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Innovation funding in Austria

Innovation funding in Austria

The venture fund “IST cube”, launched in 2018 by the Institute of Science and Technology Austria (IST), in- vests primarily in life science and tech start-ups from the academic field. Markus Wanko, the founder and Managing Partner of IST cube, provides exclusive insights into the world of innovation financing. The interview was conducted by Gili Perl and Talin Schrattenholzer. 

Can you tell us a little about yourself and what you do at the Institute of Science and Technology? 

Markus Wanko: Twenty years ago, I was able to study at the Massachusetts Institute of Technology (MIT) in the United States because my (now) wife was awarded a Harvard Fellowship. I spent my time there not only at the business school, but also took a lot of courses from the natural sciences. That was the beginning of a certainly not deep, but perhaps broader, understanding of various disciplines, which I try to maintain and expand as best I can. 

Afterwards I worked for an investment fund and a global strategy consulting firm. Since our return to Austria in 2014, I have been busy at IST Austria setting up technology transfer and related projects. 

Universities in the US such as Harvard, Stanford, or MIT, have a considerably larger budget for research and development compared to Austrian universities. How do you see this? 

Wanko: Yes, the comparison between Europe and the US is often made and it has many dimensions. In budgetary terms, you are right, especially as far as the big research universities are concerned – MIT, for example, has an annual budget of $ 4 billion. 

Another aspect is the temporal dimension. The legal regulation that universities can commercially exploit the property rights of the inventions they’ve created – the socalled “Bayh-Dole Act” – has existed since the early 1980s. In many European countries, including Austria, this exploitation model was introduced in the early 2000s. In purely legal terms, therefore, the United States has already had a 20-year head start. In addition, the easier establishment of companies, risk appetite and differences in mentality certainly play a major role. 

What is the situation in Israel? 

Wanko: Of course, Israel is also a great example. Israel has leading research institutes, such as the Weizmann Institute, and a well-functioning venture capital scene, which incidentally did not come into being without public assistance. Many of today’s VC players have their origins in a project called Yozma from the 1980s. In order to launch venture capital, public money was utilized at that time to half-finance fund managers’ first funds. Over the years, these funds have become self-perpetuating and privately financed venture capital funds. 

Is there a need for reform in the area of innovation financing in Austria? 

Wanko: In research funding, Austria differentiates strongly between basic and applied research, a distinction that is not at all trivial depending on the discipline. And the area of business-led cooperative research is consistently well-funded, while competitive basic research is underfunded by international standards. However, many examples show that this is precisely the source of groundbreaking new ideas and companies. For this reason I am particularly pleased that a conscious and courageous step was taken in this direction with the establishment of IST Austria in 2006. 

In the field of venture capital financing, Austria still ekes out an existence that is out of all proportion with the potential of science in this country. This was one of the reasons for the establishment of IST cube, a fund specifically dedicated to spin-offs from Austrian research institutions. 

Does the Institute of Science and Technology have a particular research focus? 

Wanko: No, there is deliberately no singular research focus. We are a multidisciplinary research institute that encourages exchange and collaboration across all research areas. This is modeled on the Weizmann Institute, which is also very broadly based. At the Institute we have brought together representatives of all major disciplines: from physics, chemistry, neuroscience and biology, to mathematics and computer science. 

What connects IST with the Weizmann Institute? 

Wanko: The connection between IST and the Weizmann Institute is interesting in that Haim Harari, physicist and long-time successful president of the Weizmann Institute, is a key figure in the development of the IST. Together with Olaf Kübler, former president of ETH Zurich, and Hubert Markl, former president of the Max Planck Society in Germany, who has unfortunately passed away, he wrote the blueprint of the Institute and also chaired the Executive Committee of the Board of Trustees for many years. 

You also aim to promote innovation with your project. Can you tell us more about IST cube? 

Wanko: We started the project three years ago. The plan was to use IST cube to invest in spin-off projects. The problem in Austria is that there are still no real institutionalized equity investors in the form of specialized venture capital funds for start-up financing. Our colleagues at Speedinvest are the only team that has managed to launch a series of funds and become known and active across Austria. However, their focus is not on the results of academic research, and thus there was a big vacuum in Austria. 

We recognized the potential here and, together with a British investment fund, launched a vehicle for investing in academic spin-offs from various Austrian research institutions. Last year we launched major fundraising for this project. In December 2020 the fund increased to over 40 million euros in a single financing round. We had originally planned for 30 million, but the interest was very high and we are continuing to receive inquiries, so we are now considering topping up again. 

We have already invested in 10 spin-offs with the fund, for example Contextflow, which supports radiologists with its software, and Ribbon Biolabs, which produces DNA synthetically. Incidentally, a large portion goes into the life sciences, such as the development of antiviral therapeutics. Our last investment was in Solgate, a joint spin-off of CeMM and IST, which is playing a leading role in developing the new target class of solute carriers. Our favorite projects are interdisciplinary ones where we can also take advantage of the scientific breadth of IST and our team. In my view, this will be even more important in the future than it is today. 


AUTHORS:

Gili Perl, MA., General Secretary at AICC
Mag. Talin Schrattenholzer, Marketing & Business Development at AICC
Markus Wanko, MSc. MBA, Founder and Managing Partner at IST cube (Photo: IST cube)

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