University spin-outs: our research report

There is much to celebrate within the UK’s university spinout sector. But could it do more?

It is a timely question, given that the start of April marked the official launch of UK Research and Innovation (UKRI), an amalgamation of the seven research councils, Innovate UK and Research England. With this, UK universities’ ability to turn research into innovation is once again under the spotlight.

In many ways, spinouts are a real success story. Since the mid-1980s, UK universities have been allowed to commercialise the results of their research. Over the last 30 years, many universities have gained experience of managing their knowledge transfer activities, either in-house or through a subsidiary company, or in some cases in partnership with external companies. An important part of this activity has been setting up spinout companies and securing initial funding for their activities. Some highly-successful UK and international companies can trace their origins to UK university research.

In 2014, the commercialisation of university research received a further boost when the Research Excellence Framework (REF) introduced a requirement that university research should show “impact”.

However, just four years later, research funding is facing a crossroads. Uncertainty over Brexit has left the future of many funding streams far from secure. At the same time, the government’s industrial strategy recognises the need for UKRI to benchmark how well universities commercialise the results of their research.

The time feels right, then, for scrutiny of how the university spinouts system works, In particular, the relationship between the sources of funding for academic research, and successful commercialisation of the research. It is somewhat surprising that nobody has really done this before.

So, a few months ago, Anderson Law commissioned research into precisely this. The findings, summarised in our newly published report, mark the first real insight into how innovation from UK universities is being funded and how this leads to the creation of spinouts.

Overall, it’s a positive picture. Spinouts from UK universities are thriving; nine out of ten spinouts which have received private investment between 2011 and 2015 have survived. Among start-ups on the whole, only two in ten survive beyond their fifth year.

We also found that the number of spinouts from UK universities is on the increase and, with this, so is the amount of investment into them from private investors. But we believe more should be done.

As UKRI begins its work, we expect that the commercialisation of research from UK universities will be a priority. We also think the government has a role to play too, giving Universities a clear policy steer on their role as innovators, as part of a national strategy for the commercialisation of research from UK universities.

A better-defined strategy for commercialising university research will also go a long way towards demonstrating the value of universities to the UK, and the economic and societal impact they can have. But there is a real need to get this right, now. The uncertainty over Brexit adds extra urgency. If the UK is to remain competitive on the international stage over the next decade, it is essential we understand what we are good at, where we are helping ideas develop into successful entities, and back those systems.

If we do not, the ultimate price could be a UK struggling to produce world-beating start-ups and SMEs ten years from now – which would have real consequences for our economic prospects.

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