EP08 - Building the Missing Infrastructure for University Venture Capital
Universities produce some of the most important discoveries in modern society. Breakthroughs in medicine, engineering, and deep technology often begin in academic laboratories. Yet the pathway from discovery to venture scale remains fragile.
The issue is not talent. It is a system design.
In a recent discussion about the structure of university venture capital ecosystems, I was reminded how fragmented this space still is. Many universities have built strong research capabilities and established technology transfer offices to help commercialize intellectual property. Yet only a small minority operate venture capital vehicles capable of scaling those innovations.
The result is a structural bottleneck.
Across Europe, there are well over a thousand technology transfer offices. The number of university venture capital firms is only a fraction of that. Even more striking is the absence of structured data exchange between them. Institutions often operate in isolation, developing investment processes independently despite facing identical challenges.
From a systems perspective, this fragmentation slows learning.
Technology transfer offices play a critical role in the earliest phase of commercialization. They are often the first step in transforming academic research into viable spinout companies. They help researchers structure early ventures and manage the complex process of transferring intellectual property from the university into a startup.
This is where the journey begins.
The next stage requires a different mechanism. Building globally competitive ventures requires access to venture capital.
Venture capital operates under different incentives. Investors must evaluate risk, allocate capital, and drive growth on behalf of limited partners. Academic institutions, on the other hand, focus on knowledge creation and long research cycles.
When these two systems interact without clear alignment, friction appears..
This friction becomes visible in cap table structures and licensing agreements. In some cases, universities retain large equity positions in spinout companies or impose heavy royalty obligations. From the perspective of venture investors, these arrangements create significant governance and incentive risks.
As a result, many investors simply avoid these opportunities.
The reality is that Europe possesses enormous scientific potential. A handful of institutions, such as Oxford, Cambridge, ETH Zurich, EPFL, and the Technical University of Munich, have demonstrated that university ecosystems can consistently produce high-quality ventures. Their experience shows that the model works when the structures are aligned.
The challenge is scale at a pan-European level.
If best practices from these institutions were systematically shared across the broader ecosystem, the impact could be substantial. Universities without venture capital capabilities could learn how to structure funds, attract experienced investors, and design founder-friendly ownership frameworks.
The effect would extend far beyond venture returns.
University spinouts create jobs, attract global capital, and translate public research into societal impact. Strengthening the infrastructure that supports them would enhance both their capacity for innovation and their economic competitiveness.
In many ways, the opportunity is not technological but organizational.
The next frontier of university innovation may not lie inside laboratories. It may lie in building collaborative systems that allow ideas to travel from research to market with less friction.
The discoveries already exist.
The ecosystem around them is what needs to evolve.
Timecode:
00:00 Origin Story
00:52 Outreach Findings
01:58 TTO vs University VC
02:49 Need for Platform
04:03 Venture Studio Model
05:07 Ecosystem Upside
06:34 Europe Stats Gap
08:38 Culture Clash
11:04 Bad Deal Terms
11:33 Market Friendly Fix
14:55 Closing Thoughts
Links:
Karoly Szanto LinkedIn: https://www.linkedin.com/in/karolyszanto1/
Karoly Szanto Personal Website: https://www.karolyszanto.com/
UniPrisma: https://uniprisma.com/
Guests:
Thijmen Meijer: https://www.thijmenmeijer.com/
Transcript:
[00:00:00] Thijmen: So Karoly, how did you find out about, this
[00:00:03] Thijmen: opportunity in the university venture capital, world basically?
[00:00:07] Karoly: Through my work, um, I started, uh, to build up the first, university Venture capital fund in Hungary and in the region together with, OUVC at the University of Abha, naturally I was curious about the sector.
[00:00:25] Karoly: So I thought, I want to learn best practices. I want to learn, research statistics. Templates, playbooks. So I was doing my research and reached out to many universities, and to my surprise, I found, no formal community or data exchange platform within the university venture capital segment. this is how it started.
[00:00:52] Thijmen: Uh,
[00:00:52] Thijmen: to which universities did you reach out to?
[00:00:55] Karoly: first I reached out to, I think it was Oxford, but then, to many of the, UK universities and then later to US universities. And what I have found is that they, some of them have, strong partnerships with each other, maybe two or five of them, but they, they're like a little bit isolated from the rest of the community.
