This is a podcast transcript. Listen to the episode here.
Thierry: Welcome to both of you.
Sebastiaan: Thanks.
Thierry: Sebastiaan, I might start with you. Wageningen is an unusual organisation in that it is, as the name might suggest, both a university and a research organisation. So you do applied research, kind of like people might know from Fraunhofer Society, for example. Can you talk me a little bit through this setup? What’s the history behind it? How does that work?
Sebastiaan: So as indeed the name implies, Wageningen University is comprised of two entities. Indeed, Wageningen University on the one hand side for fundamental research and education – bachelor, master, PhD. And on the other hand, applied research institutes. Eight of them comprise Wageningen Research: an RTO, as we will call in Europe, a research technology organisation, not for profit, partly working for government with statutory tasks. So directly working for government, but also doing applied research for industry and doing applied research in public-private settings. So consortia of projects where industry and NGOs or governmental organisations work together. And both of them are roughly same size-ish: 3,500 staff, both. So we have over 7000 colleagues who we work with. 13,000 students, bachelor, masters, 2,000 PhD candidates with annual roughly 350 PhD defences on the university side and just under one €1 billion turnover for the combination of the two institutes.
Thierry: Wow. Was it always this set up? Is this how you started out as an organisation?
Sebastiaan: No, no. Originally it was a university separately.
Thierry: Okay.
Sebastiaan: Until roughly 1999. So 26 years ago, it was merged or brought under one umbrella is a better word, because it is led with the same management – so the same executive board, same supervisory board, but two different entities co-located and mixed also in buildings, teams working together, but formally operating under different legal frameworks. So 26-odd years together now, because the university was actually under a bit of strain at the end of the nineties with very low student numbers. And then the solution for that was to combine it with the applied research institutes, which were then still part of the national government working for Dutch agricultural and food process industries.
Thierry: Okay.
Sebastiaan: So that’s when the combination started and also when the decision was made to bring the research groups of both the university as well as the applied research locations under one roof or one location in Wageningen, where we have Wageningen campus nowadays hosting 24,000 people working on six square kilometres, studying, doing research, innovating and building new companies, as well as having over 20-odd locations elsewhere in the Netherlands for applied research stations, very close to our prime customers, so to say. for the applied research there.
Thierry: Am I right in thinking that you’re definitely unique in the Netherlands, you might be unique in Europe, you might even be the only one in the world that has this set up as far as I could tell.
Sebastiaan: As far as we know, yes, we are unique both in combining it, but also in the size and in the focus on agriculture, food, food processing, biotechnologies in the green fields, both with the plant sciences, but also for biobased materials and the ecology and the social sciences and composting and being part of the agro-food system.
So it is a very focused two institutes that is also unique in the world. But we do see… We have a lot of guests coming over from all kinds of nations because the combination of fundamental research and later TRL levels, applied research, under one roof is something many countries aspire. So there are also other nations which combine applied research institutes next to or adjacent with universities, what we, for example, also see in the UK and elsewhere in Europe.
Thierry: Yeah, yeah. Brechtje, I’m gonna come to you then. What does this setup mean for the commercialisation activites at Wageningen?
Brechtje: They are very interesting, uh, and they are diverse because it makes a lot of difference whether you’re in a high TRL setting with a lot of public-private partnerships or whether you’re on the university side.
I think the biggest distinction that you notice is at the university, you can’t foresee what you’re going to develop. So the intellectual property that comes out is, of course, a sort of surprise. You never know. You hope that you know what comes out and you have to wait until it’s there and then you can start looking for a licensee. Whereas in the research and technology organisation, you already start from the idea that industry would be interested. So there is a different way of working with it. You also see that the research institutes create IP portfolio. So it’s an R&D engine that they have. And organisations come to us because of the knowledge and the data and everything that we have to see how we can advance it for a specific field.
So it’s two different types of IP assets, but also two different ways of looking at it. So at the university, it’s not different than any other university. You have it. It costs a lot of money and you want to find someone as fast as possible to find a licensee.
Whereas at the research institute, you have much more of an opportunity to strategically look at intellectual property. What do you want to develop? Where is the field going? How can you stack the IP assets that you have? Especially at Wageningen University and Research, you also have different faculties or science groups, as we call them, that enhance each other. So you can also look at IP from different institutes and how you can combine it to really solve a solution.
