UK uni spinouts fall

Despite progress in many areas of technology transfer in the UK, the number of university spinouts created this year has fallen. This is according to the second Annual Survey on University Technology Transfer Activities, carried out by the University Companies Association (UNICO), Nottingham University Business School (NUBS) and the Association for University Research and Industry Links (AURIL).

Data from 125 UK institutions shows that 158 companies were spunout, of these 21 were created with venture capital investment, 17 with business angel backing, 14 with an investment from an industrial partner and 50 with the support of University Challenge Fund money.

Last year the survey recorded the creation of 175 new companies. Venture capital funds played a major part in funding existing spinout companies, this year 177 businesses received follow-on finance. VCs backed 46, business angels 21, industry 16, Challenge funds 33 and universities 37.

However, the survey has found that the UK’s universities are improving their ability to commercialise intellectual property. Staffing levels have risen, with a 24% increase in full-time employees engaged in technology transfer activities, and there is also growth in invention disclosures, patents issued, licenses executed and license income, which stands at £22.4m.

“The survey suggests that universities are learning what works and what does not work,” said Mike Wright of NUBS. “These developments reflect the growing recognition of wealth creation from technology transfer, rather than the creation of spinouts and licenses per se.”

The number of companies financed by University Challenge funds has risen, accounting for 32% of all of the year’s spinouts. Of the institutions surveyed 23, or 18%, formed at least one company with Challenge fund backing. The University Challenge Seed Funds programme, a government-backed initiative launched in 1998, has provided a total of £60m to create 19 venture capital funds aimed at transforming research by students and staff of the UK’s universities into viable businesses.

Despite the increasing role of University Challenge Funds in forming businesses, the survey found that lack of access to venture capital continues to be a major impediment to the creation of spinout companies. Staffing levels to manage intellectual property, proof of concept funding for IPR due diligence, market research and prototype development are also still restricting commercialisation activity.

During the year there were 20 full and five partial exits from spinout investments, realising a total of almost £7m. Trade sales returned the largest amount, with some returns also coming from shares sales and management buyouts.