Associate feature: Inspiring Scottish innovation
Douglas Martin was studying for a Masters of Science at the University of Edinburgh when he saw an opportunity to transform the fish farming industry using one of Scotland’s greatest assets – whisky.
What if the nutrient-rich water produced by whisky distilleries could be transformed into fish food?
Martin developed an omega-3-rich microalgae that feeds on the nitrates and phosphates in the by-product water from distilleries. In 2016, Martin took this idea to the university’s commercialisation service, Edinburgh Innovations (EI), who supported him in developing it into a business.
Out of Martin’s innovation, and thanks to EI’s support, MiAlgae was born. The company’s product is high in omega-3 and proteins, which aims to revolutionise the world’s £340bn animal feed industry.
In 2018, MiAlgae received £500,000 from investors – Equity Gap, the Scottish Investment Bank and the University of Edinburgh’s own venture fund, Old College Capital – which allowed Martin to expand the company’s team and build a pilot plant for its technology at a whisky distillery.
And then in December last year, the company completed a ‘series A’ investment round, receiving £1m from a consortium of investors, including the previous investors, as well as new investor, the Hillhouse Group.
EI chief executive officer Dr George Baxter tells Holyrood Martin’s journey began at one of EI’s student enterprise events at the university.
“We’ve got a team of eight people who work on student enterprise, and he came to one of the events and as part of that worked up this idea and he’s been really supported the whole way through by us,” Baxter says.
“Instead of taking the co-product water and just treating it somewhere and it costing the company lots of money, this is a valuable feedstock. That’s the business model, you have to negotiate the value between the people who’ve got the nutrients, your algae treatment, and then the fish farms who are looking to buy food stock for their fish.”
Today MiAlgae is still supported by EI, with one of the service’s advisers attending board meetings and catching up with Martin once a month to work on his growth plans.
In 2019, EI celebrated 50 years of commercial success, including supporting the first automated industrial robot and the first artificial vaccine for hepatitis B.
Since 1969, EI has helped students and staff launch more than 450 start-ups and spin-outs. In the most recent financial year (2018-19), EI formed 64 start-ups and 10 spin-out companies. A spin-out in this context is a company started by academics where the university owns a stake in it.
Part of EI’s impact comes through investment, and since August 2019, EI-supported spin-outs and start-ups have received investment amounting to £29.3m. Looking ahead, the University of Edinburgh’s commercialisation and knowledge transfer activities will contribute £118m to the Scottish economy in 2020, according to an economic impact tool produced for the university by BiGGAR Economics.
The service does not profit from students’ ideas, as the university does not own any of the shares or intellectual property in student start-ups.
As Baxter puts it: “We’re doing it because we want to help them form a company.
“We’ve taken a conscious decision that we don’t own the intellectual property for our students. We do it because we want the student experience to be excellent here and if students want to start up their own companies, then we’ve got a team here who can help them do that.”
But EI doesn’t just rally behind students’ bright ideas. Academics wanting to start a new company or collaborate with a business are also supported by the service.
“We’ll help them start the new company up, we’ll find them the money to start the company, to develop the product, we’ll find them people to work with, such as a chief executive or a chief technology officer,” Baxter explains.
“We’ll do market research for them and we’ll sort out all of the intellectual property.”
While an academic’s intellectual property is owned by the University of Edinburgh, Baxter says they’ve “got a very liberal regime in terms of commercialising that idea”.
“If you’re going to start a company, the academic would typically get the largest portion of the shares in that company, and we would take a relatively small amount, because the university pays the salaries and provides the equipment for academics,” he says.
EI works with academics to look at whether their idea is commercially viable, whether it needs a patent, how to find investment or partnerships, get the company set up and organise the licences.
“Technically it can be quite difficult, and we want the academics to focus on what they’re good at,” Baxter says. “If you’re a world-class chemist, do you really want to be sitting down with a lawyer for two days going through the minutiae of a licence agreement?”
One example of this is Invizius, a company stemming from years of research by Dr Andy Herbert and his team at the university’s School of Chemistry.
Invizius’ researchers believe they have found a way to reduce the risk of cardiovascular disease among patients undergoing long-term dialysis.
