UK universities took the lowest stake in their spinouts to date in 2024, according to a new report by the Royal Academy of Engineering and data platform Beauhurst.
Last year, a number of the UK’s top universities adopted government-backed guidelines designed to reduce their share in affiliated spinouts, giving founders bigger stakes in their companies and in turn encouraging more researchers to turn their academic work into commercial ventures.
In 2024, universities across the UK took an average of 16.1% in the companies they spun out, down from an average of 21.5% in 2023 and a high of 27.6% in 2017.
The changes are in line with recommendations laid out by the University Spin-out Investment Terms (USIT) Guide published by TenU, a collaboration between 10 leading tech transfer offices.
Shrinking stakes
The reduction in the average percentage stake being taken by universities is a good thing, says Dave Grimm, partner at UK venture capital firm AlbionVC, which invests heavily in spinouts, but argues it doesn’t paint the whole picture.
“It's great to see universities adopting more founder-friendly equity policies, but that's only half the battle,” Grimm says.
“If these improvements come at the cost of long negotiations that slow down spinouts, it's a Pyrrhic victory. More radical standardisation is essential to enabling founders to move fast and set their companies up for success.”
There’s also a lot of disparity between the amount taken by universities up and down the UK.
The median ownership taken by the University of Cambridge in its spinouts is 8.8%, while the median taken by University College London is 9.4%.
The median percentage taken by the University of Oxford, by contrast, is 20%, while the median for the University of Manchester is 30%. For the University of Leeds it’s 42.9%, the highest of any university tracked by the report.
By the numbers
Investors put £2.6bn into UK spinouts in 2024, up from £1.89bn in 2023 and the highest of any year except 2021, when £2.75bn was invested.
There were 359 deals done into UK spinouts last year, down on the 427 done in 2023 and the lowest count since 2018, when there were 363 deals — implying that fewer spinouts were actually raising more than in previous years.
Grant funding from Innovate UK, Britain’s innovation agency, was also down in 2024 — £83.3m was handed out in grants last year, compared to £150m in 2023. The number of grants given out was also down, from 382 in 2023 to 243 in 2024.
Women remain underrepresented at UK spinouts. Only 7.38% of active spinouts in the UK have all-female founding teams, compared to 12.3% across high-growth companies in the UK. All-male founding teams are behind 75.5% of active spinouts in the UK.