That makes it very interesting. One of the challenges you would expect that we no longer havex but still exist is we have a fundamental science which is curiosity driven and you don’t know what comes out. And then we have research performed by the research institute that you actually already try to engage with companies and you still see the gap that what we have at the university level is not interesting enough for applied science related research.
So you would think that it automatically continues from the university to the research institute, but that is not necessarily true. So there still needs to be a lot of development happening at the university side before you can actually interest the companies to work in a project on the further development of the technology.
Thierry: Interesting. Wageningen is very focused on agricultural research. Is that also true for the RTO arm of it? Is that also very focused on that sector or is that more broad? You know, I’m including food and all those kinds of things in that.
Sebastiaan: Yes, I would say so. Both the applied research institutes, they also have a focus on agri-food and ecology. It’s not just the agricultural production. So in the plant sciences side, animal sciences understand the soils, et cetera. We also have teams and research institutes and environmental sciences and the meteorology and understanding how water is actually part of the agricultural system.
We have an institute on social and economic research because good and solid – nowadays, particularly – sustainable agricultural production, as well as the food process industry, as well as the retail. You need to understand how the economics work of it, how the business cases work of it. So the economical research as well as the social equitable part, particularly in the global setting that we’re in, because food systems is a global thing.
So all the applied research institutes are also focused on agri-food and ecology, but it is more than just agricultural production per se.
Thierry: Okay. Yeah. There’s a few things in there that I’m going to pick up on in a second. But Brechtje, I wanted to ask you first. A lot of people will have seen this, but the Netherlands released a new national IP deal term principles. You were involved in that work. Can you tell me a little bit about how this came together and why it matters for Wageningen and for the Netherlands?
Brechtje: Yeah. So the Netherlands has a lot of universities and university medical centres and also other research institutes. We really want to increase the amount of spinoff companies that we generate from our scientific results. And there is always a challenge on how do you license IP to spinoff companies? It has to be… the university should get a fair compensation, but then the question is what is fair? And investors, founders and universities don’t always see eye to eye on what’s fair and what’s reasonable.
So the process involved basically looking what kind of deals are we currently making and what are the common denominators in there? Also speaking to founders and investors and see what are really deal breakers in making these deals. So what’s stopping us or hampering us from creating more spinoff companies? So we want to be founder-friendly, we want to be investor-friendly, but we also want to make sure that the university is fairly compensated for the work they do and also to stimulate, mostly to stimulate future research and to incentivise researchers to give part of what the income is generating back to science, give back to the inventors and also allowed future patents to be filed, of course.
This has been an interesting examination. It took a while to get everybody on the same page. And I think what you see still is that we now have principles set out. So 80% of what we do in a deal is sort of standardised. And a lot of this was already known for us. For example, if you are a university or a research institute and you’re funded with public money, you want to make sure that as many people use the technology as possible. So we license for use. We don’t license to shelf the technology or take it off the market.
So diligent effort clauses and making sure that you’re using it, that you’re commercialising it. So an anti-shelving clause is sort of standard for us. But sometimes with new investors or new founders, you would have to explain why is it in there? Why do we make arrangements on this?
Same goes for academic freedom. So the research should be able to continue because we strive to support innovation and not hamper it. So also an academic licence is always part of the deal that we make. Even on that subject, you saw that not everybody was aware why the university needed to continue doing research. So I think we sort of communicate better what we make deals on, why we do it. And now on 80%, everything is clear. There is no discussion anymore.
And also we included investors and founders in the process. So they have had opportunities to review the guidelines and the principles we set out. They agree with it. So it makes it much easier, much faster and much more transparent what we ask reimbursement for. There is a baseline of what we ask renumeration for. So the royalties are not set in stone, like equity is not set in stone because it’s deal-based. But it’s a broad principle. So the principle is between 10% and 25%, but 25% is very high. So you see in general, it’s between 10% and 15% of equity in the first round. It’s fully dilutive and it’s also a minority share.
