame, for example, in, in the US, they had an internal fund.

Very quickly, as you would realize, that you need a lot of back office capacity to do that. Um, and then they didn't do that again. They, they partnered with an external firm- Mm ... to, to manage the fund. Um, which I guess you could turn... They didn't turn around the first fund, but they kind of learned their lesson that maybe the model that they used initially wasn't a failure, but it just wasn't suited to, to university. Fair enough. Yeah. Um, and I think that's, that's the lesson for every university. Don't, don't, don't have a fund that's entirely internal. Have, have an external management team- Mm ... that knows that they, what they're doing. Yeah. And that sits slightly removed from the TTO. Maybe, you know, you can share an office with them. Um, but legally, I would argue that the university fund should be separate from- Mm. Yeah ... from the university. I agree. Um, yeah. If you disagree, you know, send me a message. I would like to hear from

Károly Szántó: you,

Thierry Heles: but,

Károly Szántó: um- Exactly.

Thierry Heles: Yeah. Um...

Károly Szántó: No, I mean, there are many different situations, different ecosystems, different-- even different university setups- Mm-hmm ... like, uh, in terms of ownership or, uh, KPIs of a certain university, like you said. And by the way, some of the investors, uh, on the market also I've seen working like that, like I invest, but then I will also provide some services for which you will-- you are going to pay. I mean, if the value is there and, and if it's not obligatory, uh, so by choice, uh, every startup or spin-off has to purchase, uh, services from the market in any case. So selling lab services, it's, uh, it's, uh, it's a more obvious thing than, uh- Yeah ... you know, other. So it, it makes sense. But all I'm saying is that there are many different forms, forms of, uh, structure between university and, um, and its investment vehicle. Yeah. So, um, it's hard to, hard to come up with a one-size-fits-all solution and probably-

Thierry Heles: I don't think you should ... we, we, we shouldn't. Yeah. Yeah.

Károly Szántó: Yeah, exactly.