University Spinouts are having a moment. Investment in the sector hit £3.35bn in 2024, up 44% on the year before, and the institutions driving those headlines – UCL, Oxford, Cambridge – are clustered within a few miles of each other in London. UCL Business’ recent research underscores the point, with academics at a single London university having driven £3.06bn in external investment across 95 active spinout companies over the past five years.

The capital chasing their spinouts is concentrated in the same region. While the UK’s spinout ecosystem is producing real commercial momentum, if the next wave of UK university commercialisation replicates that same geographic pattern, we will miss the bigger opportunity – one that exists within Scotland and across the North of the UK.

The talent has always been here

Scotland is home to several of the UK’s leading universities, including the University of Edinburgh, ranking first in the UK for Computer Science and Informatics, and second nationally as a spinout location with 86 active spinouts. The University of Glasgow is also internationally recognised for its strengths in life sciences, quantum technologies, photonics, and semiconductors.

It doesn’t stop there though, with institutions like Strathclyde, Newcastle, Manchester, Leeds, Liverpool, Queen’s, York, and Sheffield proving the research depth in the North of the UK is genuinely world-class.

Northern universities account for 40% of the UK’s research intensity in the science and engineering disciplines that underpin deeptech – AI, quantum, semiconductors, biotech, advanced materials. When you look at the ten largest Northern universities collectively (the ‘N10’), they actually command 12% greater research power than the five renowned Golden Triangle universities in the disciplines that matter most for deeptech.

This research is becoming more valuable in the emerging region. With the same research power, the Northern universities’ total research income growth is outpacing the Golden Triangle, growing more than 50% faster than their southern peers. This isn’t a case of closing a gap, it’s an advantage that’s being underutilised.

The missing piece is capital

The funding picture tells a starkly different story. Northern spinouts attract only 11% of UK venture funding despite generating 40% of the country’s research output in the disciplines that underpin deeptech. A spinout coming out of Edinburgh or Glasgow raises less than a quarter of what its Golden Triangle equivalent would access at the same stage. The median age at which a Scottish company reaches its first institutional fundraise is also twice as long as that for a London-based equivalent

Here at PXN, we have backed 35 spinouts from 18 universities. Two-thirds have grown revenue year-on-year, supporting over 750 jobs in Scotland and the North. One in three is on track to turn over more than £1m this year, proving these are not just early-stage university projects – they are businesses being built for growth, and with patient support.

One of our most recent investments illustrates what is possible when the right capital meets world-class science. Quantcore, a University of Glasgow spinout, is the only UK company manufacturing niobium-based superconducting processors, combining proprietary material science with access to fabrication infrastructure that would cost competitors £50m-£100m and decades to replicate. The business is building sovereign UK capability in quantum hardware that is genuinely essential to national security. It demonstrates the calibre of spin outs the North can produce, but unfortunately many of these still go unfunded.

What separates the ones that make progress from the ones that stall? Almost always, it comes down to the availability of the right capital, at the right stage, from investors who understand the journey.

What backing spinouts actually requires

University spinouts are not like conventional early-stage startups, and they require investors with experience who come with more than money. The founding teams often tend to be brilliant scientists and researchers, who can be world-leading in their field. But commercialisation is a learned skill, and the learning curve is steep. Managing institutional stakeholders, hiring a commercial team, building a sales function: none of this is connected to the academic experience that brought the technology into existence.

That’s why investors need to be genuinely hands-on. At PXN, we invest in an average of 2.5 rounds per spinout, following our money because these companies need continuity of support, not just a cheque at the start. We help build boards, shape commercial strategy, make introductions, and sit alongside founders through the decisions that determine whether world-class science becomes a category-defining business.

Yet the capital gap remains. The pre-seed stage, where the earliest and riskiest capital decisions get made, is chronically underserved in the North. EIS investment, which has historically filled some of that gap, is contracting. Larger funds rarely engage at this stage, and almost never with the hands-on support that early spinouts require.

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However, there are some encouraging structural shifts. University equity stakes, which were long cited as a barrier to investment, are falling. The median UK university stake dropped from 22.6% in 2015 to 16.1% in 2024, its lowest level in a decade. This was partly driven by the adoption of the University Spin Out Terms (USIT) guidelines launched by TenU, a framework developed by ten of the world’s leading research universities to standardise and improve how spinouts are created, supported and governed.

TenU members and the wider ecosystem have pushed for more founder-friendly deals to make it easier for external investors to back these companies from day one.

Why now is crucial

The UK Industrial Strategy has identified frontier technologies, such as Advanced Connectivity Technologies, Artificial Intelligence, Cyber Security, Engineering Biology, Quantum Technologies, and Semiconductors, as central to economic growth. Government-backed capital is finally beginning to flow into the right areas. Additionally, geopolitical pressures are creating renewed urgency around sovereign capability in semiconductors, quantum, and advanced manufacturing – precisely the foundational technologies where Scottish and northern universities are strongest.

The conditions for a genuine step change are aligning, but this alone is not enough. What turns research excellence into real economic value is patient, dedicated investment from people who know the ecosystem and are committed to it long term.

Scotland has produced the science, and it is producing more of it every year – with spinout formation at northern universities growing by 29% compared to 14% at Golden Triangle institutions over the same period. The question is no longer whether the talent is here; it’s whether the capital will follow at the scale and pace the opportunity demands.