Scotland takes top spot for equity investment in uni spinouts

Scotland has once again emerged as the top spot in the UK for equity investment in university spinouts.

Small businesses founded at Scottish institutions accounted for the highest number of equity investment deals to UK spinouts last year, according to new figures released by the British Business Bank.

Of the 211 equity deals involving spinouts across the UK during 2021, 44 came from Scottish academic institutions - the highest figure of any region or devolved nation. The south east of England was second with 39 spinouts receiving funding, while the east of England and London had 35 and 32 respectively.

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It marks the second year in a row that Scotland has been the leading location for equity investment deals in university spinouts after recording 64 in 2020 - ahead of the south east and East of England at 41 each.

The British Business Bank said equity investment in Scottish spinouts had continued into 2022.

Deals announced during the first half of the year include an £8 million investment in Elasmogen, a biotechnology business spun out from the University of Aberdeen, and a £1.2m investment in WellFish Diagnostics, an aquaculture spinout from the University of the West of Scotland.

The latest figures follow the publication of a new study which shows that university spinouts that have emerged from research council investments and receive funding from both the British Business Bank and Innovate UK are more likely to have better business and employment outcomes.

Barry McCulloch, senior manager, UK network, Scotland at the British Business Bank, said: “Scotland is home to a number of world-class research institutions that are developing ground-breaking products and processes, particularly in sectors such as life sciences and technology. It’s highly encouraging to see Scottish businesses accounting for the highest proportion of equity investment deals to spinouts, with access to finance helping entrepreneurs turn research concepts into commercial ideas.

Barry McCulloch, senior manager, UK network, Scotland at the British Business Bank: 'Scotland is home to a number of world-class research institutions.'

“Investing in research-led businesses is an essential part of fostering an innovation economy and the British Business Bank is committed to driving sustainable growth and prosperity across the UK, including ongoing funding for R&D-intensive businesses such as spinouts from Scottish universities.”

Scotland produces large volumes of spinout companies due to its world-leading research capability. However, these companies raise less funding on average than their counterparts based in the “Golden Triangle” of London, Oxford, and Cambridge, at £10m compared to £17m on average. However, this figure is still higher than any other area beyond the Golden Triangle.

Indro Mukerjee, Innovate UK’s chief executive, said: “As the UK’s innovation agency, Innovate UK is focused on delivering products and services to support the innovation journey and to help to make innovative businesses more investable, robust, and able to access capital for growth.

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“So, I welcome both this report and the strong collaboration with the British Business Bank. The report’s findings reflect my strong personal commitment to a joined up offer to innovative businesses to better exploit the strengths of the UK’s excellent research base.”

The British Business Bank is the UK government’s economic development bank and was established in 2014.

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