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19 November, 2020 - 14:27 By Tony Quested

Cambridge University spinouts contribute to record UK valuations

The University of Cambridge is second only to Queen’s University Belfast for yields on successful exits from academic spinouts, according to research by Octopus Ventures.

UK university spinouts are achieving record breaking exit values, according to the latest figures from Octopus Ventures’ Entrepreneurial Impact Ranking 2020. 

While Queen’s retained top spot, Octopus says the gap to second-placed Cambridge “narrowed significantly this year – a testament to the growth of the spinout ecosystem.”

It adds: “The University of Cambridge held firm in second place but both the Universities of Oxford and Cambridge had outstanding years. Sales of shares in spinout companies totalled £23.8 million and £18.8 million, respectively.” As a result Oxford moved up two positions to seventh place.

Octopus said the new plateau in exits from UK university spinouts show promise for the UK’s post-Covid economic recovery. Experts quoted in the report believe university spinouts could hold the key to the UK’s next industrial revolution; latest data shows UK universities received a record £61 million from spinout exits and that top performing sectors were in AI, quantum computing and life & medical sciences.

The £61m universities received from spinout exits was an increase of 37 per cent year on year from 2017/18 to 2018/19.

Cambridge is an exemplar for a number of reasons, not least the brilliance of S & T research emanating from its hallowed halls. It also benefits from having a dynamic commercialise arm at the university in Cambridge Enterprise, academic investment specialists such as Parkwalk and Cambridge Innovation Capital and VCs including IQ Capital, Ahren Capital, Amadeus Capital Partners and others who work closely with the university and its leading ‘dontrepreneurs.’

Simon King, partner and deep tech investor at Octopus Ventures, explains: “When investing in spinouts you have to take a long-term view. We’re thinking about how these technologies could revolutionise the way businesses and society operate in ten years, well beyond the challenges posed by the virus today. 

“The scientific research produced by UK universities is genuinely world-class and, as we start to think about the UK’s post-pandemic recovery and our future outside the European Union, there’s no question that producing more successful spinouts could unlock huge economic growth.

“The momentum we’re now seeing, particularly in the fields of deep tech and life sciences, could help to power the fourth industrial revolution, creating thousands of jobs and giving the UK a strong competitive edge. That makes it even more important that we maximise their potential.”

The economic benefits generated by these sectors are already significant. The UK’s life sciences industry alone contributes over £70 billion a year and 240,000 jobs across the country. 

Figures from Innovate UK also demonstrate that government support to help commercialise spinouts pays off, with every £1 invested returning almost £42.

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