Spinning Gold from Good Ideas

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Then there's London-based IP Group, which has formed 42 portfolio companies from university partnerships—seven of which have listed on the Alternative Investment Market. One promising example: Proximagen, a startup developing drugs to combat Parkinson's disease.

The British government also has gotten into the act. In 2001, it set up a private company called Qinetiq whose job is to bring defense-related technologies—some of them formerly classified—from the Ministry of Defense to the marketplace. The MoD's legendary research labs helped invent such breakthroughs as liquid-crystal displays, thermal imaging, and carbon fiber. Publicly listed Qinetiq pulled in $150 million in pretax profits last year, on revenues of $1.97 billion, and the company is jointly funding Britain's first "tech transfer professorship" in the physical sciences.

The rest of Europe is finally starting to catch on. Ten years ago, the very thought of partnering with industry would have been anathema in countries such as France. But now, laws to facilitate the commercialization of technology transfer have begun to change—and just as important, so have attitudes, says Antoine Papiernik, managing partner at Paris-based venture capital fund Sofinnova Partners. Likewise, in countries such as Italy and Spain, networks of technology transfer offices are working together to promote commercialization.

BRITISH ADVANTAGE.

Countries that continue dragging their heels may be forced to change. With budgets under pressure, many European governments are trimming funding for academic research, forcing universities to look elsewhere for financial support. "If policies don't adapt…research will fall by the wayside, which is why universities need to become more commercially minded," said Mark Schneider, network manager of Proton Europe, an organization that promotes technology transfer and helps tech transfer offices work more effectively.

For academic and government technologies to reach their ultimate potential, inventors and early-stage private investors also need ready access to public markets. That's another advantage Britain currently enjoys. Industry watchers say the Alternative Investment Market, which allows smaller companies to gain access to capital markets without strict shareholder's equity requirements, has given the country's universities a head start in cashing in on scientific research.

UP AND COMING.

Investors in academic research looking for a quick buck may have to learn the fine art of patience, however. Private-equity groups typically expect to see investment returns in four to five years, whereas at universities it can take twice as long to bring an idea to market. "Companies are easy to set up, easy to fund and grow, but not to succeed," said Neil Rimer, general partner and co-founder of Geneva-based Index Ventures, which seeded Innovative Silicon, a semiconductor venture that came out of Lausanne, Switzerland's Ecole Polytechnique.

Tech transfer is catching on in Europe. Britain has got a head start—but the rest of the Continent is starting to sing from the same songbook.

Norton is a BusinessWeek.com correspondent in London.