UKRI-backed university spin-outs ‘twice as successful’

University spin-outs twice as likely to succeed when backed by UK funding agencies, new analysis shows.

According to a new report by UK Research and Innovation (UKRI), 97 per cent of university spin-outs receiving funding from its commercialisation arm Innovate UK or the state-owned British Business Bank remained active, compared with 49 per cent of those that did not.

Those chosen for Innovate UK funding employed 18 people on average compared with four for those solely backed by universities, it adds.

Eight years after incorporation, spin-outs with support from both Innovate UK and the British Business Bank had raised a median of £7.3 million via 4.6 external equity rounds, compared with just £1.6 million via 2.9 rounds for those that had not had funding from either.

Overall, a total of 14,594 companies have been backed by Innovate UK, whose annual budget is set to rise by £400 million to £1.1 billion by 2024-25, while 2,306 organisations had received support from other UKRI research councils.

Indro Mukerjee, Innovate UK’s chief executive, said that the report indicated the need for a “joined-up offer to innovative businesses to better exploit the strengths of the UK’s excellent research base.”

Dame Ottoline Leyser, UKRI’s chief executive, said the study showed how research councils could help researchers “form and scale R&D intensive innovative businesses”.

The study also found that spin-out companies based in the “golden triangle” of Oxford, Cambridge and London tended to raise more money: within eight years of their foundation, golden triangle spin-outs had raised £5.7 million on average, compared with £1.4 million outside the Greater South-East.

Spin-outs outside the golden triangle were less likely to access equity capital, with 40 per cent raising at least one round of external equity, compared with 53 per cent of those within the golden triangle.

The study highlights the success of the graphene company Paragraf, which spun out of the University of Cambridge in 2015 and recently raised $60 million (£50 million) in funding, having received six Innovate UK awards throughout its lifetime.

jack.grove@timeshighereducation.com