In 2022 alone, we have already read about a number of deals that will enable spinout companies to expand and develop, particularly in the life sciences and technology sectors.
Elasmogen, a biotechnology business spun out from the University of Aberdeen secured an £8 million investment in May – including funding from the British Business Bank’s Regional Angels Programme – while Kynos Therapeutics, a life sciences company from the University of Edinburgh secured £9m in April. WellFish Diagnostics, an aquaculture spinout from the University of the West of Scotland, is another example, having announced a £1.2m investment in March.
In fact, recent data from the British Business Bank showed that smaller businesses founded at Scottish universities accounted for the highest number of equity investment deals into UK spinouts last year. Of the 211 equity deals involving spinouts across the UK in 2021, 44 (21 per cent of the total) came from Scottish academic institutions – the highest figure of any region or devolved nation.
Investing in research-led businesses is an essential part of fostering an innovation economy, so it is highly encouraging to see Scotland accounting for the highest proportion of equity investment deals into spinouts. For academic entrepreneurs, the process of turning ambitious research-based concepts into successful commercial prospects often relies heavily on access to finance, and there are a number of organisations they can turn to for support.
Along with UK Research and Innovation (UKRI), we recently published Backing innovation-led businesses: the role of public investment, a study which highlighted that spinouts that receive funding from both the British Business Bank and Innovate UK are more likely to have better business and employment outcomes.
There is, however, room for further growth when you compare the amount of capital raised by Scottish spinouts with companies that originate from the “Golden Triangle” of London, Oxford, and Cambridge. Scottish spinouts raise £10m on average, versus £17m for their counterparts in the south.
What has become clear from our interactions with spinouts from across the UK is that supporting innovation doesn’t follow a standard linear sequence or path. Businesses need different types of support, in different combinations and at different times, but access to finance is crucial to fuel their growth.
While Scottish spinouts have developed a strong track record for attracting equity investment, we must continue to encourage innovation for the range of benefits that it brings to the economy and society. Ensuring that new companies going through the process of spinning out have equal opportunities for financial support will be a key piece of the puzzle.
Susan Nightingale, UK Network Director, Scotland at the British Business Bank