So these things now are set and it really helps to speed up the processes. We are actually collecting data because these deal terms have now been in place for about three years. However, the first set of deal terms that we made was very for experts. So if you was working in this field, you would understand what it said. It was only three pages. And if you’re new, which are most of our founders, they do this for the first time, you really don’t understand what it said. So this recent set of guidelines, they are much more clarifying the process, the steps, the freedom, the options that are there. Also explaining why we selected specific elements in those deals in order to just make it more clear for everyone why we do what we do.
Thierry: Yeah, that is quite interesting. And I don’t think I ever saw the original guidelines, but I read them and I’m not an expert. It all made sense to me. Like it read like something that I can see an early career researcher would be able to figure out where you’re coming from and yeah, what everyone’s trying to get out of this.
Were you aware that similar work was going on in other countries like the UK and Denmark recently announced something similar or is this just a “the discussion kind of came up at the same time in different countries without them having talked to each other”?
Brechtje: I think it’s happened both. So we were inspired by the USIT Guide in the UK, but we wanted to explain a little bit more about the process, not just the deal terms. So we were inspired by the USIT Guide. You saw also that other universities are more standardizing the way they work, rapid contract, things is happening.
We also started three years ago with the first set of guidelines. And what we do, there is a big conference, Slush Helsinki. A lot of startups and founders go there to meet investors. We as technical universities in the Netherlands always go there. We take a whole delegation of Dutch spinoff companies there. And you have a thing called the investors dinner and founders day, and it’s a day before the conference starts. So we decided to host the tech transfer dinner, or drinks, in this case and invite everybody who was in tech transfer to also discuss with us how they look on this IP deal term setting and what they were doing in their country. So from those meetings, we got to meet people from Denmark. We met people from Norway. So they were also sharing their experience on what they were doing. That was really helpful.
So I think the people in Denmark got inspired by what we were doing in the Netherlands and then looked at how can we learn from this and do this in Denmark. And it’s still continuing. So this is just a start.
I think we are going to go further in these deal terms. So you already see that in Ireland, they have licensing templates and we in the Netherlands also want to do that. So we want to have legal documents that actually fit with our guidelines that you can just use and copy-paste, basically. And I think on a European level, you now have the startup and scale up strategy. The European Commission is really excited about… part of that startup scale up strategy is developing a blueprint for licensing IP in general to small and medium-sized enterprises but also to spinoff companies.
So there you start looking on a European level, but then really looking at and analysing on a European level, what is everybody doing and what can we learn from each other?
Sebastiaan: If I can add to that. So there were several things that combined the effort to come to national deal terms. And one of the things to add to that, next to having European-wide connections between knowledge transfer offices with the ASTP conference, we were in touch, of course, from the Netherlands with all kinds of other initiatives elsewhere in Europe.
But also in 2019, we started with national spinoff programmes in which several universities collaborate together with an early-stage investor – programmes funded by the national government. And what those programs did, they’re called Thematic Tech Transfer programmes, TTT programs.me What they actually did is we tried to foster the best scalable spinouts from universities, actually, often by combining teams or by combining IP or efforts that took place in different institutes, but would be stronger if they were put together. And also with the direct help of the investors in those programmes, we could already have a different conversation before a company was actually started on what it would need to answer before it would be erected as a company in order to be a scalable and fundable company for the longer route.
So starting those national spinoff programmes since 2019, actually also primed each university to look into how they work things at their institute. But if we then combine IP and teams, you have to collaborate better. Hence, it was actually a call for action also to get to national deal terms that every university and university medical centre subscribes to.
Thierry: It’s quite interesting as well, the working with a spinout before it’s a spinout because that’s something that has also kind of been cropping up around Europe, like Birmingham has a model where they kind of have a spinout before it’s a spinout, Stuttgart in Germany has something similar. So again, it’s interesting that it’s also appeared in the Netherlands.
Yeah, these kind of seedlings of ideas that are everywhere and probably in 10, 15 years’ time it’ll be spread throughout Europe because everyone can see the benefits of these approaches.
Yeah, it’s interesting that the Netherlands are going about it in quite a systematic way with the TTTs.
Sebastiaan: Yeah and maybe what would be challenging and still can be challenging also in the Dutch setting is apart from the sector as a whole universities, founders, investors involved, incubators involved, there’s also often a wider societal debate, of course, on how spinoffs and particularly the universities work together with them or whether or not equity is actually part of the consideration at all.
