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Barr Ellison Solicitors – commercial property
9 April, 2018 - 10:55 By Tony Quested

Cambridge success backs call for UK to nurture university spinouts

The success of Cambridge University spinouts in recent times backs up new research showing that commercial rollouts from UK universities have a far higher success rate than startup companies.

Investment in spinouts from both public and private sources increased by more than £1 billion between 2011 and 2017, according to Intellectual Property law firm Anderson Law.

Their study comes hot on the heels of the formation of the UK Research and Innovation (UKRI) body, which will be an important part of the Government’s industrial strategy.

Anne Dobree, who is head of seed funds at Cambridge Enterprise – the university’s commercialisation arm – revealed the extent of CE’s successful strike rate. She said: “We have just done an assessment and the five-year survival rate of Cambridge Enterprise portfolio companies is 97.5 per cent; this covered companies incorporated in the 10-year period from  01/01/2003 – 31/12/2012. The amount of funding raised by our portfolio companies since 1995 is over £1.6 billion.”

The Anderson Law research says that notably the best funded sector is engineering and physical sciences, which received £7.6bn in private and public funding between 2011 and 2017.

Amid uncertainty over the funding landscape post-Brexit, Anderson Law recommends that the Government supports enterprise and innovation by outlining a clear strategy for the commercialisation of research from UK universities.

It argues that the future of UK innovation will suffer without more support for university spinout companies that are proving the backbone of the startup sector.

Anderson Law’s research finds that investment in UK spinouts from both public and private sources has increased by £1.1 billion between 2011 and 2017. 

Over £800m of that came between 2015 and 2017; in 2014, the Research Excellence Framework (REF) introduced a requirement that university research should demonstrate “impact.”

Across specific sectors, the best funded is engineering and physical sciences, which attracted £7.6bn in private and public funding between 2011 and 2017. Arts and humanities receives the least funding overall at just over £300m, followed by particle physics, nuclear energy and astronomy. At the same time, nine out of 10 university spinouts which received private investment between 2011 and 2015 have survived. This is significantly higher than the usual survival rate of startups more widely, where only two in 10 survive beyond their fifth year.

Mark Anderson, managing partner of Anderson Law, said: “The commercialisation of university research makes a substantial contribution to the UK’s enterprise economy. Turning ideas into commercial ventures in this way creates jobs and wealth, and scores of highly successful UK and overseas companies can trace their origins to university research. The success rate of university spinouts is undoubtedly something for the newly formed UKRI to celebrate.

“This success needs to be built on, though. The spinout ecosystem has not been rigorously assessed before; our research marks the first real effort to trace patterns of public and private investment into UK spinouts.

“Furthermore, we found no real evidence of any relationship between the level of public investment into research and the level of private investment into UK spinouts – further evidence that the system is not working as well as it could. 

“As UKRI begins its work, the commercialisation of research from UK universities should be top of its in-tray. The Government has a role to play too. 

“Universities should be given a policy steer on their role as innovators, as part of a clear national strategy for the commercialisation of research from UK universities. The information the Government will receive from the KEF, as part of its industrial strategy, will be a critical piece of the puzzle.

“A better-defined strategy for commercialising university research will also go a long way towards demonstrating the value of universities to the UK, and the economic and societal impact they can have. But there is a real need to get this right, now. 

“The uncertainty over Brexit adds extra urgency. If the UK is to remain competitive on the international stage over the next decade, it is essential we understand what we are good at, where we are helping ideas develop into successful entities, and back those systems.

“If we do not, the ultimate price could be a UK struggling to produce world-beating start-ups and SMEs ten years from now – which would have real consequences for our economic prospects.”

• PHOTOGRAPH SHOWS: Anne Dobree, head of seed funds at Cambridge Enterprise

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