Look with an investor's eye

Anticipating the queries from potential commericial backers will make it easier to clinch the private support needed to exploit research, reports Alison Goddard

Researchers seeking commercial funding for their work need to know how investors put a value on technology, a consultant told a conference heard last week.

"All cutting-edge technology is high risk, and investors must be able to manage that risk. There are many different evaluation methods and many different characteristics of university research, each of which must be covered," said Christi Mitchell of Highbury Consultants in Hitchin, Hertfordshire. She was speaking at the third European biotechnology symposium in Glasgow.

As part of the assessment, would-be investors will conduct market research and examine a product's potential financial return. But they will also consider some characteristics that are specific to university technology.

For example, it can be difficult to keep university research confidential. Investors will check to see if it has been kept quiet. "Seek advice before publishing because in some cases, if the work is published, the invention is lost," Ms Mitchell said.

Technology transfer offices within universities, companies such as BTG and consultants can all help in assessing a researcher's position. "Make sure that your PhD students have signed confidentiality agreements," she added. Potential investors who are visiting a university should also be asked to sign.

Early publicity for a discovery can put investors off, Ms Mitchell pointed out. If investors have read reports of the technology before it is ready, they are less interested when the time comes to invest. "I have seen a number of inventions falter due to this," Ms Mitchell warned.

University technology is embryonic and researchers have not necessarily filed a patent. If a patent has been filed, an investor will want to examine it. "The patent strength should be evaluated in terms of what the competition can do, "Ms Mitchell said. "For example, can they quickly discover how the invention functions or can they simply replicate the product or process? Will it be possible to police the invention, and could a competitor avoid the patents to create the same product via a different method?" Investors will also want to see a prototype in action. They will consider what it will cost create a working model to demonstrate to a potential licensee that scale up will be possible, Ms Mitchell said.

Because university technology can often be locked in "know-how", an investor will seek reassurance that it can be transferred to a potential licensee.

"There are usually special tweaks to processes that make them special," Ms Mitchell said. She cited the example of a brace developed by researchers that enables children with cerebral palsy to walk, often for the first time. Although it had been patented, the document did not state how to fit the brace. The researchers had to visit and spend time with the company holding the product licence to show its people how to fit the brace.

Other problems can arise if researchers have unrealistic expectations about the commercialisation of their work.

"Over-valuing can be a problem, but it is not just that," Ms Mitchell said. "Inventors can expect the process to happen very quickly. If the inventor or the university has unrealistic expectations, it can be impossible."

Determining and managing the risk associated with investment in university research is essential to investors, Ms Mitchell concluded. "There is superb technology within universities but assessing it is difficult."