And those societal debates often fuelled by cases that didn’t go well, those kinds of discussion take place in each country, I guess, in Europe. So that also helps steer us towards very clear and practical guidelines which everybody read and hopefully understand. And if that’s not the case, let us know, and we’ll enhance them even better.
Thierry: Yeah. The bad press for the founders that got burned in the process, I mean, that happens in the UK as well. There’s… I think it’s called Spinout.fyi where they collected examples of universities that have taken huge equity stakes. It just didn’t work out for the founders. And then obviously, you know, if you look for those examples, you’re going to get those examples. And then the picture kind of skews in that direction, because the people that have done really well or where they thought, you know, thats all right, but it could have maybe gone better. They’re not necessarily going to speak up because, yeah, ha.
Brechtje: The whole idea of these principles – deal terms principles – and why we call them principles is that we have to explain what we do. And because we explain what we do, we also can have conversations with our peers or with industry that says: “but I disagree with your reasoning”.
And then you have a conversation instead. That’s not about you have 10% or 12% equity, but on the base, what you take the equity for.
And because it’s also principles, you can deviate from the principles, if that’s justified. And there is always a reason why something can be different, but it means that we explain and agree on that this should be different. So you have 80% set and 20% is where you can have an honest conversation of what’s best for the company.
Thierry: It’s probably fair to say that ag schools, Wageningen are coming to this spinoff investment game later than maybe other higher education institutions. Why do you think that is?
Brechtje: I don’t think we’re coming later in the game. Actually, I think we were one of the first, because you’re so close to society, you’re so close to the farmers. I think the whole reason Wageningen came to be is because they wanted to support the ecosystem and strengthen the ecosystem.
But if you compare this, for example, to the medical field where tech transfer, at least the commercial licensing is much stronger organised, maybe, there’s much more money in there. So I think value of commercialisation in the agri-food world is more on creating value for each partner involved. Whereas on a commercial side, it’s usually also very economical. It’s about the money. And it makes sense because the investments you need in the medical field are insane. So you need to think about how am I going to get those millions.
Whereas in the agri-food world, it’s more about how can we really valorise this and how can we really bring this to society and improve society. You need to have a commercial mindset, but it’s more than just the deal making itself. You need to reform the whole system, come up with new business models. That’s a different way of thinking.
Another thing why it might be less visible is it takes a long time for something in agriculture and food to become successful, in terms of breakeven. So you see that investors need to have an extensive period before they want to have their return on investment.
So I think our spinoff companies, they need seven to 10 years before they really break even because the margins are just much lower.
You’re talking about starting up a spinoff company and then you have to wait 10, 15 years before you really see them growing and scaling. It can be faster, especially with digital and everything. But I think if you look at biotech and you take green biotech versus red biotech, there’s a big difference.
Sebastiaan: I would like to add to that because I fully agree. But when I started in this field, I worked at Delft University of Technology and helped to build up the first steps towards valorisation or commercialisation of research results in 2005. It was formally laid down in law that this was the third mission for the universities. And at that time, Wageningen University and Research was also already active in this. So we have been supporting entrepreneurship and setting up an incubator already a long time ago.
However, the societal or cultural drive among students and staff has been very different, I would say.
Stepping into Wageningen University and Research just under 10 years ago, you could still feel a little bit of a shift that most of the people that used to work prior, so before, say, 2000-ish, that many of them were well accustomed and attuned to the agricultural system. So many came from farms also as students.
And one of the usual drivers for research results is to collaborate, indeed, together with many different stakeholders and get it into action in one way or another. But going for a startup per se or a spinoff per se was not the first thing that was thought of because you need to have different players in the field working together to get it into societal use.
And starting up a company for your own or together with a team and then really going for it was something that was, for many people, culturally wise, not the first thing they thought of. As well as, Wageningen used to be a very left-ish, a socialist-ish type of town. It’s only a small town, but still many of the more social democratic type of people call this home. And going for a company and then making money was sort of frowned upon.
And that changed over the past 10, 15 years tremendously because really going for a spinoff could actually bring that arduous journey of de-risking and innovation as something that could really propel your own impact on the world. Because many people that come work here and study here, they really want to make the world a better place. And we saw a change or a mind shift change that indeed spinoffs are actually one of the ways to make big leapfrogs of change possible because a spinoff is just a de-risking way of looking into things.