[00:01:21] Karoly: The rest of The Players. and then I discovered that there are so many universities that already have, a tech transfer office, but they do not yet have a venture capital firm. However, they are aiming into that direction. They're seriously considering launching their own VC firm, and that's, that's like in the thousands.
[00:01:48] Karoly: So many universities are like that. And they also lack, best practices. So they are also naturally turning towards, the successful players to learn.
[00:01:58] Thijmen: And what we, what would you say is the difference between a tech transfer office like a TTO and a university vc?
[00:02:06] Karoly: So from where I see it, a tech transfer office.
[00:02:12] Karoly: Enables, a university research and the researcher team, to commercialize their research in the very early stages. most of these, tech transfer offices, they have some budget to support, to invest, very small ticket sizes just to create the basic structure. And also take care of the IP transaction, which is always a pain point, so that the IP from the university somehow becomes The
[00:02:45] Karoly: IP of the startup.
[00:02:47] Karoly: The spinoff.
[00:02:48] Thijmen: Yeah. And how, because we found out that we, there's about 1200 TTOs in, in Europe and about a hundred plus 120 European, university venture capital firms. And, we found out basically that, there's no structured, organization or structured, data platform, on the market, that basically unites these university venture capital, firms. do you see that as an opportunity?
[00:03:15] Karoly: So there are communities around the tech transfer offices. like we mentioned earlier, there are some micro communities, fragmented communities in the university, venture capital, whereas there is no united platform. So communities one thing, which is I think the heart and soul of uh, anything. but then data exchange should be, structured. through process, and there is no such thing. By data exchange, we mean, structured and relevant data to be shared and then to have access to by the members of this community. And as an example. the best way maybe to explain it, that in the last two or three years, the Venture Studio segment. Experienced, a boom, a revolution in that sense.
[00:04:14] Karoly: mainly thanks to Max Poog, and his team and his initiative. and what he did is basically he, did an outreach, a research gathering data from all the ventures to the OC could find globally, structure the data, publish the data. Formed the community and created a platform for further learnings and data exchange and facilitating connections.
[00:04:41] Karoly: I think that's good.good. direction. I'm not saying it's a hundred percent applicable, but we can learn from that initiative as opposed to the Venture Studio community, there is no such or similar. tool, community solution in the university venture capital segment. And second part of your question was, about the opportunity.
[00:05:07] Karoly: So, now we can dig a little bit more into the statistics. What everybody knows even with that data is that there are some very successful universities successful in terms of number and quality of spinoffs. the amount and number of, venture capital attracted as investment into their spinoffs and number of exits and so on.
[00:05:35] Karoly: There are really successful ones. Oxford is one example. Cambridge another one, MIT, Stanford in the US and so on. so what if the whole European or global, um,university venture capital segment could step up one or two levels, learn from the good ones. that would make a huge impact on, the European economy as well as investments. so there is, a, huge opportunity that the whole ecosystem is missing out on.
[00:06:18] Thijmen: Yeah. And especially in Europe, we we have a lot of deep tech, innovations and researchers, which is perfectly aligned basically With what we are aiming for. and you, you said about the universities that are, top performers basically.
[00:06:31] Thijmen: like Oxford, also Switzerland, there's one in Germany. did you know that actually in Europe there's only four, university spinoffs, that are unicorns in comparison with the 160 already existing, but there's only four companies.
[00:06:45] Karoly: That's the missed opportunity.
[00:06:47] Thijmen: Yeah.
[00:06:47] Karoly: Yes. And another, another eye opening statistic is, 78% of the European University spinoffs never receive, Investment from a market, venture capital. So not from university, but from out, from the market. that's a missed opportunity for the venture capital players.
[00:07:10] Karoly: It's not that they don't want to invest, but there is, there is a bottleneck in the system. Why, why they cannot invest. And we can talk about that later.
[00:07:19] Thijmen: Mm.
[00:07:20] Thijmen: another, data point on the, size of the missed opportunity is the finding, about top 10 European University producing 33% of the spinoffs. Is that right? And, the median university produces. 0.08%.
[00:07:40] Thijmen: Indeed, that's a gap of 400, times. Yeah,
[00:07:44] Karoly: that's a huge missed opportunity.
[00:07:46] Karoly: And I mean, if you look at it from a macro perspective, it's not only about venture capital is the whole economy. It's, creating jobs,you know, innovating, putting actually Europe in a better position globally, strictly speaking from a university perspective, and from a venture capital, it's just, almost unimaginable huge gap.
