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Insider UK
Business
Peter A Walker

Edinburgh attracts increasing number of spin-out firms

Edinburgh is among the best places in the UK - outside of the ‘golden triangle’ of Oxford, Cambridge and London - for university spin-out companies to grow.

That's according to the Royal Academy of Engineering Enterprise Hub, which stated that Scotland's capital hosted 78 spin-outs, continuing to attract fledgling firms from universities in other parts of the country, due to leading research institutions, funding ties and access to talent.

The third annual Spotlight on spin-outs report follows the recent publication of the UK Government’s Science and Technology framework, in which it committed to strengthening the spin-out pipeline, and the government’s ongoing review to identify best practice in turning university research into commercial success.

It also revealed that during the last decade the mean investment size in spin-outs increased by 187% between 2013 and 2022, while the mean deal size across this period was £3.91m.

Spin-outs attracted a total equity investment of £2.13bn in 2022 – although this was slightly lower than 2021.

There are 1,166 active spinouts in the UK, according to the report. Of these companies, 659 (56.5%) are still at the seed funding stage.

Cleantech and genomics are the increasingly dominant spin-out sectors in the UK, while the number of all-women teams has risen from zero in 2016 to 12.8% of spin-outs incorporated in 2021.

The report also found a decrease in the mean stake taken by universities in the year of companies spinning out between 2013 and 2022, declining from 24.8% to 17.8% – the lowest average stake by universities taken over the past decade.

Minister for Science George Freeman said: “Better converting academic leadership in science and engineering into commercial success is crucial for the UK’s economic and geopolitical security.

“Spinning-out and scaling-up ideas and innovations from labs into companies is also key to widening and deepening our UK Innovation Economy and Opportunity Society – creating exciting new career paths and investment in high-tech clusters all around the UK.

“From Glasgow’s satellite city to Warwick Robotics, South Wales Semi-Conductors and Solent MarineTech, the UK is home to many high growth R&D clusters.”

Maria Dramalioti-Taylor, founding partner at Beacon Capital and a Royal Academy of Engineering Enterprise Committee Member, added: ”The remarkable growth of university spinouts outside the 'golden triangle,' exemplified by Manchester, Bristol and Edinburgh, presents a compelling case for nurturing innovation hubs across the country.

”The report also highlights two encouraging developments: the substantial increase in spin-outs founded by women that showcases the expanding inclusivity within the entrepreneurship landscape, and the decrease in universities' average stake that signals a shift towards more balanced partnerships that empower spinout founders.

”By championing gender diversity and fostering equitable collaborations, we can foster a thriving ecosystem that supports the growth of university spin-outs, unlocks their potential, and propels the UK's innovation-driven economy forward.”

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