This year is set to be the best yet for companies spinning out of UK academic institutions, according to a new study.
These university spinouts have managed to raise more than £1bn so far in 2017, according to research from law firm Penningtons Manches, with most capital going to those from the “golden triangle” of Oxford, Cambridge and London.
Last year spinouts from Oxford University raised the most in equity investments, followed by Cambridge University and Imperial College London. But this year, data indicates Cambridge could overtake Oxford by the year-end.
“Following the release of a number of reports and reviews in recent months, not least the Patient Capital Review, the Life Sciences Industrial Strategy and the government’s Industrial Strategy, it is clear that the technologies emerging from our academic institutions are key to the future economic health of the UK,” said Nicola McConville, a corporate partner at Penningtons Manches who has advised more than 50 university spinouts.
The study also found that the majority of capital is being raised at the seed and venture stages of a spinout’s life, and that seed-stage spinouts are worth 47 per cent more than the average non-spinout.
But as was pointed out for all companies in the government’s Patient Capital Review earlier this year, growth capital is harder to come by. Only 42 per cent of spinouts received investment at this stage, compared to 55 per cent of non-spinouts.
Still only 10 per cent of the investment last year went to spinouts with a female leader, and this looks set to decline in 2017.
Significant amounts of money came from outside the UK – foreign investors contributed 37 per cent of the capital in 2016 but took part in only 15 per cent of deals. US-headquartered funds were the most active after the UK.