INSIGHTS / News

Six months on from UKRI’s Deepening University-Investor Links, authored by Tony Hickson, the UK spin-out ecosystem has moved forward – but some of the most persistent barriers to commercialisation remain.

That was the central theme of the latest Innovation Insights session, From recommendations to reality: six months from the Spin-out Review, which brought together Tony Hickson, Chief Business Officer at Cancer Research UK and Cancer Research Horizons; Anne Dobrée, Investment Director at Parkwalk; and Rosie Bennett, Director at SETsquared, to examine what has changed and where further action is needed.

Progress is clear to see

Reflecting on how far the sector has come, Tony Hickson said: “We forget sometimes just how much has been achieved in the UK ecosystem around university tech transfer in general, but also the spin-outs within that.”

There are encouraging signs of progress since UKRI’s review was released. User guides have emerged, and there has been movement towards a patent register and a UKRI statement. The British Business Bank has also been developing initiatives, including micro-funds and Investor Pathways Capital. The first close of the British Growth Partnership was also highlighted as a significant development.

The British Business Bank’s support for new and emerging fund managers, alongside shared Technology Transfer Offices (TTO) models and a growing focus on university-investor relationships, points towards a more developed ecosystem.

Other recent commitments include £10 million for Fuel Ventures and £3 million for TSP Ventures to support early-stage businesses, alongside £135 million committed across two Advent Life Sciences funds to help research-intensive companies progress towards commercialisation. Meanwhile, Research England’s £19.75 million Collaboration for a Sustainable Future programme supports greater collaboration between universities, including the testing of shared TTO models. Together, these developments could help create more joined-up routes from academic research to investment and commercial growth.

These are some of the highlights, but progress is not uniform. One of the clearest gaps remains funding at the very beginning of the commercialisation journey – before a company is ready for conventional investment, but after an idea has moved beyond the research stage.

Gaps still remain; how do we fill them?

The numbers discussed during the session put the scale of the problem into sharp focus. Around £8 million a year is currently available from government for proof-of-concept funding, potentially supplemented by locally devolved funds. However, Tony estimated the gap to be much larger: “We really think the gap is around £100 million, so it’s a 10x gap.” The shortfall reflects a wider imbalance between policy progress and the funding needed to put recommendations into practice. Tony added: “We see lots of movement on all the recommendations that don’t cost any money, and we haven’t seen a lot on the ones that cost something.”

The difficulty is that proof-of-concept funding does not fit neatly into traditional funding categories. It is too far along to be treated simply as research funding, but too early to offer the clear financial returns expected from investment. That creates a difficult middle ground that can have consequences further down the line.

Anne Dobrée highlighted the longer-term value of investing in early-stage businesses, arguing that the benefits extend well beyond the returns on an individual investment. “What you’re getting is 20-plus years of growth of jobs, of taxes back from the individuals working in those companies and bringing in foreign investment to the country as well.”

Accelerators, incubators and early-stage funds can struggle to generate sustainable financial returns, encouraging them to move towards larger investments. As that happens, the earliest part of the pipeline can be left without enough support. The result is a familiar problem: promising research may exist, but there is not always enough funding to test it properly, validate the opportunity or build the foundations of a business.

There is a role for government here, but the discussion also highlighted the responsibility of universities. If more public funding is made available, universities need to demonstrate that funding decisions are informed by appropriate expertise and that the outcomes can be clearly evidenced. 

Build the proposition before the company

Funding is not the only issue at this stage. Sometimes, the problem is that companies are being created before the opportunity is ready.

Tony Hickson suggested that too many founders are trying to access funding schemes before they are ready: “It would have been better to keep its powder dry, build that proposition, talk to investors and understand what it’s building, and then go out and raise the right amount of money at the right time.”

A spin-out may need to incorporate to access funding, but investors will often want to see evidence that the technology works, that there is a market for it and that the right team is in place. The difficulty is that building the team and generating that evidence often requires investment in the first place.

Customer discovery programmes, fellowships and stronger links with industry can help bridge this gap, giving founders structured opportunities to test markets, refine their propositions and build credibility before raising capital. Rosie Bennett highlighted the value of engaging with investors before a company is actively seeking funding, explaining that “Early-stage introductions to investors really help formulate the business at the early stage. You might not be looking for investment, but you might well be looking for feedback from investors.”

Another part of the solution is giving academics more flexibility to spend time on commercial opportunities without forcing them to leave academia altogether, for example through sabbaticals or venture-focused fellowships. Industry experience, active alumni networks and professors of practice were also highlighted as powerful ways to bring real-world commercial skills and perspectives into the university environment and spin-out teams.

