A report published today from Parkwalk, the UK’s biggest investor in university spinouts, has revealed that UK spinout investment is showing signs of recovery following a challenging year in 2023.

The report, Equity Investments Into Spinouts, published in partnership with Beauhurst, reveals that spinouts have secured over £1 billion in funding during the first half of 2024. If this trend continues, investment for the full year is expected to exceed 2023 levels.

Investments into university spinouts has been falling since 2021 after hitting a record high of £2.73 billion. In 2023, the sector attracted investment of £1.75 billion, down from the £2.38 billion invested during 2022, but the number of deals for spinouts has remained fairly stable between 2020 and 2023, with an average of 423 deals each year.

While no spinout deals exceeded £100 million in 2023, compared to two in 2022, companies in the life sciences, quantum, and AI industries have raised significant amounts to support R&D and commercialisation.

Among the largest deals for spinouts were Oxford Quantum Circuits securing £78.7 million in November 2023 for the development of quantum computing, and AI developer Synthesia, from University College London, which secured £71.4 million from investors including Accel and Google Ventures.

Oxford and Cambridge continue to top the charts for the number of spinout deals secured and the amount of equity investment, with £654 million invested between them.

Several Scottish universities also make the list, with the University of Strathclyde securing £55.5 million in spinout investment, followed by the University of Edinburgh, with £35 million.

The research also highlights the most successful exits by spinouts since 2014. Oxford Nanopore Technologies has been the most successful, seeing a valuation of £3.38 billion at its IPO, while cybersecurity firm Darktrace, out of Cambridge University, hit a market cap of £1.72 billion in April 2021.

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Moray Wright, CEO of Parkwalk, said: “The case for uncovering, nurturing and backing spinouts could not be stronger – these are companies delivering novel solutions to the world’s most pressing challenges. 

“We applaud the new 2035 extension to the Enterprise Investment Scheme which will see thousands more spinouts secure funding. To truly realise the potential of UK science and technology, it’s now essential the Mansion House reforms are effectively implemented, and we unlock vast pools of domestic pension capital.”

Over the past decade, annual investment in spinouts has quadrupled, increasing from £514 million in 2014 to an estimated £2.3 billion in 2024.

A recent report from the British Business Bank showed that Scotland accounted for almost one-fifth of all UK equity deals involving university spinouts in 2023, with total investment value in Scotland reaching £402 million, 50% less than in 2022.