Spin-off numbers inflated

Universities significantly overestimate the number of spin-off companies they generate, according to what is claimed to be the most comprehensive and objective survey of enterprise activity in higher education.

The survey, which amounts to an overview of university innovation activity, was carried out by Library House, a Cambridge-based company, on behalf of an undisclosed client.

University technology-transfer offices this week distanced themselves from the survey amid speculation that the Treasury may have commissioned it to inform funding policy for third-stream activities - Jthose outside institutions' traditional teaching and research. The Treasury said it was unable to confirm whether it was the client.

Doug Richard, founder of Library House, said that universities' technology-transfer offices overestimated the number of spin-off companies they had created by almost 50 per cent.

He said this could be the result of institutions counting a range of different operations - such as academics' own consultancy companies - as university spin-offs even when, technically, they are not.

But he said that innovation was about more than spin-offs.

Mr Richard said: "The prime measure of success is spin-off companies, when in fact universities play a role in many, many innovation companies. Yet all people talk about is spin-offs.

"Graduates with great new ideas for companies are entering the marketplace.

We have to have great research institutions to create great innovation companies. But they don't all have to be spin-offs from universities."

Library House supplies research and data on innovation companies to clients from the investment community, large companies that are looking to buy in ideas and various government organisations.

The company initially compiled the data to help investors interested in the higher education sector, but it said that it had now been commissioned to analyse the findings and to try to reveal the true picture. Library House would not reveal the identity of its client.

But clearly the client, whoever it is, appears to be dissatisfied with the higher education community's efforts to measure technology transfer.

This is done through the funding council's Higher Education Business and Community Interaction survey and the Nottingham Business School Commercialisation survey.

Both surveys are estimated to cost each institution several thousand pounds to complete, and technology-transfer offices tend to reuse data whenever they can to save time.

The implication is that the Government wants an independent view on whether its third-stream policies are working.

Philip Graham, executive director of the Association for University Research and Industry Links, speculated that the Treasury could be behind the survey.

"The funding council and the Office of Science and Technology work together on the HEBCI survey, so it can't be them. The Treasury, as we all know, does its own thing. It doesn't trust anybody."

He added that the sector would be furious if this sort of data gathering influenced government policy because it could destroy the anonymity the two sector surveys preserve and push vice-chancellors to set targets for technology-transfer offices.

There has been continuing controversy over whether UK universities produce enough spin-off companies and whether they should do more licensing deals.

All eyes are on the Government to see how it will measure the success of third-stream activity - and then distribute funds.

A consultation on the Higher Education Innovation Fund III, which will be worth £238 million, is likely to be issued at the end of this month, coinciding with the results of the Library House analysis.

Library House's data were compiled from business database sources. The company then interviewed the top 40 universities by research income and compared the figures.

caroline.davis@thes.co.uk

HOW UK UNIVERSITIES EXPLOIT INNOVATION

• There are 431 spin-off companies. They account for a tiny proportion of the estimated tens of thousands of UK innovation-based companies.
  
• Creation peaked in 2001 with 89 new companies. The number fell to just 30 in 2003
  
• About two thirds of spin-offs are small companies set up by younger academics and professors.
  
• Many spin-offs struggle for funding. They often finance their technology development by charging fees for services in the hope of eventually finding an investor.
  
• A fifth of companies are consultancies. Such companies tend to remain small, rarely growing beyond the founding academic and one or two helpers.
  
• A tenth of spin-offs are big hitters, often founded by world-class academics whose reputations are enough to convince investors that their technology is capable of attracting tens of millions of pounds in funding.
  
• 46 per cent of spin-off companies are in the life sciences.
  
• 39 per cent of spin-offs are information and communications technologies.
  
• Only a quarter of spin-off companies are profitable.