In what are known as industrialised – or maybe developed – countries, a typical government industry plan is built around being a technology leader, designing new products. These might then possibly be manufactured in lower cost areas, but are pulled together and applied from a home-based technology centre. To achieve this, the university and similar research centres are encouraged to develop specific industry expertise and training, plus also to spawn spin-off companies.
Job creation and skills development
The objective is to create higher value jobs from the technology, and to develop the skills of the workforce. In the UK, government support is handled by “Innovate UK”, and its “Knowledge Technology Partnerships”, which bring together university and industry in partially government financed projects of interest. In major technology areas, like cybersecurity or renewable energy, the government invests in facilities known as “Catapults”, which are supposed to accelerate ideas through testing into use. For example the Offshore Renewable Energy Catapult has a base in Northumberland, where there is a wind and offshore test centre, and there are various other tide and wave power test centres around the coast.
More mature technologies have already developed their own university/industry links. As research projects often need to be derived from an industrial problem, and need test sites, equipment needs creating, and model shops and spin-off prototype production companies are created. Eventually the university, or one of its staff, form a start-up company, and maybe this develops further, hopefully creating jobs locally, and then even attracting a venture capitalist or similar. In Norway, this system has become well structured. The whole country revolves around the extraction and processing of oil and gas from offshore fields. The universities are well linked into the industry, and have separate “Nurseries” for funded R&D projects, where university staff help develop these ideas into products. Promising ones are financed through the university until they are taken on by a venture capital group, who develop the business and then sell it on a few years later.
Theory in practice
There are some good examples: Gas Secure AS, formed out of a research idea at a Norwegian university, developed a battery-powered wireless-linked flammable gas detector for use on offshore platforms, as a university spin-out company. It then, with a funding investment from a Norwegian venture capital (VC) group specialising in start-ups, spent several years perfecting it on trials with Statoil and other North Sea installations. After gaining world-wide approval, and interest, the VC and the management – who still retained some shares – sold the business to Dräger of Germany for a total of around US$50 million, with a commitment to retain the research centre base in Norway.
Not necessarily based on university start-ups, two recent GE acquisitions are still relevant. In November this year, GE Oil & Gas bought Advantec of Norway, a specialist in subsea intervention equipment – i.e. equipment to service the valves and pipelines and other subsea installations offshore. Established in 2005, the company grew from 20 to 370 employees, and had Norvestor, a private equity fund, involved as an investor from 2010. GE wants to add its services and expertise to the worldwide offering, and will be supporting all future development. GE also recently acquired one of the UK pioneers in the use of composites for wind turbine blades, Blade Dynamics, formed in 2007 and financed from 2010 by Dow Chemicals’ venture capital arm (from the USA). In 2013 it also gained GBP15 million in grants and investment from the Energy Technologies Institute, a UK public-private partnership backed by Shell, BP, Rolls Royce and Innovate UK. Blade Dynamics has been involved with the Offshore Renewable Energy Catapult for testing the turbine blade, developed with help from European and UK government funding.
The UK approach to university research is to encourage students from overseas, hopefully developing links to the UK, which will produce future benefits after they return home – or maybe they will stay and contribute to the UK economy directly. Two Chinese students, who did research on tuneable diode laser absorption spectroscopy (TDLAS) to create process gas analysers at Stanford and UC Berkeley in the USA, went home to Hangzhou and found backing for their start-up Chinese technology company back in 2002. The company was Focused Photonics Inc, and developed various optical analyser products: now it has over 3000 staff. FPi is acknowledged as a world leader and innovator in this field, and has installed over 8000 TDLAS analysers worldwide. FPi is doing just what the Chinese government wants, and what governments in the Western, developed world are trying to achieve, it is upgrading the base technology in China, creating high value skilled jobs, and exporting high technology equipment.
Pulling it all together
What’s the message? Researchers, and universities, need to attract the interest of start-up technology investors, and even provide some seed funding or facilities to start the process. Then a plan, or ability to involve venture capitalists is needed, to pay back the university or start-up investor. Then the VC exit route will be to sell out after some years to an acquisitive large company. This is when, hopefully, the inventor and company managers make some profit!
Nick Denbow spent 30 years as a UK-based process instrumentation marketing manager, and then changed sides – becoming a freelance editor and starting Processingtalk.com. Avoiding retirement, he published the INSIDER automation newsletter for five years, www.iainsider.com, and now acts as its EMEA editorial correspondent. His blog is on www.nickdenbow.com
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