UK spinouts have drawn £1bn in funding in the first half of 2024, marking a potential recovery in investment levels.
- Despite a previous decline, spinout investments show promising signs of returning to their peak levels recorded in 2021.
- Parkwalk, the key investor in university spinouts, highlights the importance of nurturing these ventures for delivering innovative solutions.
- The stability in the number of spinout deals suggests resilience in the market, backed by recent government initiatives.
- A significant review suggests universities rethink their equity stakes, aiming to foster more growth in collaboration with spinouts.
New research has indicated that UK-based university spinouts have raised £1bn in the first half of 2024, signalling a shift towards increased investment. The report suggests that this is a rebound from a decline observed after the record £2.73bn in 2021.
In subsequent years, a decrease was noted, with funding dropping to £2.38bn in 2022 and £1.75bn in 2023. However, the current trajectory could see investments reaching £2bn this year. Parkwalk CEO Moray Wright stated, “The case for uncovering, nurturing, and backing spinouts could not be stronger – these are companies delivering novel solutions to the world’s most pressing challenges.”
Parkwalk’s influence in the spinout sector is significant, being identified as Britain’s most active investor. The organisation’s reports note that while funding levels have decreased, they remain above pre-pandemic figures of £1.53bn in 2020. This resilience is further evidenced by the consistent number of deals from 2020 to 2023, averaging 423 annually.
Wright further praised the extension to the Enterprise Investment Scheme to 2035, which should enable thousands more spinouts to secure necessary funding. He also emphasised the need for effective implementation of Mansion House reforms to unlock domestic pension capital, aiming to further bolster the sector’s growth.
A recent review commissioned by the government suggested adjustments in how universities handle equity stakes. Currently, universities have increased their average stakes from 19.1% to 22%. Recommendations propose a reduction to 10% for non-IP-intensive spinouts and 10% to 25% for more IP-intensive companies, to encourage wider growth and collaboration.
The resurgence in spinout funding underscores the vital role these entities play in innovative developments, supported by sustained government and investor engagement.
