A New Zealand research commercialiser says the new-idea business is all about experience, contacts and patent defence.
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Entrepreneur: Dr John Kernohan, founding Chief Executive Officer
Company: Auckland Uniservices Limited
Business type: Research contracting and commercialisation of intellectual property
Founded: 1988
Turnover: $NZ10M - $NZ50M
Head office: Auckland, New Zealand
Contact details: +64 9 3737 522
The Auckland Uniservices Story
Since 1996, Auckland Uniservices has created ten businesses with a combined shareholder value of over $NZ1 billion. Each business has been based on opportunities in health research and biotechnology that Auckland Uniservices has evaluated, patented, developed and financed in its mission to enhance the research program of the University of Auckland.
In 2000, of the University of Auckland's $NZ75M in research funds, just under 50% came from commercial contracts developed by Uniservices, according to the company’s CEO, Dr John Kernohan. “It’s about picking winners,” says Kernohan. “We have been very successful in that respect. Our procedure is to quickly evaluate intellectual property opportunities that come to us and then make decisions.
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Key learning points:
- Opportunity evaluation - Evaluate intellectual property opportunities carefully and systematically from human - personal relationship - business and financing angles.
- Patent protection - Protect each intellectual property selected for development with several patents. Be prepared to mount and defend legal actions to preserve your patents.
- Relationship finance - Develop and maintain long-term relationships with actual and potential investors.
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“It’s very difficult to decide what to protect and what to let go. The first question we ask ourselves is ‘how can we work with this inventor?’ And then we ask ‘is this a global business opportunity?’ and ‘is it a significant improvement over what is already in existence?’. Then we ask ‘do we have the right contacts to do anything about this?’ and ‘is it something we know what to do with - do we think we have got a chance?’. There is no doubt that our success has been due to the contacts that we have, to the networks and the other people in the global marketplace that we are plugged into.”
To protect its intellectual property, Uniservices files 12-20 new patent applications each year in their main market countries including New Zealand, USA, France, Australia, UK and Japan. Kernohan says: “It’s always better to have several patents (per property) to stop competitors. A competitor will always have a go if there is just one patent. They will take you to court or they will just infringe and you can sue them. But it does start to get expensive. You spend your $NZ100,000 per patent but that just gives you a licence to litigate. After that, (competitors) will have a go if the technology is valuable.”
Uniservices holds a patent estate of over ninety-two families - groups of related patents - about two-thirds in biotechnology and invests itself in the technology.
Kernohan says: “If somebody comes to us with what we think is a good application, we will invest in further research or in building a prototype to add value. We might put in a couple of hundred thousand dollars to take it to the proof-of-concept stage. If we have a family of patents and we think there is an opportunity for a global business, we will look at forming a start-up company, otherwise it will be a licensing proposition.”
To fund Uniservices’ research and development projects, Kernohan spends a lot of time developing and maintaining relationships with venture capital institutions, corporate investors and ‘business angels’ – high net worth individual investors.
Kernohan sees raising finance as no different to selling something in a market. “If you want to bring a new customer in,” he says, “you have got to find out what they want, who is the most likely person that’s going to have a good relationship with you and who is a decision-maker.”
Kernohan attends two major overseas investment partner conferences each year - J.P. Morgan Conference in San Francisco each January and the BioPartnering Europe Conference in London each October - at which he meets with many of institutional investors and venture capitalists. He says: “It’s just a case of developing contacts, but you don’t do any good if you don’t have the contacts. You meet people at every opportunity and you keep in touch with them, talk a lot, and send them business plans. Even if they are not interested, keep them informed and up-to-date. I think it is axiomatic in our industry that if you don’t know somebody, you cannot do a good deal with them.”