So it is also a cultural thing, as well as the setting as such, and I think that holds for all the agricultural schools in the world. You always need so many different stakeholders to get things really into societal use, and that’s challenging. So you can also work more with incumbent industry as well as incumbent farmers that are innovation prone. So you might not need a spinoff per se.
Thierry: Yeah, that’s quite interesting. I appreciate how you reframe my question a little bit as well, Brechtje. I had Kevin Walters on the podcast last year from the Wisconsin Alumni Research Foundation, and they obviously got started by someone with a farming background because they figured out how to put vitamin D in food.
So yeah, I agree that there has this commercial mindset of agricultural researchers, but maybe the spinoffs specifically have come into it a bit later, as Sebastiaan said.
The spinoffs, is that something that you’ve seen in the Netherlands change more broadly over those last 10, 15 years? As I think is probably true in a lot of countries, that there has been more focus on the startup that comes out, both from the university and the policymakers.
Sebastiaan: Yeah, if I could jump the gun a little, I would say two things that have changed tremendously in our field is that risk appetite and risk funding has changed dramatically since 15 years ago in agtech and in food tech. Beforehand, there was not much around. And if you look into the multi-annual projections that some of the consulting companies do in this field, you see it has been rising and now in the last five years going down a little, but there is money available and it did not used to be there because it was in different sectors.
As well as we had in the past 15 years, at least in Wageningen, a tremendous influx of international students. So roughly half of all our masters come from abroad and they are entrepreneurial by mindset in order to be here and to start studying. And particularly if you come from outside of the EU, you have to overcome hurdles. So we also see many international students and PhDs in our incubator that have a drive to go for something like a spinoff.
Thierry: Brechtje, did you wanna…
Brechtje: Yeah, so I think what’s interesting now, of course, is the digital age. So a lot is data driven and a lot of the university’s value is no longer in the patterns, but in the data models that we have. For example, a model that determines from seeds to ripening when a tomato is perfectly red and when you can pluck it. So that data and use of models gives all kinds of opportunities for companies to be created on decision-making or service-oriented levels, which were not there before.
So you also see that those type of companies, they’re still academic startups, if you ask me. So it’s still a spinoff company. It uses a lot of knowledge generated from research, but it’s not necessarily technical in the sense that you need a patent or development of a patent. So it’s much more related to data science, data modeling, software development. And I think that suits, or it’s closer to home, for many of the scientists that we have. It’s not as big as a step to think about offering this service as being a company, versus I have a patent and I need to raise €2 million to get my proof of concept going.
Thierry: Yeah, the data is useful without there being IP attached to it.
Brechtje: The data needs to be turned into information, and I think that’s the magic, because data itself – unless you’re a scientist, you know how you got it…
Thierry: Yeah.
Brechtje: … then it’s difficult to understand. But I think there’s a lot of value in turning data into information for people from outside the academic community.
Thierry: Okay.
Sebastiaan: And stepping on from that, because I don’t think it’s just the data itself but we also saw the last 15 years, many people stepping into the world of agtech, food tech, and ecology that were originally not trained there or did not work there previously. So we see many people, for example, from robotics stepping into the agtech field because they see there is an opportunity and now we better understand how difficult a natural environment is: way more difficult than a car manufacturing plant, for example, for a robot to understand what’s happening there.
So it’s also a challenging circumference where these people then bring their expertise, for example, in robotics, because many of the people really want to also make a change for the better in this world. And we welcome that.
So one of our spinoffs, SAIA Agrobotics, for example, is turning the horticultural world upside down by not bringing robots to the plant, but the plants to robots. So they’re rephrasing how a glasshouse actually works by having plants on mobile platforms. So the understanding of how in this sense« and robotics solution, how pricey that is and how low the margins are in agritech, they combine experience from different worlds into new, in this case, spinoffs.
Thierry: Interesting. We should perhaps say, low margins. I think people should be aware – they might not think about it, but they should be aware – that any cost that you add anywhere in the supply chain is going to have a knock on impact, which the consumer will feel. Food is already incredibly expensive these days. In a lot of places, there’s a cost of living crisis – eggs in America are sort of an insane price right now. You have to keep your costs low, which then makes any adding new tech significantly more difficult, because if you add it and it costs money…
Sebastiaan: Uh huh.
