Accuri Generates Windfall for Plymouth Ventures, But Not University of Michigan

2/15/11Follow @xconomy

Plymouth Ventures Partners stands to cash out big from Becton, Dickinson’s (NYSE:BDX) pending acquisition of Accuri Cytometers in Ann Arbor, MI.

But the University of Michigan, where the technology originated? Uh…not so much.

Plymouth was one of Accuri’s first investors when the company spun out of the university in 2005, providing around $2 million in funding and helping to raise about $1 million more.

The investment firm, based in Ann Arbor, MI, currently owns about a 6.2 percent ownership stake in Accuri, according to founder Ian Bund.

BD did not disclose a purchase price for Accuri, though it stands to reason that Plymouth and other local investors like Arboretum Ventures will soon get a big check—or at least a big upfront check followed by future milestone payments.

In 2009, BD bought HandyLabs, another medical device startup in Ann Arbor, for $275 million.

Accuri is a private company and does not release key financial measurements like sales, profits, or year-over-year sales growth percentages. But the company has displayed strong growth in recent years, expanding beyond its core markets in the United States and Europe into Asia and South America.

In May 2010, Accuri announced it sold its 500th cell counting machine, which can cost anywhere from $49,000 to $71,000 per unit. So we’re talking about $25 million to $35 million in theoretical historical revenue, based on today’s prices.

The U-M, however, apparently has left some money on the table. Despite owning equity in most of its startups, the school does not hold any stake in Accuri.

The school structures deals that will best suit the needs of its spinouts, which can include equity and/or royalty streams. Usually, that equity ownership gets watered down into the low single digit percentages over time as outside investors put more money in, taking lots of new shares in return, and diluting the value of the original stake granted to the university.

Historically, when U-M spinoffs get acquired, that means the university gets hundreds of thousands of dollars to a couple of millions of dollars in revenues.

Winning big payouts is not the primary goal of the university, says Ken Nisbet, executive director of the school’s technology transfer office. Rather, the university hopes to deploy its technology to benefit society in the quickest and most efficient manner possible, he says.

Still, investment exits are not a bad thing, Nisbet says. The school has reaped financial benefits from sales of other university spinouts, including HandyLabs, Arbor Networks, and HealthMedia.

Nevertheless, Nisbet says, in hindsight, he wishes the school would have owned a piece of Accuri.

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  • pdriscoll

    Keep in mind that there are many, many technologies spun out of universities that ultimately go nowhere. The fulfillment of a technology’s promise is often largely determined by the guidance and direction provided by venture capitalists, whose forte is not only spotting technologies with lucrative potential but also guiding them in the right direction to realize it. Having said this, a university is squandering opportunity by not retaining at least a minor stake in the technologies it spins out.