7th March 2024

Tomas Coates Ulrichsen and Zoi Roupakia

A new UCI report, published today, reveals detailed insights on key trends in UK spinout production and the influence of university founding equity on initial investments. The report demonstrates the importance of university spinouts for the UK’s ambitions to become a more science and technology-driven economy. Analysis of UK and US spinout data finds that UK spinout production, controlling for the size of research base, is comparable to that of the US, and points to further research needed on the ability of the UK to retain value from its spinouts. It also confirms a very weak relationship between university founding equity and initial investment.

Download the full report

Download the executive summary

Contact the authors:

• Tomas Coates Ulrichsen (tc267@cam.ac.uk)
• Zoi Roupakia (zr216@cam.ac.uk)

The study, led by Zoi Roupakia and Tomas Coates Ulrichsen, builds on UCI’s 2022 Busting Myths report, exploring the realities of approaches to spinning out in UK universities. Through surveying UK Technology Transfer Office (TTO) Directors, the 2022 report highlighted the complexity of the spinout process and need to consider barriers beyond equity. Other important recent developments in this domain include the 2023 independent review of spinouts by Professor Irene Tracey and Dr Andrew Williamson, which among other things recommended improved data and transparency to better inform developments of ‘innovation-friendly’ policies.    

Key findings

UCI’s new report builds on work over the last few years and attempts to address key limitations by working closely with TTOs of 15 universities responsible for approximately half the spinout production in the UK to obtain internal data on their populations of spinouts, including founding equity and other key deal terms at the point of foundation and initial non-grant investments raised; data which can be very hard to obtain through public and commercial sources. We are incredibly grateful to these universities for investing their time and effort to provide us with these data.

Combining this novel dataset with other data from Companies House, Pitchbook, HE-BCI, and the AUTM Licensing Activity Survey (amongst others), the analysis finds:

• Healthy UK spinout production: university spinouts play a significant role in driving innovation in many of the sectors that have been identified as strategically important for the UK’s future competitiveness (including life sciences, advanced materials, and semiconductors).
• UK university spinout production compares favourably with their US counterparts when controlling for the scale of the research base. However, our findings tentatively suggest that the UK struggles to capitalise on the value potential created by its spinouts to drive long-term national and regional benefits. Our evidence reveals the growing importance of overseas markets, investors, and companies in enabling UK-based spinouts to grow, which may result in pressures to expand and scale outside the UK. Further work is urgently needed to understand the scale, nature, and drivers of this challenge and the implication for long-term value capture in the UK.
• Evidence of only a very weak (albeit statistically significant), non-linear relationship between university founding equity and the initial investment success of spinouts, with the shape dependent on context. This points to other factors, such as the value proposition, team strength, support available, investor access and relationships, and market access likely playing a more significant role. Further research is needed to better understand the relative contributions of these different factors.

Moving forward...

Moving forward, we call for a more holistic, cross-government approach to better support a thriving spinout ecosystem, with more aligned policy efforts across different domains.

We must expand the debate beyond its focus on university founding equity, to identify the critical factors influencing spinout success and find ways of building and reinforcing them.

We must also urgently investigate the factors influencing the ability of the spinouts to successfully scale in the UK and the ability of our nation to capture more of the longer-term benefits unlocked by these ventures.

We must also get much better at leveraging data-driven insights to inform policymaking in this area. This includes finding ways to track the health and performance of the spinout ecosystem and how preferences and drivers of success are evolving, as well as how to better classify spinouts to reveal their unique potential. In this respect, UCI are proud to be collaborating with Research England and the Higher Education Statistics Agency (part of Jisc) to develop a national spinout register, a recommendation of the government review. This will provide another important step in enabling greater understanding and data driven insights for spinout policy.

By addressing these challenges and finding ways for the UK to anchor more of the longer-term value unleashed by spinouts in the UK, we can foster a thriving spinout ecosystem that drives innovation, economic growth, and societal benefits for the UK.