UK university spinouts have achieved significant funding success, raising £1bn in the first half of 2024, according to new research.
- Investment in UK spinouts shows signs of recovery despite a general decline since 2021.
- Funding has yet to fall below pre-pandemic levels, maintaining stability in deal numbers.
- Government initiatives play a crucial role in sustaining this upward trend in spinout funding.
- Recommendations suggest universities reconsider equity stakes for long-term growth in spinouts.
New research indicates that university spinouts in the UK have successfully raised £1bn in funding in the first half of 2024. This development signals a potential rebound in investment, following a trend of declining figures from a high of £2.73bn in 2021. This was a period marked by decreased funding, with figures dropping to £2.38bn in 2022 and further to £1.75bn in 2023.
Despite this decline, the latest funding has not dipped below pre-pandemic levels, which stood at £1.53bn in 2020. The number of deals made per year has remained steady, averaging 423 annually from 2020 to 2023. This stability suggests a sustained investor interest in university-linked innovations.
The government’s proactive measures have been pivotal in reviving momentum in the spinout landscape. Parkwalk, a leading investor in the sector, acknowledges the importance of these developments for Britain’s long-term prosperity. Parkwalk CEO Moray Wright emphasised, “The case for uncovering, nurturing and backing spinouts could not be stronger – these are companies delivering novel solutions to the world’s most pressing challenges.”
Moreover, recent policy changes such as the extension to the Enterprise Investment Scheme until 2035 are expected to facilitate additional funding opportunities for numerous spinouts. This legislative support is crucial to unlocking domestic pension capital, which could bring about substantial investment inflows.
In tandem with these financial strategies, a review has encouraged universities to adjust their equity stakes in spinout companies. Findings reveal a rising trend in equity stakes, from an average of 19.1% to 22%. Recommendations propose that non-IP-intensive spinouts should see stakes of approximately 10%, while more IP-intensive projects might justify up to 25%, ensuring a fair share of future gains.
The latest funding developments indicate a promising horizon for UK spinouts, underpinned by strategic investments and policy support.
