A new report highlights the crucial role of university partner funds in fostering spin-outs, 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.
Lord Hague praises this success, urging ministers to back a University Partner Fund Accelerator to help other universities replicate Oxford’s achievements. The report reveals that only six universities are creating more spin-outs and attracting greater investment than in 2014, with the “Golden Triangle” of Oxford, Cambridge, Imperial, UCL, and King’s College London responsible for a third of spin-outs.
Regional inequality is hindering progress, with four-fifths of venture capital and private equity firms based in London and 60% of deals struck supporting firms in the capital and South East. Lord William Hague and Allan Nixon, Head of Science and Tech, emphasize the need to support universities outside this hub to unlock their innovative potential.
The Role of University Partner Funds in Fostering Spin-Outs
The success of university spin-outs is heavily dependent on the presence of partner funds that provide accessible private investment to support these ventures. A recent report by Onward highlights the critical role of university partner funds, citing the example of Oxford Science Enterprises, which has helped more than double the annual number of Oxford University spin-outs since 2015 and increase the capital raised for them sixfold.
The report notes that only a few universities are replicating this success, with the majority struggling to create spin-outs and attract investment. The universities in the Golden Triangle – Oxford, Cambridge, Imperial, UCL, and King’s College London – are responsible for a third of spin-outs, while regional inequality is holding back spin-outs elsewhere.
High-quality research is produced across the UK, but four-fifths of venture capital and private equity firms are concentrated in London, and 60% of all deals are struck supporting firms in the capital and South East. This geographical imbalance is exacerbating the funding deficit faced by universities, which are under severe pressure to support their Technology Transfer Offices (TTOs) that foster university commercialization.
The Funding Deficit Faced by Universities
The higher education sector faces an overall funding deficit of £4.5 billion, and two-thirds of institutions could be in the red by 2025. Many universities cannot afford to support their TTOs, leaving them underpowered and underfunded. A Government survey found that 30% of universities 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. This funding shortfall is hindering the ability of universities to commercialize their research and create spin-outs.
The Need for a University Partner Fund Accelerator
To address this issue, 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. 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, has endorsed this proposal, stating that universities play a critical role in the country’s science and tech ecosystem and that supporting academics to commercialize their ideas through spin-outs is essential. Allan Nixon, Head of Science and Tech, notes that Britain punches below its weight when it comes to university spin-outs and that creating a University Partner Fund Accelerator will help innovative universities catch up.
The Potential Impact of a University Partner Fund Accelerator
The creation of a University Partner Fund Accelerator has the potential to level the playing field for universities outside the Golden Triangle. By providing accessible private investment funds, these institutions can better support their spin-outs and attract more investment. The success of Northern Gritstone in Manchester, which attracted double the investment, and Leeds, which saw nearly 50 times the investment, demonstrates the potential impact of such a programme.
By supporting universities to commercialize their research, a University Partner Fund Accelerator can help bridge the funding gap faced by these institutions and promote regional growth. As Lord Hague notes, universities are critical to the country’s science and tech ecosystem, and supporting them to create spin-outs is essential for driving innovation and economic growth.
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