For many professionals in the higher education sector, however, the term brings with it many outstanding questions about their institutions, and the sector at large, as widening gaps in budgets at some universities remain unaddressed.

University spin-out growth

The insolvency of any UK university would be a tragedy, not just for the students and employees of that institution as it’s pitched into unknown territory, but also for its wider community, and UK plc generally. Universities play significant economic roles, driving R&D, growth and innovation, all of which are at the heart of the Government’s plans to boost the UK. Between 2012 and 2023, £1.6 billion was invested in UK academic spin-outs, up from £169 million (+947% growth), with the number of active spin-out companies hitting approximately 1,259 in 2023, up from 315 (+352%), although the UK’s share of venture capital investment has remained relatively static in recent years (based on Beauhurst data, February 2024).

Stopping spin-outs from stalling

Across the UK, there are key gaps in R&D, where opportunities are being missed in growth sectors where spin-outs should have a greater reach but lack the support and investment to fully thrive and commercialise their output. There’s often a difficulty in incubator ecosystems growing, with small and medium enterprises (SMEs) either failing or leaving knowledge areas. This is usually driven by affordability issues, such as a lack of physical infrastructure, including finding enough real estate with the right spec and facilities on flexible lease terms and competition over highly-skilled technical labour, alongside many other capital and regional-specific influences. We therefore believe there’s a greater role universities can play to maximise their economic influence and create more fostering ecosystems: both to retain these spin-outs in their areas - facilitating growth and benefitting communities - but also potentially benefitting from the financial success of these spin-outs if they have equity stakes. 

The role of real estate

Appropriate real estate has an important part to play here: while out-of-town/edge of campus science parks and innovation districts/zones have a role, there’s a need for more integrated spaces, offering a stronger vertical mix of collaboration between academia and businesses in multiple industries, and the opportunity to scale-up to sustain expansion by offering affordable grow-on options in terms of space, too. While some landlords and providers do already provide enterprise space in specific cities, universities can better facilitate bridging the gap between them and spin-outs, or to lead on the delivery of brand new spaces. Successful examples of the latter include STEAMhouse, powered by Birmingham City University. This is a multi-disciplinary space which provides coworking and meeting spaces, alongside state-of-the-art production space and prototyping facilities, a digital hub, workshops, courses, events, and networking, in a collaborative environment. Science Creates in Bristol is another model. Part funded by Research England with the University of Bristol, it offers incubator lab-space for deep tech start-ups in old warehouses, but also provides access to a dedicated venture capital fund and a network of strategic partners and entrepreneurs. Given their long-term approach and pre-existing business and economic influence, other universities can lead in the delivery of similar hubs, helping to transform the economic picture of their towns and cities, and contribute to the wider growth story.

Of course, this is not without its challenges in a time when universities are watching every penny. However, there is a case for public sector investment to be made available to help the delivery of such transformational initiatives and, with a proper business case, there is the prospect that universities may find a receptive audience if they choose to seek such support.

Further information

Contact Sadie Janes or Ryan McKenzie

Sectors: Education