Venturing Out

Something special is happening in Oxford and Cambridge. Since 2015, Oxford University has seen a 166% increase in the number of new companies formed from its research each year, attracting seven times as much investment. Meanwhile, Cambridge University has seen a 60% increase, securing nearly 14 times as much capital. But their recent spin-out success isn’t being replicated elsewhere.

Only six universities are creating more spin-outs and attracting greater investment than in 2014. The universities in the Gold Triangle — Oxford, Cambridge, Imperial, UCL, and King’s College London — are responsible for a third of spin-outs. The gap is growing thanks to the university partner funds they have helped establish.

Regional inequality is holding spin-outs back. High-quality research is produced across the UK, from Edinburgh to Exeter and Liverpool to Manchester. But four-fifths of venture capital and private equity firms are in London, and 60% of all deals are struck supporting firms in the capital and South East.

Universities are under severe pressure. The sector faces an overall funding deficit of £4.5 billion, and two-thirds of institutions could be in the red by 2025. Many cannot afford to support their Technology Transfer Offices (TTOs), which foster university commercialisation, leaving them underpowered and underfunded. 

A Government survey found that 30% spent a year or more waiting to strike a spin-out deal with their university. The previous Government’s plans to use the Higher Education Innovation Fund to support these cash-strapped offices are insufficient, as only 11 out of 131 universities received a grant large enough to cover most TTO costs.

Onward urges the new Government to create a ‘University Partner Fund Accelerator’ to help institutions outside the Golden Triangle build accessible private investment funds to support spin-outs. In the two years since the establishment of Northern Gritstone, Manchester attracted double the investment and Leeds by nearly 50 times. By redirecting existing funding pots, the programme would match fund four initiatives to create new partner funds using £20 million of public money each.

Lord William Hague, former Foreign Secretary, said: “Universities play a critical role in our country’s science and tech ecosystem, bringing together talent, ideas, and funding, and supporting academics to commercialise their ideas through spin-outs.”

“This new report by Onward rightly highlights the role of university partner funds, with Oxford Science Enterprises helping to more than double the annual number of Oxford University spin-outs- since 2015, and increasing the capital raised for them sixfold.”

“Ministers should back Onward’s call for a University Partner Fund Accelerator to help more universities emulate the spin-out- successes of Oxford.”

Allan Nixon, Head of Science and Tech, said: “Britain punches below its weight when it comes to university spin-outs. We produce world-class research but frequently fail to turn our innovative ideas into companies. Our universities and country are poorer for it.

“Support from universities for spin-outs are underpowered and underfunded, and regional inequality in access to finance makes the situation even harder for leading universities outside London.

“But university partner funds provide an answer, attracting investment accessible to spin-outs. It’s partly why Oxford and Cambridge are so successful and why Manchester is on the up. Creating a University Partner Fund Accelerator will help those innovative universities catch up.”