The government’s commitment to spinouts is encouraging

Spinout businesses – born out of university research – are in the spotlight and it’s encouraging to see the government place these innovative companies at the heart of its growth agenda.

Labour’s manifesto, the draft industrial strategy, and the Budget all included a commitment to supporting university spinouts to drive growth, jobs, and have real-world impact.

Spinouts are where groundbreaking research meets opportunity, where ideas conceived in labs are cultivated into thriving businesses.

In recent years, university spinouts have created nearly 29,000 jobs and drawn more than £20 billion in investment into the UK.

But this is only the beginning. These businesses, fuelled by pioneering research, can position the UK as a leader in key high-growth sectors as outlined in the industrial strategy.

Take Autolus, for instance – a powerful illustration of how spinouts can drive transformative change.

Born out of University College London, Autolus has raised over $900 million to develop cutting-edge, personalised immunotherapies for cancer patients who have no other treatment options. Its first FDA-approved therapy, AUCATZYL, treats advanced B-cell leukaemia, marking a breakthrough in targeted cancer treatment.

Beyond medical innovation, Autolus is generating real economic growth: it now employs 450 people and has established a 70,000- square-foot production facility in Stevenage. Autolus exemplifies how UK-born innovations are not just advancing global therapeutics but redefining spinouts’ role in healthcare progress.

But the road to market success is seldom straightforward or swift, especially in fields like life sciences.

Years of clinical trials and the uncertainties of market adoption and health system procurement present significant challenges. The gap between the end of research funding and the start of venture capital investment is known in the trade as ‘the valley of death’ where innovative spinouts can – and do – perish.

That’s why spinouts need long-term, reliable capital to survive and grow.

Recognising the critical role of spinouts in advancing technological innovation, the government has prioritised growth, modernisation, and support for high-potential sectors as part of its economic strategy.

A notable £40 million in proof-of-concept funding from the Budget is a crucial early boost for these science- and technology-based ventures, helping them prove their viability and attract essential investment.

Almost exactly a year ago, the excellent independent review of spinouts, authored by Professor Irene Tracey and Dr. Andrew Williamson, identified what needs to happen to ensure a next generation of spinouts flourish – from best practice blueprints to make deals faster and simpler, to collaboration and access to funding.

I speak to founders every day and one issue keeps coming up.

To truly thrive, spinouts need investment that allows them to grow and sustain their impact, transforming promising ideas into powerful, real-world solutions.

But the appetite of venture capitalists these days is increasingly for shorter term and lower risk returns. Early-stage proof-of-concept funding is one piece of the puzzle. But, above all, we need a quantum leap in private investment. The next priority must be to champion spinouts and encourage larger investments in these transformative projects.

Major reforms to the pension system to enable investment in innovation are a huge opportunity to make this step-change. We are expecting the Chancellor to say more about her plans in the Mansion House speech.

Amalgamating local authority pension schemes – the Canadian model that Rachel Reeves has been looking at intently – could free up billions of investments for spinouts, supporting innovation, growth, and jobs. This is exactly the type of transformative governance we need to see.

With the UK government placing growth at the heart of its agenda and a world-class innovation ecosystem in place, the spotlight is rightfully on spinouts. But we’ve yet to truly harness the full potential of commercialising our world class research.

As a sector, we’re doing more to ensure that spinouts can play a vital part in this government’s growth mission.

Whether it’s upskilling academics to become the entrepreneurs of the next decade or grouping universities together in clusters to share expertise and best practice, we’re playing our part.

We need cross-government determination to ensure early-stage technologies and businesses get the investment and support they need to thrive. By supporting high-quality, innovative spinouts, we can create thousands of high-value jobs and fuel our national growth.

The government has everything it needs to deliver necessary growth: world-class universities, strong financial markets and a successful spinout ecosystem ready for growth. With the right policies in place, spinouts can deliver the innovation-driven growth and societal impact the UK urgently needs.

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