Investors have a key role to play in scaling spinouts, from offering recruitment advice to connecting them with the right partners.
The UK is home to some of the world’s leading universities and has long been a driver of global innovation. From penicillin to the Higgs boson, UK universities have been central to scientific breakthroughs that have had a significant impact on society. More recently, we’ve seen spinouts such as Oxford Nanopore become global leaders. Others, like Synthesia and Oxford Quantum Circuits, raised £78.7m and £71.4m respectively in 2024, topping the list of UK spinout equity deals.
Funding to university spinouts is trending upwards, with these companies now accounting for around 17% of total equity investment in UK tech start-ups. Yet despite progress, the sector remains underfunded. Compared to the US, UK spinouts raise less at every stage and are often sold earlier. To create more global leaders, we need to back research with larger amounts of capital — not only during commercialisation but also through the crucial scale-up phase. In short: we need a better-connected ecosystem.
Encouragingly, momentum is building. The launch of the UK’s spinout register has improved visibility of investable IP, while Innovate UK and the government’s industrial strategy are expected to channel more capital into R&D-intensive businesses.
Investing more than money
Investors have a pivotal role to play. Engagement should start early, helping founders lay solid foundations — from recruitment advice to connecting them with the right partners. Communication must flow both ways: investors should not only expect updates but also make clear what is required for investment. If corporate structures or IP protections are dealbreakers, founders need to know upfront. Spinouts demand a more collaborative approach than most investments.
Investors should also look inward. Do they have the technical capability to understand complex research? Can they properly evaluate novel IP? Can they speak the sector-specific language of their future partners? Building in-house expertise is essential to unlocking the potential of academia and forging stronger investor–founder relationships.
Finally, the industry needs greater patience and new ways of navigating risk. The UK has a rich landscape of grants and non-dilutive funding that can de-risk opportunities. Spinouts need both time and capital to achieve greatness. One without the other won’t work.
Laying the foundations of greatness
For academics, the driving passion is research. That same ambition, however, doesn’t automatically equip them with the commercial mindset needed to run a business. Moving from lab bench to CEO is a big leap. Spinout leaders must be willing to develop new skills — learning how to pitch to investors, protect IP and build teams.
Academics and investors often speak different languages. Clear articulation of both the technology and the size of the market is critical to convince investors. Fortunately, there are strong support systems available. Innovate UK, UKRI, and the Royal Academy of Engineering provide training and mentorship that help founders become investable.
This work has to start from day one. Protecting IP, building the right structure, and creating the right team are not “nice-to-haves” — they are make-or-break. With foresight and ambition, founders can build businesses of global scale, delivering the greatest societal and environmental impact.
Universities as incubators of success
Universities themselves also have a critical role. They must create structures that allow researchers to explore commercialisation, and act as conduits to connect founders with investors and mentors. Many institutions now have years of experience backing spinouts and can introduce infrastructure to replicate success. That might mean alumni mentoring schemes, talent recycling, or stronger networks between successful founders and the next generation.
Standardisation can also help. Using transparent templates for spinout deals can accelerate commercialisation and reduce friction. Encouragingly, we’re already seeing cultural change across institutions. Several universities have embraced entrepreneurship more actively, responding positively to the Independent Spinout Review and adopting frameworks like TenU’s USIT guide.
Policy is also evolving. Revisions to the Research Excellence Framework now tie impact more closely to funding, further incentivising universities to commercialise their research. UKRI, Innovate UK, and the Royal Academy of Engineering continue to provide guidance and resources that help spinouts thrive.
Building a healthier ecosystem
With government focus on unlocking new capital, the opportunity is clear. But investment alone won’t deliver the step change we need. A healthier, better-connected ecosystem will.
That means investors deploying greater amounts of patient capital. It means founders preparing early for scale. It means universities embedding entrepreneurial culture. And it means corporates stepping up — not just as investors, but as early customers and partners who can bring market insight.
If we get this right, the UK can do more than create spinouts. We can create enduring global businesses, rooted in our world-leading academic institutions, delivering economic growth and solving society’s biggest challenges.
Chris Smart is the investment director of the British Business Bank, the UK’s economic development bank.