[00:08:10] Karoly: that is, that the point is that it's possible to bridge this gap because some universities are doing a great job.
[00:08:18] Thijmen: Yeah. And for us it's the job to put the best practice in. also for universities that don't have a. Venture capital firm at the moment.
[00:08:26] Karoly: Exactly.
[00:08:27] Thijmen: How do you see a lot of opportunity here, for universities that do not have, a venture capital firm, but would like to open one?
[00:08:36] Karoly: Yes. I mean, I think the, let, let's take one step back and just look at this, these two. Very different word, how they clash and meet. it's a clash of cultures as well, venture capital and the academia. So universities have basically two activities or two missions. One is, education, the other is research.
[00:09:08] Karoly: And venture capital is all about, making returns on investments.
[00:09:13] Karoly: and growth for their LPs. So, very different KPIs, very different culture and approach. And oftentimes, when a university is about to launch venture capital fund or even a tech transfer office, the bottleneck is the culture.
[00:09:32] Karoly: And then it's a systematic error at the end because, Academic people usually, and I'm, I know it's bad to generalize, but that's, that's what we see, that it's a different profession to build up a venture capital firm than to be a good researchers. However, there are many great examples, which are exceptions.
[00:09:59] Karoly: There are good researchers who have done outstanding. businesses and investments and so on and attracted lots of venture capital. So it's also possible, but it's not, not your average, spinoff. So,on the other hand, venture capital knows almost nothing about how academia works. I mean, do they need to know?
[00:10:25] Karoly: But there is certainly a gap between the two words. So it's one thing to set up a venture capital firm, but it's another, thing to attract the right talent to run that firm. And those people, most of those people shouldn't come from academia. They should come from venture capital or entrepreneurship.
[00:10:51] Karoly: that kind of a background
[00:10:53] Thijmen: you were mentioning, that there is a gap between the academics and also the VC funds. we have seen quite a lot already on the market, right? how it should not be working. things like, 30%, equity share for the universities, but also, in royalties as well.
[00:11:10] Thijmen: So, 30% of the revenue in royalties. Um, as, as you are coming from, a venture capital world, how do you look at this, from your professional point of view? would you invest in a company that is partially owned by a university and also, is contractually obliged to.
[00:11:29] Thijmen: pay royalties, 30% of it's revenue, in perpetuity.
[00:11:33] Karoly: Yeah, it's a great question and it goes right into the heart of the problem, which is I think that universities, some universities, end up acting as investors and when you act as investor or owner. And then naturally you, you are looking for some ownership in the spinoff and, because of your contribution, but that's really not compliant with the market.
[00:12:08] Karoly: So most of the venture capital firms, when they look at a university spinoff and they're cap, their equity shares structure, and they see that university holds 10, 20, 30% ownership. They don't even touch that opportunity. It's not, not even a due diligence, nothing. Why? Because now as a vc, now I have a, a founder or a co-owner in the company who works in a very, very different way and what way?
[00:12:45] Karoly: Bureaucratic, slow, and has absolutely different incentives. So building a successful startup is very, very difficult. No matter what. Why make it more difficult? So venture capital is all about assessing and mitigating risk, and that ownership structure is like the biggest red flag it's a no go. So first off, and it also, goes hand in hand with the.
[00:13:17] Karoly: IP strategy of the university. So that's why,if and when universities are brave enough to launch their own venture capital fund, that is already a very good direction because that arm of the university is a structured way to actually invest in spinoffs. Yes, a university venture capital can and should hold ownership.
[00:13:46] Karoly: in a spinoff, but not the university and how to handle this situation before a university has its own venture capital fund. And I think the best way, and we just, seen it recently in Hungary in a university that the university was, I think, smart enough to say. I don't want to hold any ownership in the spinoff. I only ask for a royalty fee of, I think it was only 3%, and that is only when the startup is making revenue or profit, which means is a shared risk and that's the way it should be. It's a shared risk. So. We are all pushing that one spinoff to make it successful because when that happens, then we can all go and harvest. That's the only way, and that's the only compliant way probably with venture capital as well.
[00:14:55] Thijmen: Yeah, and that's probably also the reason why only 78% of the university spinoffs, get, funding from a professional VC afterwards. so there's just a huge gap there.