University of Melbourne sets up new $115m commercialisation funds

The University of Melbourne is setting up a unique investment pathway to take promising research from a business concept to full commercialisation.

University of Melbourne vice-chancellor Duncan Maskell. Picture: Mark Stewart

The University of Melbourne has launched two investment funds that will pump at least $115m into research commercialisation over the next decade.

Vice-chancellor Duncan Maskell said the new funds would make his university stand apart as the only one in Australia with its own funding platforms to take research commercialisation ideas from proof of concept to start-up company and eventually an initial public offering.

He said the new funds would give “full support to our academics to translate their research into commercial outcomes”.

The two funds will build on the University of Melbourne’s existing $10m proof of concept scheme, which helps academics to determine the commercial ­potential of their research.

Once commercial possibilities have been identified, the new $15m Genesis Pre-Seed Fund will support researchers to establish investment-ready, start-up companies, offering them advice and mentoring, and assisting them through the so-called “valley of death”, where new companies often fail because commercial ­investors are not willing to take the risk.

After that, the new $100m Tin Alley Ventures Fund will kick in with larger follow-up investment to companies that have successfully come through the Genesis fund.

The Genesis fund will operate with $7.5m invested by the ­university and $7.5m from Breakthrough Victoria, a unit of the state government.

The Tin Alley Ventures Fund is a joint venture between the University of Melbourne and Tanarra Capital, with each putting $25m into the fund and with the other $50m to be raised from external investors.

Tanarra Capital founder and CEO John Wylie said he was excited about the new fund because of the potential of the people in the university. “This is about lighting the match and making it really come to life,” he said.

Professor Maskell said while the goal was to initially raise $100m for the Tin Alley Ventures Fund, it could go to $200m ­“depending on demand”.

“Tanarra’s job from here on in, and to some extent our job, is to ensure that we land the rest of the fund,” he said.

Professor Maskell said other universities around the world – including Oxford, Auckland, and Cambridge, his former university – had established similar venture funds.

“What we’ve got to do now is mould all of that into something that will work in Melbourne and will work in Australia,” he said.

Professor Maskell said the university would receive a proportion of both the profit, and the management fees, of the Tin Alley Ventures Fund, which would fund research, early stage commercialisation and social ­enterprises.

While investment from the funds is open initially to researchers at the University of Melbourne and its affiliated institutions, it would later be open to students and alumni of the university, Professor Maskell said.

Up to one-fifth of the Genesis Fund will be able to be invested in social purpose ventures, which Professor Maskell hopes will ­develop into successful not-for-profit companies to fulfil the university’s social purpose.

The Genesis Fund is expected to make 10-12 investments of ­between $200,000 and $300,000 into start-up companies each year, with any one company receiving a maximum of $500,000.

Funding accelerates for companies backed by the Tin Alley Ventures Fund. Companies would receive investments of at least $500,000 a year, and up to several million dollars a year for the best prospects.