Spin-out firms from universities of Leeds and Sheffield rank in top slots for investment, according to new report

Both the University of Sheffield and the University of Leeds have placed in the top rankings for investment into university spin-out companies in 2023, according to a new report from investor Parkwalk and analytics firm Beauhurst.

Based on the number of equity deals secured by the spin-out companies, both institutions came in the top 20 of all UK universities, according to the report. The University of Sheffield placed 4th on the list, with 17 equity deals, while the University of Leeds placed 13th with 11 equity deals.

Oxford and Cambridge came first and second on the list, with 62 and 45 deals respectively.

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The report notes that UK spin-out investment is now showing signs of recovery after a “challenging year” in 2023.

Both the University of Sheffield and the University of Leeds have placed in the top rankings for investment into university spin-out companies in 2023, according to a new report from investor Parkwalk and analytics firm Beauhurst. Photo: University of Leeds Parkinson Building by Jonathan GawthorpeBoth the University of Sheffield and the University of Leeds have placed in the top rankings for investment into university spin-out companies in 2023, according to a new report from investor Parkwalk and analytics firm Beauhurst. Photo: University of Leeds Parkinson Building by Jonathan Gawthorpe
Both the University of Sheffield and the University of Leeds have placed in the top rankings for investment into university spin-out companies in 2023, according to a new report from investor Parkwalk and analytics firm Beauhurst. Photo: University of Leeds Parkinson Building by Jonathan Gawthorpe

Equity investment in university spinouts had fallen year-on-year from the record high of £2.73bn in 2021. University spinouts attracted investment of £1.75bn in 2023, a marked downturn on 2022, which saw £2.38bn of investment, but surpassing pre-pandemic levels of £1.53bn in 2020.

In the first six months of 2024, spinouts secured over £1bn in funding. The report notes that a continuation of the H1 2024 trajectory will see investment for the year surpass 2023 levels, signalling a resurgence for some of the UK’s most innovative companies.

Moray Wright, CEO of Parkwalk, said: “The case for uncovering, nurturing and backing spinouts could not be stronger - these are companies delivering novel solutions to the world’s most pressing challenges.

“A 2024 investment resurgence is vital for Britain’s long-term prosperity and the government has moved quickly to help cement momentum.”

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Spin-outs from the University of Leeds secured £25.3m total equity volume in 2023, while spin-outs from the University of Sheffield secured £22.9m.

The number of deals for spinouts has remained stable between 2020 and 2023, with an average of 423 deals each year.

The report, however, also shows a 15 per cent decline in first-time equity deals for spinouts, falling to 67 in 2023 from 86 in 2022.

First time funding has been trending down, with almost half the number of deals completed last year on 2021 levels - highlighting a potential bottleneck in early-stage funding.

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However, the report suggests that a culture of commercialisation with successful Technology Transfer Offices has been established across the UK’s university base.

Annual spinout investment has quadrupled in 10 years rising from £514m in 2014 to an estimated £2.3bn in 2024.

The global appeal of UK spinouts continues to trend upwards with greater participation from foreign investors since 2021. In 2023, 22.6 per cent of equity deals involved UK-foreign co-investments, with US based investors as the leading participates having contributed to 39 deals - five of which ranked among the top 10 largest deals by value that year.

Over the past decade, the Netherlands ranked as the second most active participant, contributing to 62 spinout deals, whilst Germany ranked third with 55.

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