Disclaimer: The Next Leap contributed insights for the report, which also references earlier research into university venture funds conducted by Thierry Heles.
UK Research and Innovation’s Research England released a report this morning looking at university-investor links in the country, with the review led by Tony Hickson, chief business officer at Cancer Research UK.
The report follows the Independent review of university spinout companies, published in 2023, which helped settle the debate around equity stakes in the UK.
Hickson makes a total of 20 recommendations in the report, grouped into four distinct categories: access to finance; investor interactions; behaviours and relationships; and capacity, capability, and place.
Access to finance
The report identifies a shortage of pre-seed and scale-up funding and challenging environments for securing venture capital outside the golden triangle. Hickson recommends a more targeted approach, allocating capital to pipeline gaps and key sectors, such as fusion, quantum, and creative industries.
The report also calls for system-wide collaboration across universities, investors, funders, and policymakers.
The headline recommendation is that the government’s proof-of-concept fund, which currently has £40 million to be deployed over five years, should be expanded to £100 million per year.
The government should also accelerate pension reforms and set up a contiguous pathway that integrates council awards with Innovate UK funding and others, including the British Business Bank.
UKRI should map the gaps in seed, venture, and scale-up funding across the regions to expand specialist deep tech capital access, focused on the eight sectors outlined as a priority in the Industrial Strategy.
University-investor relationships
The report says there is a “cultural mismatch” between universities and investors: investors usually prefer deploying large sums into fewer, more developed ideas, while universities typically manage a portfolio of early-stage technologies that ask for a broader spread of proof of concept funding.
Hickson suggests UKRI adopt a strategic approach to embed entrepreneurship within academic career pathways and curricula. Universities should expand access to entrepreneurship education – combining business skills with hands-on experience for PhD students and researchers in startups.
He also recommends that universities and investors build internal venture teams and seed funds.
The report further recommends that models for sector-based shared technology transfer offices should be developed. The Next Leap previously took a look at one such shared TTO on its podcast.
Addressing barriers to formation
There is a concern that too many spinouts may be formed too early and struggle to raise capital (in part because the ventures may lack investment readiness).
The report suggests that UKRI establish a national task force to speed up the formation of viable spinouts and reduce the time from investor interest to deal completion.
The report also says that early investor engagement should be strengthened, embedding more commercial expertise and involving investors earlier in university decision-making.
“The UK spinout ecosystem is thriving but there is room for improvement. There is no shortage of good ideas coming from UK universities across the country, and their relationships with investors are improving.
“Cancer Research Horizons looks forward to partnering further with universities, investors, government and others to make the recommendations in this report a reality and bring breakthroughs to patients sooner.”
Tony Hickson
Hickson says a whole-system approach is needed, but also acknowledges that there is no silver bullet. And not all suggestions from contributors made it into a recommendation: for example, some called for immigration reform to facilitate recruiting the best talent, while others called for capital markets reform.
In its response, UKRI is outlining commitments around seven key themes:
- Explore the expansion of proof-of-concept and pre-seed funding.
- Work with the British Business Bank, the National Wealth Fund and institutional investors to unlock new flows of pension capital.
- Support universities to integrate entrepreneurship into their teaching and staff development.
- Promote harmonised intellectual property and equity frameworks and encourage clear, published policies.
- Back shared services and sector-specific accelerators to build investor-readiness.
- Align interventions with regional strengths: innovation is everywhere, and opportunity must be too.
- Work with partnerships to expand specialist training in deeptech for investors and bring international best practice.
“From rolling out how quantum computing can have everyday uses, to ensuring chemical safety by identifying toxicology solutions, our spinouts can help advance knowledge, improve lives and drive growth.
“Research England commissioned this report to understand where our intervention can benefit UK spinouts. We will be working on developing a long-term vision that will explore the expansion of early stage funding, how we can unlock pension capital and look to align interventions with regional strengths so every area can benefit.”
Dame Jessica Corner, executive chair of Research England
UKRI is holding an invite-only event for contributors to the report in London this evening. We may update this article with additional insights following the panel conversations.
