UK universities make £61m from spinout exits

University spinout exits have proven lucrative, with the highest exit values being in AI, quantum computing and medical and life sciences

 University spinouts look to solve problems facing us in the future

University spinouts look to solve problems facing us in the future

Universities have made a record-breaking £61m from university spinout exits, according to a new report from Octopus Ventures. That’s a 37 per cent increase year on year.

The firm’s second annual Economic Entrepreneurial Ranking report shows that the spinouts with the highest exit values were in artificial intelligence (AI), quantum computing and life and medical sciences.

The economic benefits generated by these sectors are already significant. The UK’s life sciences industry contributes over £70bn a year and 240,000 jobs across the country. Figures from Innovate UK also reveal that government support to help commercialise spinouts pays off, with every £1 invested returning almost £4.

Queen’s University in Belfast has retained its place in the top spot while the University of Dundee has entered the top five. The latter is leading in two categories: computer and medical sciences.

1stQueen's University Belfast
2ndUniversity of Cambridge
3rdCardiff University
4thQueen Mary University of London
5thUniversity of Dundee
6thUniversity of Leeds
7thUniversity of Oxford
8thUniversity of Nottingham
9th University of York
10thKing's College London

The ranking rates UK universities’ effectiveness in terms of production of intellectual property, creation of spinout companies and successful exits from such spinout companies, relative to their total funding.

Simon King, partner and deep tech investor at Octopus Ventures, said:

“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.”

How to create more commercial success for your spinout

Many of the top universities included in the report share similarities in developing and commercialising spinouts. Here are the report’s recommendations based on their performance:

  • Focus on customer discovery: Spinouts should aim for at least 100 conversations with potential customers
  • De-risk technology and teams: Use proof of concept and prototyping, along with quality hires, to de-risk the spinout
  • Align incentives for different skill sets and development phases: Ensure ownership structure and incentives are aligned to attract the right people at the right time
  • Use milestone-based valuations and fundraising targets: Aim to raise funds in stages according to what is needed to reach the next milestone
  • Be creative in fundraising: Leverage all sources of fundraising available
  • Build scale through alliances: Use networks to add value to spinouts in different circumstances

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