British brains have invented a lot of things over the years — penicillin, DNA’s double helix and the World Wide Web — but they haven’t always been so good at turning those discoveries into moneymakers.
That’s something Seth Bannon, founding partner of US VC Fifty Years, is hoping to prevent happening again. In March, Fifty Years will launch its company builder for scientists, 5050, in the UK. It’ll be run with, and part-funded by, the country’s research funding organisation ARIA (Advanced Research and Invention Agency).
The idea is simple. Find the best minds working on clever deeptech at UK universities and help them create companies off the back of their research. The goal by 2028 is to have put 600 scientists through the programme and seen 150 companies created.
Spinouts are hot property these days; VCs are increasingly looking at universities across Europe for the next big thing, and some of the buzziest companies in Europe are led by PhDs, including Mistral, Wayve and DeepL.
The test for 5050 is whether it can get UK academia to take kindly to an injection of Silicon Valley energy.
Power to the nerds
Bannon, who joined our call at 10:30am California time, drinking sugar-free Red Bull from a mug, tells Sifted that ARIA reached out and convinced the Fifty Years team to set up 5050 in the UK. Its argument was that the country has a huge gap “between the calibre of its technical talent and the robustness of its deeptech ecosystem”. Despite having some of the world’s best research universities it has a deeptech ecosystem smaller than Palo Alto’s.
A lot of that is because many scientists just don’t consider becoming founders, Bannon says. “For more than 95% of innovations someone needs to take it and turn it into a product or service and scale it for the world in order for the impact to manifest […] and this process is totally broken.”
From travelling around universities up and down the UK Bannon says that he’s noticed a lack of self belief among some academics that they could be a successful founder. “So many scientists, because of the culture of academia or because of some of the culture of the UK, don’t have the self belief to believe they could build a world changing company,” he says.
In the last few years there’s been a wave of new funds popping up to back UK spinouts — but that approach is “putting the cart before the horse”, Bannon says.
“The problem is not capital, the problem is there’s not a great on-ramp to entrepreneurship. If you just throw money at people you’re going to end up with weak companies and you’re going to lose a lot of money.
“The real issue as we see it is inspiration to start companies, self belief and knowledge network.
“If you help great scientists become great founders the money will follow. If there are a bunch of great companies being formed in the UK there’s going to be a bunch of VCs coming in.”
Fixing the ‘broken process’
Bannon says that intellectual property has historically been spun out of universities in three ways. In ‘phase one’ a VC firm would go to a university’s tech transfer office, pick the IP to licence and attempt to build a company around it. That didn’t work because the inventor of the tech wasn’t involved in the company.
‘Phase two’ saw VCs go directly to a professor, and if they had an idea for a company based on their research the investors would start a company alongside the professor as an ‘academic cofounder’. This also doesn’t work, Bannon says, because even though there’s more buy-in from the academic, they’re typically a part-time advisor with equity and don’t run the business day to day. “That model works well for traditional therapeutics companies, but for every other type of deeptech company it just doesn’t work.”
5050 is pushing ‘phase three’: “going directly to the people who had the idea, who figured out how to make it work and who wrote the majority of the research paper around it, and saying, ‘if you think the best way to get this out into the world is a startup then we’ll support you.’” “We think this works better because you have the vision of the founder, someone who deeply understands the technology, and its limitations and potential, running the company,” Bannon says. “It works way better when the ‘nerds’ run the company.
“It’s unthinkable, in the Valley at least, to not have a developer CEO […] for some reason deeptech is still stuck in this old paradigm.”
There are other programmes in the UK open to UK scientists with an entrepreneurial itch to scratch. UK accelerator Entrepreneur First is heavily skewed towards technical founders, including PhDs. There’s also Deep Science Ventures, a venture studio which starts with a problem and works backwards to find the scientific talent to form and lead a company to solve that problem. Venture firm Wilbe is also focused on helping turn researchers into founders.
The 5050 programme is open to researchers finishing up a PhD or actively doing a postdoc who want to or think they might want to start a company based on their research. In the US 5050 has also started to accept engineers from places like SpaceX and Tesla — something Bannon hopes to do in the UK down the line.
5050 is looking for researchers working on “anything in deeptech that helps humanity get better”. ARIA is particularly interested in people working across its opportunity spaces, Bannon adds, which include scalable neural interfaces, maths for safe AI and future proofing the climate.
The 5050 programme
The first part of the programme covers what and how to build. It includes a weekly three-hour lecture (30% of these will be in person in London) and virtual office hours with programme mentors including the founders of GitHub, Dropbox, Supercell, Coinbase, Klarna and Reddit. Bannon says there’s a “YC flavour” to this part of the programme; he, along with Fifty Years’s other founding partner Ela Madej and partner Scott Phoenix, are all alumni of the famed US accelerator.
The second part of the programme looks at the traits you have to build up to be a great founder, and includes journaling, as well as examining and overcoming any doubts the participants have about their ability to start a great startup. Participants also strip off for an ice bath — appealing if you’re basking in the California sunshine; perhaps less so during the dank British springtime.
Bannon says this part of the programme is genuinely transformative, but it remains to be seen if he can convince a bunch of UK academics to overcome their aversion to anything that feels severely un-British.
The third part of the programme is focused on community, and includes a camping retreat in the countryside. This all plays out over around four and a half months.
The spinout equity debate
5050 has taken 250 scientists through the programme in the three years it’s been running in the US; 55 companies have been started.
The programme is free for the scientists and funded by the ARIA grant and Fifty Years. 5050 doesn’t take any equity — although if a company is incorporated based on research done at a university, the institution may take some.
“A big part of the programme is how do you negotiate with your tech transfer office,” Bannon says. “The UK has gotten better recently but it’s still not great, it’s not where the US is,” he adds, referring to the amount of equity taken by universities in their spinouts. “You’ll often see equity arrangements which make it really hard for these companies to raise venture capital.”
In the UK the median equity stake taken by a university in the year a company spins out is 20.2%, according to a 2024 report from the Royal Academy of Engineering and Beahurst. That number is coming down though — and last year 49 universities in the UK agreed to adopt the best practices for spinout deal terms laid out in a government-commissioned review published in 2023.
“I don’t think there’s any good universities in the UK yet — but they are all getting better,” Bannon says.
5050 doesn’t just want to better UK universities’ approach to company building though. The big goal is to change the mentality of scientists across the country.
“Our rough estimate right now in the UK is that about 5% of scientists, when they have an innovation, think about whether they should start a startup,” Bannon says. “That number should be 100%”
Read the orginal article: https://sifted.eu/articles/deeptech-company-builder-yc-uk/