Thierry: … anywhere in the chain, no one’s going to adopt it.
Sebastiaan: Yeah, it does. And maybe to understand if you come from a different sector like medtech or from pharma or from a high tech industry, it’s often also difficult to understand how the agri world or the food process world, which are two distinct, different worlds, I would say, how they actually work.
One of the key things is many parts of the value chain have been working in the past 50 years into cost optimisation. So each shackle in the individual value chain is focused on how can they reduce costs for themselves, which is way different compared to pharma, which is very much geared –as I would say, and not having worked there, so I might not understand it well enough – but it’s really geared towards making blockbuster drugs. So really having a very high margin at the end of sale towards, in that case, patients. Different with agri techs. So everybody’s really focused on low margins and that pushes the entire chain towards cost optimisation and then getting into products that may not cost too much. Hm. It’s challenging to actually break in there.
Thierry: That doesn’t mean that you can’t have successes. You did have three exits last summer. Brechtje, I might come to you. Can you tell me about, well, maybe all three, or maybe you can break them up between the two of you if you want?
Brechtje: Yeah, we were very fortunate this year, but honestly, I don’t think you can plan for an exit. So it basically happens to you. We sold our shares in several companies. Two of them actually made an exit, I think, and one we just sold. So the two big exits are The Akkermansia Company being taken over by Danone, and Ceradis, a company in the plants field, being taken over by Gowan from the US.
And I think for all these things, it happens that the companies were spun out at least 10 years ago. So they have been existing for a while, whereas the conversations have also been ongoing for a while between the partners that in the end took over.
So for us, it was very nice to see, of course, because you want to see the scale of innovation increase. And this is what happens when you get an exit partner, you can do more. So the companies have proven that they work and that they sufficiently work and they created enough interest by the big players to be taken over. And in the end, now we hope, well, we think this will allow for Wageningen technology to be included in more products and in the end, reach more people in society and make a bigger change.
Thierry: Is the, and again, you can’t plan for this, but is your hope to have these companies reach an M&A or do you want an IPO for these companies? You want them to stand on their own? What’s sort of the ideal outcome in an ag world?
Brechtje: Oh, that’s a good question. So I think if you take shares, you always want to plan for an exit, right? So that’s, that’s the idea. However, if the company is created and the company drives value, then it’s fine if the company in itself stays. That’s a bit more difficult for the investors because the investors want to move out. What we see, I think is maybe that’s specific for Wageningen, I don’t know, but our companies that are incorporated also do very well with European grants. So we have a lot of spinoff companies with an EIC grant, which is non-dilutive, which is very good for the company. But we also see that it’s a bit of a change for the investors. Because the company gets an influx of millions, but it’s not necessarily a next investor or you cannot sell your shares in the next investment round. So the value is increased.
We also see a lot of pilot projects being performed by the company. So funding coming in to build pilot plans, which governmental agencies contribute to. So a lot of investment is needed and it’s usually a combination of investors, but also a non-dilutive funding.
And I think interestingly, we also see a lot of impact investors turning to our fields. So it’s a combination of just regular VCs, but also impact investors with a bit more longer horizon for investments and return.
So it takes a bit longer, I think, before a regular investor steps out of the spinoff company. But what I would plan for from the university perspective is for the company to be able to grow and scale as quickly as possible, as successful as possible, and help it find the financial resources that support their objective.
Sebastiaan: Yeah. Maybe to add to that, we have seen some changes in the past say, seven, eight years in our spinoffs, in the sense that they were able to attract pilot projects also with partners that paid for those projects, next to the European funding that Brechtje just alluded to. And we often see that the very early stage for these companies is crucial. So really building up the IP portfolio, developing their proof points for follow-on investments is crucial.
And that could be either refunded with European funding, for example, like the EIC accelerator – alumni managed to do so. Or with pilot projects, Rival Foods was one of the exits we also did this summer. That means it was an exit for us. We were able to sell our shares to the series B investor, which was logical for us as a university because we were still working closely together. But it’s really up to the company to make it a big international success.
And what they did, they were able to attract pilot project development money, also non-dilutive, as well as what The Akkermansia Company did. They were founded in 2017. They provide probiotics based on very strong IP from not only Wageningen, but also Université Catholique de Louvain. And they were able to attract very good and sufficient funding in the pre-seed stage to build the right team to get to a big round for seed funding.
