Funding for UK spinouts could be back on the rise, with startups coming out of universities raising £1bn in the first half of the year alone, new research reveals today.
Investments in British spinouts have been steadily declining since the record high of 2021 when they brought in £2.73bn, according to a new report published by Parkwalk.
In 2022 the figure dropped to £2.38bn, then to £1.75bn the year after. UK spinouts could, however, be on track to pull in £2bn following encouraging activity in the first half of the year.
“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,” said Parkwalk CEO Moray Wright.
“A 2024 investment resurgence is vital for Britain’s long-term prosperity and the government has moved quickly to help cement momentum.”
Parkwalk is Britain’s most active investor in university spinout companies.
According to the group’s findings, though spinout investments have slowed down, the amount of funding has yet to drop below pre-pandemic levels of £1.53bn in 2020.
Parkwalk noted that the number of spinout deals has remained stable from 2020 to 2023, averaging 423 deals a year.
“We applaud the new 2035 extension to the Enterprise Investment Scheme which will see thousands more spinouts secure funding,” added Wright.
“To truly realise the potential of UK science and technology, it’s now essential the Mansion House reforms are effectively implemented, and we unlock vast pools of domestic pension capital.”
Last year, a government-sponsored review of spinouts urged universities to consider lower equity stakes in their companies.
Recent research from Beauhurst and the Royal Academy of Engineering found the average equity stake taken by universities in companies formed by students and staff grew from 19.1% to 22% over the last year.
The spinout review recommended universities take 10% stakes in non-IP-intensive spinouts and between 10% and 25% for more IP-intensive firms.
Read more: A guide to university spinouts