A tale of two spin-outs

The reputation and quality of British science is globally recognised. But can it be converted into the creation of world-beating businesses? Cliff Jones and Kevin Matthews provide two good reasons to be optimistic.


When Cliff Jones was a scientist, it never occurred to him to start a spin-out. His career had been very academic. But in 1998 he was at a US conference to talk about the technology he was working on at the then government agency Defence Evaluation and Research Agency (now known as QinetiQ). He got talking to a venture capitalist who said that he would put up $5 million for Jones to develop it.

Jones got back to the UK and talked to his co-inventor Guy Bryan-Brown. ‘We immediately knew we wanted to start our own firm,’ he says. Since 20 of the necessary patents were owned by the Agency, it took a major stake in the new business, called ZBD. Jones and his colleagues raised an initial £1.5 million of venture capital in July 2000, with Prelude Ventures, TTP Ventures and Dow Chemical Ventures coming in as seed investors; a second round followed in 2001. The American who put the idea into his head has become an investor.

The technology that has obsessed Jones for the past ten years is the development of a new type of zero-power liquid crystal display. The image it generates stays on display even when the power is switched off. Supermarkets can use it for displaying pricing and product information instead of printed labels, as it can be updated instantly. As it uses no power, the cost, says Jones, ‘is a fraction of existing LCD displays.’ ZBD has developed colour versions and can produce varying shades of grey. ‘It’s a completely new technology, unlike anything in existence,’ says Jones. ‘The global market in the retail sector is worth over £4 billion and then we are looking at applications such as iPod screens, eBooks, PDA screens and televisions. It’s applicable for anything that has a display and uses a battery.’

Developing this technology, says Jones, has been incredibly difficult. ‘My last ten years haven’t been three-day weeks where I go home at 4pm. I’m talking about 12-hour days, six days a week, month after month, year-in year-out, during which time I have registered 40 patents. But I’m a born problem-solver; it is built into me. Some people get demotivated by problems; I have spent my entire career searching for problems that I can pit myself against. It’s what I get out of bed for.’

Becoming an entrepreneur was initially a strange experience for Jones. ‘As an academic you can chase any problem you see. It doesn’t matter if they need to be solved or not. Entrepreneurs need to be more focused. You have got investors to please and customers to satisfy, so the key is to learn when to let ideas and problems go.’

He has enjoyed the help and support he has received in the past five years. ‘In the academic world, everyone is in competition with each other. People want to show off. Entrepreneurs are so willing to share advice. It is a surprise.’

When ZBD started, Jones says that this was one of their mistakes: ‘we looked at too many things. We thought our competition was more important than our customers – it’s a common mistake in our industry. And venture capitalists are always looking for the next big thing, so there is big pressure from them. We looked at too many possible uses for the technology so there was no focus.’

In 2003, ZBD recruited Clive Mayne to become chief operating officer. (Jones himself is chief technology officer). ‘He’s done wonders,’ says Jones. ‘He’s got great experience of taking projects to market. He’s shifted our focus purely onto the retail sector. Now we have one big London department store trialling our displays and another chain has just signed up to start trials. We need to raise another £5-10 million over the next year; we need one more round of funding before we can be cash-positive.’

In the spin-out, Jones and his colleagues parted with most of the equity in the business. But it isn’t the equity that drives them. Of course, he would like to see his mortgage paid off as a result of his intense work. But his passion is problem solving. ‘When our investors decide to move on I’ll consider what to do next,’ he says. ‘I can see myself starting again. I would start with a team of one or two and build another company. I’d like my next project to be my idea, although I could do a good job with somebody else’s. There is a big kick in sitting down with a piece of paper and, five years later, seeing what you have created.’


Kevin Matthews would endorse many of Cliff Jones’s comments. ‘The best advice I ever received,’ says the CEO of nanotechnology company Oxonica, ‘was to always focus on what the customer wants. Even in a technology organisation you mustn’t get distracted by the science at the expense of the customer. Scientists have a great way of explaining what their technology does rather than what it solves. With more and more British scientists wanting to be part of a spin-out, I’d advise them never to forget this crucial message.’

Oxonica began life in Oxford University in 1998. Originally called Nanox, it was started by ISIS Innovation, the University’s technology transfer company, with Professor Peter Dobson and Dr Gary Wakefield being its academic founders. Wakefield continues to lead the group’s research activities. Through several rounds of funding, the group raised £12.5 million from a range of investors including BASF Venture Capital, Foresight VCT and Trivest VCT. In July 2005, it raised £7.1 million from a placing on AIM.

‘Nanotechnology is going to be a huge industry,’ says Matthews, who joined Oxonica as CEO in 2001. ‘Over $8 billion has been invested in it, but Oxonica is one of the few firms to have revenue generating products in the sector. The reason is pretty simple. We don’t get distracted by the technology. Instead, we look at the real world for a problem that needs solving, and then look around for technology that will help.’

The company currently has two products – Optisol sun-screen and a diesel catalyst called Envirox. The former came from an observation that skin cancer was on the increase because sun protection from UVA was not as effective as for UVB. Founder Professor Peter Dobson, said he could solve it. A four-year research project was commissioned. ‘We ended up with a product that addressed a problem raised by a biochemist using solid state physics, but at every stage our research was focused on a basic market need,’ says Matthews.

But the company also wanted to work in a higher-risk and larger marketplace. The energy industry beckoned. ‘We saw a need to improve the efficiency of diesel engines, so we found some basic technology from a private UK company, which we licensed. The catalyst took four years to develop. It uses cerium oxide, the same ingredient used in petrol engine catalytic converters. Normally the cerium oxide clumps and settles in the fuel tanks, limiting its effectiveness. Our ingenious solution is to wrap nano-sized particles in a special polymer, which keeps them isolated. The surface area of the cerium oxide is maximised, this improves combustion efficiency by more than five per cent. For a client such as Stagecoach, which uses 17 million litres of diesel every year this means huge cost savings.’ Stagecoach was also a major investor in the AIM placing.

Oxonica’s market focus is demonstrated by its latest project that is another new field again – medical diagnostics. ‘We see a big shift in the way medicine is being practised,’ observes Matthews. ‘It is increasingly integrated with diagnostics as the only solution to rising costs. Medical interventions need to be a lot more targeted. Take breast cancer. There are over 200 types but you don’t want to do 200 tests in series. You want one test that covers all varieties. So we’ve developed a product that allows multiplexing – simultaneous diagnoses. It is based on silver nanoparticles in combination with dyes. The colour variation reveals the test results. We haven’t just speculatively developed this product. We started by identifying market interest, and then doing an exploratory programme. When we knew the product’s potential and what the science needed to do, only then did we look around for the science – which we found at the University of Strathclyde – to licence and develop.’

Matthews is optimistic about the future of spin-outs in the UK. ‘It’s a trend that has been led by the Americans. There, it is embedded in scientists that you will spin out at least one or a basketful of companies. When I was at University, that wasn’t an option. But now the UK is changing and is ahead of the European curve in this regard.’

Alan Dobie

Johnathon Jacobs

Alan Dobie was assistant editor at Vitesse Media Plc before moving on to a content producer role at Reed Business Information. He has over 17 years of experience in the publishing industry and has held...

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