During dialysis, the procedure removes waste and excess fluid from the blood when the kidneys stop working, but in filtering out unwanted substances and fluids, a patient’s immune system can be compromised, resulting in inflammation and damage to the cardiovascular system.
Invizius has developed H-Guard, a coating which acts as an invisibility cloak for the dialysis filter, effectively hiding it from the immune system.
In October last year, the company raised a £2.75m investment from a consortium including Mercia Asset Management and the university’s Old College Capital investment fund, managed by EI.
Baxter says that while the technology is “incredibly complex” and involves a lot of testing to get it to market, “the prize is, if you can change this for the millions of people around the world who are on kidney dialysis… you could revolutionise the survival rate for that as well.
“We want this technology to get out into the world and do good. If we make money, we can reinvest and do more of this good stuff, which will generate social value.”
An important part of EI’s work is bringing commercial partners and academic experts together to innovate through collaborative research, which includes EI helping to source funding for major projects. EI has recently helped develop partnerships with businesses including the engineering giant Babcock International, biotech firm Fujifilm Diosynth Biotechnologies and healthcare imaging specialist Canon Medical Research Europe. And the collaborations are not just in the medical, science and engineering fields. With EI’s help, the university recently signed an agreement with UNICEF to provide research.
“If we’ve got an academic who’s got an interesting research area and there’s a company that’s got a similar interest, then we’ll match up the academic with the company so they can work together on a common problem,” Baxter says.
When he was offered the top job at EI in 2016, Baxter says he saw “a huge opportunity”.
“I was really interested in the opportunity to say, wait a minute, if we’re fourth in the country on research, there’s an opportunity for someone to make a big difference, with the right resources and the right approach, to bring more of that research to have an economic impact,” he says.
Baxter says he would like to see EI producing hundreds of student start-ups per year.
“We’ve doubled the amount of venture capital that we’ve brought in over the last three years into our start-ups. We’ve gone from about 50 start-ups a year and this year we’re hoping to break 100. We’ll probably do 120.
“We’re absolutely going to keep growing. I don’t see any reason why we can’t do 200 start-ups. We’ve gone from about 60 to 100 staff in the last three years.”
However, when it comes to spin-outs, Baxter says: “It’s really important you focus on the ones that are quality.
“We don’t have any particular target for spin-outs,” he says. “Some people say, ‘why don’t we do 20 spin-outs a year?’ I’d rather do three really high-quality spin-outs, than do six that were going to die within a year or two, because it takes a lot of time and effort to do a spin-out company.
“Our track record on that’s excellent: 85 per cent of our spin-outs are still operating from the last ten years.”
On top of the work EI does for staff and students, it has an important role in the £1.3bn Edinburgh and South East Scotland City Region Deal.
The university is playing a central role in making the region the ‘data capital of Europe’, including leading efforts to launch an additional 400 data-centric companies over the deal’s 15-year span.
“The city deal takes us into a completely different sphere, where we’re leading on an activity which is of a scale that can affect the whole country’s economy,” Baxter explains.
“The investment from the government is to set up a number of new innovation institutes and support infrastructure and a programme of work over a 10 to 15-year period.”
He says examples of the university’s “data-driven innovation” work include the creation of the Usher Institute, which was set up in 2015 to “strive for and work towards the data-enabled transformation of health”.
Another is the Bayes Centre, the university’s hub for data science and artificial intelligence, which was opened in October 2018 and Baxter says is now home to “600 people” bringing together “world-leading academic excellence” from mathematical, computational, engineering and natural sciences.
Baxter also notes the Edinburgh Futures Institute (EFI), under construction at the old Royal Infirmary Hospital site at Lauriston, which will “tackle the world’s big social and environmental problems using data-driven innovation”.
“It’s all about what the challenges are, such as global warming, modern slavery, how can data-driven innovation tackle all of those as well?”
EI is always on the lookout for more industrial partners and Baxter encourages those interested.
“If you’ve got a problem or an issue or something that interests you, we’ll find the best person within the university to go and talk to,” he says.
“Our job is to make it easy for you to find the right person at the university and make it easy for you to work with them, so that everybody wins.”