So both companies had a bit of a different sort of starting, outset point than Ceradis had, which was part of our portfolio for indeed, I think, 12 or 15 years almost, because they were loaded at the start and they were able to build up their strong portfolios from the get-go together with a strong team.
And we’re trying to sort of weave in and bring partners to our campus in how far we are able to do so as a university and a research organisation to get those funds, to get those teams better equipped, but also advise the companies that do step up or spin out that they really ramp up their efforts in building their data points, so that they will be able to reach significant seed and series A funding.
Thierry: Yeah, you’ve both touched on funding. So I’m going to stay on funding because Wageningen is going to become part of Graduate Ventures, which is an existing VC organisation in the Netherlands. That’s raising a new, is it seed fund or pre-seed fund? And I think the Amsterdam institutions are also going to join it. Can you tell me a little bit more about this? Why does it make sense, as Wageningen, to go to an existing VC rather than maybe raising its own vehicle?
Sebastiaan: So, Wageningen University and Research is indeed working together with Graduate Ventures, but it’s not the only fund that we’re working with. We have been working with early-stage VC funds since 2009, also as a small investor, as a small LP, early-stage VCs. And we do that in order to have a seat at the table with those VCs in order to get them to campus to set up maybe an office here, but also be in touch with early-stage projects.
And by being a minor LP in them, we also managed to get them into those national spin-off programmes, those TTT programmes I spoke of earlier, because we would like to get VCs be active in the pre-seed stage.
So really at the moment that the company is being erected or needs funding, but then we would like to have VCs ready that could walk along with the company for several moments of investment in a couple of years. So also be there with a seed and a series A funding round.
So having worked with VCs for a while, we still saw a challenge in the pre-seed phase because most of the VCs, when they are successful, they become larger as a fund and then they move slightly down the pathway of when they start investing in a company. So they start out as a seed funder, but after a while, they would like to ask companies for, for example, traction in the market and sales. Yeah, that’s not really happening with a very early stage spinout.
So one of the solutions that we saw fit was maybe we can attract our alumni to step into our incubator, to be not only a mentor and open their network, but also be, as a wealthy individual, maybe funding those companies. And ideally you do that through a fund vehicle and not with informal investors only. So you could raise larger tickets or you have a more sort of a long-term approach with it.
So we checked that out with many of our alumni. And some of them said, okay, we would like to be an investor, but we would like to have financial return as well. And that was challenging for us because we actually wanted them to donate money for the pre-seed round and even to be active in our incubator space without direct strings attached and direct financial returns for them in order to make the most out of the ideas and the teams that are there.
And then we saw that the Graduate Ventures initiative in Delft and Rotterdam was really taking off. So originally it was launched in Rotterdam and Delft with the alumni there to set up a pre-seed and a seed fund in which the alumni actually are an investor in the seed fund. And they donate money for a pre-seed, and that is worked together with the local university and with the local charity office in order to make that work properly.
And it taps into the expertise and the network as well as the funding that alumni might be able to provide. We’re looking forward to open up a Wageningen chapter with them, with our wealthy alumni, which we, after the last say six months’ outreach, we found many more of them than we had actually anticipated because they had been also active as an entrepreneur in the last say 20-odd years. And many of them whom we’ve been talking to in the last six months, were not on our radar yet as being an alumni with money, but also with the intent to give back and to help out with work and expertise.
Thierry: Did they become entrepreneurs after they let Wageningen then they weren’t founders when they were still there?
Sebastiaan: No, most of them indeed became entrepreneurial or a founder later on in life. Many of them started working at a large industry. Like we have many large food companies, of course, having their headquarters or research quarters in the Netherlands, like Heineken, Unilever, Fies & Campina are just a few large Dutch names, but many international brands have also set up their HQ or research department here. So many of them went and had first steps into the sector in a different space, but then switched gears and became entrepreneurs.
Thierry: I’m gonna come to you with this, Brechtje, then. When you’re building these spinouts – you’re trying to solve the funding question – is there enough talent available for spinoffs? Do you have the right entrepreneurs, the right expertise, that is willing to work for a pre-seed company?
