In the first half of 2024, UK university spinouts have raised £1bn, signalling a potential comeback in funding.
- Investment in UK spinouts has been declining since 2021, when it peaked at £2.73bn.
- Despite the decline, funding remains above pre-pandemic levels, averaging 423 deals annually from 2020 to 2023.
- Parkwalk, the leading investor, highlights the government’s swift action to maintain momentum in spinout funding.
- The 2035 extension to the Enterprise Investment Scheme is set to boost further investment in British spinouts.
In a significant development for UK university spinouts, £1bn has been raised in the first half of 2024 alone. This represents a promising rebound for these ventures, which are known for delivering innovative solutions to complex global challenges. Funding for these spinouts had been on a downward trajectory since reaching a record £2.73bn in 2021, dropping to £2.38bn in 2022, and further down to £1.75bn in 2023. However, the current figures suggest a resurgence that could see total investments reach £2bn by the end of the year.
Despite the prior decline, investments have consistently surpassed pre-pandemic levels. According to Parkwalk, Britain’s most active investor in university spinouts, the average number of deals has remained stable, with 423 deals annually from 2020 to 2023. This stability indicates enduring interest and confidence in the potential of university spinouts, even amidst varying economic conditions.
Parkwalk’s CEO, Moray Wright, has articulated the importance of nurturing and supporting spinouts, stating that they are crucial for UK prosperity. He emphasised the necessity of the 2024 investment resurgence and the government’s prompt measures to solidify the current momentum. Wright also acknowledged the significance of the 2035 extension to the Enterprise Investment Scheme, which is anticipated to facilitate funding for thousands more spinouts.
Government initiatives are further highlighted by a review that urged universities to reconsider their equity stakes in spinout companies. Recent data from Beauhurst and the Royal Academy of Engineering shows that university-held stakes in such companies increased from 19.1% to 22% over the past year. The spinout review recommends a more strategic approach, with equity stakes of 10% for non-IP-intensive spinouts and between 10% and 25% for those that are IP-intensive.
The resurgence in UK spinout funding highlights a promising trend for innovation and economic growth within the sector.