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This World Economic Forum article highlights that many of today’s most awesome scientific and commercial opportunities, such as metamaterials and DNA sequencing, have taken decades to move from the lab to the market. This does not come cheap and the WEF argues that patient capital is a necessary ingredient.
Patient capital fulfils a vital role in supporting university start-ups because of its ability to take a lengthy and systemic view that accords with the diversity, dynamism and risk of solving complex problems. The formative stages of start-up companies are usually funded by personal savings and debt, family, friends, and maybe some crowdfunding. Traditional funding of their early stages of growth follows a linear model starting with angel investors moving through various series of VC funding: seed, growth, mezzanine and into later stage funding, and private equity financing. Investor ownership is diluted following each successive round of investment unless they ‘follow their money’ by investing in each subsequent round to protect their stake.
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