October 18-20 | Tucson, AZ

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Isis Innovation, University of Oxford seed funded company, NaturalMotion, sold for $527m

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October 18-20, 2023 / Tucson, AZ
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The Story

Isis Innovation worked with Zoology researcher Torsten Reil to protect his intellectual property, develop a business plan, and introduce first-round investors. The company was spun out in 2001.

US social games company Zynga has now finalised the acquisition of Natural Motion for more than $527m, one of the largest transactions ever involving an Oxford spin-out. The University, as a NaturalMotion shareholder, will benefit from more than £30m in cash and shares from the deal.

NaturalMotion Ltd started in 2001, based on the work of Oxford Zoology DPhil student Torsten Reil, the company’s CEO since foundation. Torsten was a neural researcher, developing computer simulations of nervous systems based on genetic algorithms. His programmes used natural selection to evolve their own means of locomotion, allowing more realistic animations of human and animal movement.

Torsten quickly saw the commercial potential of the technology, called Dynamic Motion Synthesis (DMS). With the help of the University’s technology transfer company Isis Innovation Ltd, he co-founded NaturalMotion for the development, use and sale of DMS. The Oxford University Challenge Seed Fund provided some initial funding for the new business, while Isis Innovation helped Torsten apply for a patent. Isis also introduced the new company to further investment from business angels, many of them Oxford-based.

Following NaturalMotion’s launch, the University continued to invest in the company’s development through Oxford Spin-out Equity Management (OSEM). The University established OSEM in 2008 to manage its equity in spin-outs and make further cash investments when appropriate. OSEM’s backing was complemented by investment from top-tier venture capital firms Balderton Capital and Benchmark. The continued support helped NaturalMotion expand to its current size of around 260 employees, with offices in Oxford, London, Brighton and San Francisco.

Professor Andrew Hamilton, Vice-Chancellor of the University of Oxford, said: ‘Torsten Reil has built up a remarkable business, based on his research at Oxford into computer simulations of nervous systems. NaturalMotion is now an outstanding example of how our academic excellence translates into high-quality jobs and commercial success. The scale of the acquisition, and the benefit to the University, is a terrific endorsement of our strategy of commercialising University Intellectual Property and continued investment in our spin-outs.’

The acquisition by NASDAQ-listed Zynga represents the first major sale of a University spin-out since OSEM’s formation in 2008. Dr Chris Towler, Director of OSEM, said: ‘I am thrilled that as a major investor and shareholder in NaturalMotion, OSEM has delivered a substantial capital gain for the University. OSEM has enjoyed a close working relationship with Torsten and the other major shareholders over many years. This is a tremendous vindication of the University’s decision to provide significant funds for investment in its spin-outs. Returns from this investment will allow the University to continue to invest in its most promising spin-outs and ultimately feed back funds to the benefit of the wider academic community.’

DMS technology offers real- time simulation of nervous systems and biomechanics. The first DMS product, Endorphin, captured the imagination of producers of major Hollywood films, including Troy and Poseidon. The software helps animators save time and money but allows them to produce more realistic characters. A subsequent DMS product, Euphoria, then sold to major games companies wanting to create interactive 3D characters for Playstation3, Xbox 360 and PC.

NaturalMotion then started its own catalogue of smartphone-based mobile computer games. The company’s first mobile game, Backbreaker Football, has been downloaded more than five million times, and its first ‘free-to-play’ game, My Horse, has been downloaded over 11 million times. Other popular titles now include Clumsy Ninja and CSR Racing.

Tom Hockaday, Managing Director of Isis Innovation Ltd, has worked with Torsten since Natural Motion’s inception in 2001. Tom said: ‘From being an exciting project in the Zoology Department we worked with Torsten to protect the IP, develop a business plan, and introduce first-round investors. Now, 13 years later, the cycle is complete with a return to the seed funds managed by Isis that will help launch the next generation of spin-outs from Oxford.

‘It’s a fantastic achievement for Torsten, who is a remarkable leader, to have left the world of academia and led a company of over 200 people to such a highly valued exit. Despite the company’s international growth he has retained the Oxford base, creating jobs in the local economy. For Isis this is a great example of the benefits of commercialising university IP, and we’re hugely grateful to Torsten for his unwavering support.’

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