Talk of venture capital opportunities nowadays and thoughts inevitably turn to the pioneers of Silicon Valley. But innovation doesn’t always stem from that particular hotbed of capitalism. In the UK, many start-ups begin life at some of the world’s oldest institutions: universities.
Over the past ten years, the combined value of equity investment deals into companies spun off from UK universities has risen by 527 percent, totalling £11bn of funding. Last year spin-outs took in more than £2.5bn in equity investment, equivalent to almost 10 per cent of total investment into UK private companies in 2021, according to figures from data platform Beauhurst and spin-out investment manager Parkwalk.
Early-stage investing is fraught with risks, but university-linked companies have more staying power than most. Data from Beauhurst and the Royal Academy of Engineering has found that academic spin-outs are more likely to survive than the average start-up. Established UK companies such as Sage (SGE) and Kainos (KNOS) are among those that began life as university spin-offs.