Ultimately, the aim is not simply to create more spin-outs, but to build companies whose underlying propositions have had enough time to develop.

One example of what that longer journey can look like came from Cancer Research UK’s work with Professor Ed Tate’s lab at Imperial College London and the Francis Crick Institute. Research was supported for more than 15 years before the opportunity developed into the company Myricx, which was subsequently acquired by Novartis for around $1.5 billion. The important point was not simply the magnitude of the spin-out, but the continuity of support that helped the opportunity progress from research through to investment and, eventually, a spin-out.

Finding the right investment at the right time

Once a company is ready to seek investment, the challenge becomes finding the right investor. Even when a proposition is ready, getting in front of the right investor at the right time is becoming harder. Generic outreach is increasingly easy to ignore, particularly as investors deal with growing volumes of pitches and AI-generated business plans.

Researching an investor, understanding their investment focus and explaining clearly why a particular proposition fits can make a significant difference. A vague request to “pick your brain” is unlikely to get very far, whereas a concise proposition that aligns with an investor’s interests gives them something tangible to respond to. Anne Dobrée emphasised the importance of getting this right, advising founders to “do your research first, and then be very clear about what you’re asking.”

Longer-term relationships between investors and universities can make that process much easier. Investor relations teams, sector-focused events and curated introductions all provide ways to build familiarity before a company is actively seeking capital. For smaller TTOs, however, maintaining those relationships can be difficult. Shared investor relations could help universities build stronger networks without each institution having to develop the same infrastructure independently.

Looking beyond the established clusters

Collaboration also matters when looking beyond the UK’s established investment clusters.

Regional funding has grown, but much of the capital available is generalist. Deep tech spin-outs require investors with specialist knowledge and the patience to understand complex technologies and longer commercialisation timelines.

One potential route discussed was bringing universities together around particular sectors, creating enough scale and quality to attract specialist investors. This could help regional ecosystems build their own investment capacity without trying to replicate the UK’s existing clusters. Rosie Bennett underlined the importance of this approach, arguing that the sector needs to work “more as a spin-out ecosystem on a national basis, but with regional pipeline coming through.”

The key is that this should add to the ecosystem rather than replace what already works. Strong clusters such as the Golden Triangle, comprising leading research universities and innovation hubs across London, Oxford and Cambridge, remain an important national asset. The challenge is expanding access to specialist capital elsewhere rather than simply moving capital from one part of the country to another.

This highlighted the need for a more connected journey. From research funding and proof of concept, through company formation and early investment, to scale-up and international capital, the different parts of the ecosystem need to work together rather than operate as separate stages.

Keeping the pipeline moving in the right direction

The biggest theme running through the discussion was continuity.

There is no single funding programme that can take a university idea all the way to a successful company. Instead, businesses need to move through a series of stages – from research and proof of concept, through Innovate UK and early investment, to scale-up capital and eventually larger investment.

At present, that journey can feel fragmented, with companies having to navigate different schemes and funding sources. These programmes can have varying eligibility requirements, timescales and objectives, creating gaps between one stage and the next. Rather than building on a continuous pipeline, companies can find themselves navigating a series of separate funding opportunities.

Government restructuring could provide an opportunity to connect some of those pieces, but simply bringing organisations together does not automatically create a joined-up system. There was also concern that constant reorganisation can have the opposite effect, with new programmes replacing established ones before they have had time to mature. Anne Dobrée touched on this, suggesting that what the sector desperately needs is “solidity and continuity” across funding programmes, rather than “a different programme every three years.”

The next step could be to make those connections more visible. The session ended with a proposal for a national showcase that could bring together the UK’s scale-ups, emerging spin-outs and international investors, building on approaches that have already brought ecosystems together. The aim would be to demonstrate not only the strength of individual companies, but also the depth of the pipeline beneath them and the quality of UK research from which future ventures can emerge.

Six months on, the picture is one of progress, but not completion

Tony, Anne and Rosie emphasised that the foundations of a stronger spin-out ecosystem are becoming clearer. Yet ensuring that promising research has the funding, people, investor relationships and continuity remains one of the hardest parts of the journey. Bridging those gaps will be central to turning the recommendations of the review into lasting change.

That ambition sits naturally alongside SETsquared’s Investment Futures 2026, taking place on 24 November at CodeNode in London. The event will bring together investors and 21 deep-tech start-ups raising between £250,000 and £5 million, spanning areas including AI, climate tech, life sciences, defence and advanced manufacturing.

Delegate registration is now open. Register your place here: https://www.setsquared.co.uk/programme/investment-futures-delegate-registration/