Brechtje: Ah, that’s a good question. Well, the answer is always no. We always need more. But I don’t think we’re solving the funding problem first.
Especially in Wageningen, at least we focus on pre-incubation. So when we talk about our incubator, we actually mean our pre-incubator programme, which means that we find entrepreneurial researchers and students that have an idea and we help them validate their idea both on the technical and commercial side, but also on the organisational side. So what do you need to build a company? What will your role be? Because it’s highly unlikely that the academic is also going to be the CEO of the company. So we try to mix them.
The whole programme is stage-gated. So we have them from idea, “I have no clue, is this something for me” to “yes, I’m interested, I’m going to do a feasibility study, what should it be?”
Then you know what your biggest assumptions are. You go through. So then you’re really going to validate your key assumptions with either proof of concept funding or pilot projects or anything.
And then you also need a team.
So at the end, they are ready for the first round of pre-seed funding. And of course, afterwards, you hope that society takes them up that they will be successful. But in reality, it’s a grey area. So there we work together with all kinds of partners, for example, StartLife, our European accelerator program, but also all kinds of other partners.
So we try to de-risk both the technology and the commercial side, but also the founding team so that people can get to know each other. And then we suggest people incorporate.
So we try to incubate as long as possible within the facilities of the university and within grants that we can allocate and get from a university or research institute perspective. The idea is to make them as investor-ready as possible. So when they come out of the incubator, the investors have already seen them, are in contact with them, have given them advice. So they are connected to mentors from the field. People that we know and are enthusiastic. We connect them to experts for patenting or anything else. Legislation. There is a lot of legislation in agriculture and food world they don’t know of. And we try to connect them to new talent.
New talent is, I think, the most difficult part. Wageningen has a very strong alumni network that helps, but also the mentors, the networks, the connections that we have with industry. So we can help find the talent that they need by simply making a vacancy text and then sharing that to see if there’s somebody that might help.
We’re also working together with other technical universities or other incubators in the Netherlands because everybody has the same challenge. So, for example, there is twice a year, an event that we call Meet Your Co-Founder XL, where all kinds of startups can meet people that are interested in joining a startup but don’t know which one yet or are just looking for what kind of ideas are there. What kind of technologies do you have? What can we work on?
We’re also working with venture builders, venture builders that are actually looking for IP and then want to build a company themselves. But they are usually open to including the academics in their teams. So they are basically building the teams and the company in the business model. And then the academic can focus on what he likes doing most, which is the research and the development.
There are different ways to support this process. But I think especially, as you mentioned, hiring senior staff that has done it before that is not an entrepreneur. Well, you need quite a sum of money to hire such people. The ticket sizes we see, especially in the pre-seed stage, are basically too small to hire good staff. You can, of course, reimburse them with equity. But I think it’s a challenge. It’s just if you’re going to get really good people, you need to be able to afford them and give them something more.
Thierry: Yeah. And that’s probably something that would only work in Silicon Valley to give them equity and convince high-value people like that.
Sebastiaan: Well, I would disagree, actually. I think it is slightly turning towards that now. And I think one of the things we need to understand is that building up such a system takes years and not just a few years, but decades. What I would say now with our outreach to our alumni in getting them to fund and co-fund both pre-seed and seed, but also be active as a mentor and open up their network, we see many of them that are willing to do so. They have stepped on their own strides towards entrepreneurship, also 20 years ago or so.
And we started with our incubator and outreach and entrepreneurship courses in Wageningen also since 2005, 2006 onwards. It takes time to get those people back into the regional ecosystem, so to say, because they also have their walks of life to go through before they are those valuable assets that are needed in new and budding companies.
So, yes, we need to have a long term perspective on our next strides. And that’s what we try to do with the different components in our incubation and spinoff creation activities.
Thierry: Yeah. Something that a university is probably uniquely placed at for the long-term thinking, because you don’t have to worry about the next six months. You can’t think about the next six years and building something up.
We are pretty much out of time. I think I could keep this conversation going for another hour, but I will let you get on with your actual work. Thank you so much to both of you for joining me today. This has been absolutely fascinating and I look forward to keeping a close eye on Wageningen as the story continues.
Sebastiaan: Definitely. Thanks Thierry for the opportunity to talk about it.
