Proof of Concept funding: small funding amounts can make a huge difference, says TenU

Government and private sector must join forces to support academics-turned-founders, or risk missing out on growth-driving new spinouts, according to the international collaboration of ten leading technology transfer offices, TenU. 

Leading tech transfer figures at TenU’s ‘Pathway to Growth: Driving Innovation Further, Faster’ event, held at the British Academy, today (20 May) stressed that the UK could be missing out on thousands of cutting-edge spinout companies due to a shortage in support for academics to take the first step towards forming a business. 

Bridging the gap from research to commercialising an innovation can be very challenging –described by some as the ‘Valley of Death’. But relatively small amounts of funding or access to commercial expertise can make all the difference. The Government announced a £40m Proof-of-Concept (PoC) five-year fund at the Autumn Budget for inventors to test and validate their ideas so they are more attractive to investors. But TenU warns that the first £9m tranche of the fund is significantly oversubscribed with thousands of academics to miss out.  

 

Working group  

TenU commissioned a working group, including representatives from PoC funds, national funders, investors, and industry, to devise creative ideas for the future of PoC funding.  

TenU’s working group chair Adam Stoten presented the findings: “In my work with university commercialisation experts, investors and founders, I’ve heard the same story again and again: great ideas stuck in limbo. Research funding runs out before commercial viability is established, and investors aren’t yet ready to step in. Inventors need time and resource to understand commercial potential, build a prototype or conduct a “killer experiment”. PoC funding can bridge that gap,” he said 

“With its world-class research base, the UK should be a global leader in spinouts. A more strategic and sophisticated approach to PoC funding would dramatically increase the number of successful spinouts, licences and high-growth start-ups from UK universities.” 

Tim Haines, Chair of TenU and Executive Partner and Managing Director at Abingworth LLP added: “A partnership approach is a win-win. For a spinout boom – particularly in sectors identified in the Industrial Strategy – there needs to be more access to PoC funding and support.  

“At the same time, greater private sector involvement in process could attract greater levels of follow-on investment, and the private sector would benefit from a greater pool of validated, investment-ready spinouts and a flourishing entrepreneurship on campuses.” 

Dr Ananay Aguilar, head of TenU, said: “We’re bringing together leading universities — including TenU’s international members — alongside investors, founders, industry and policymakers to explore how we unlock the potential of PoC funding. 

“The Government is betting on innovation to drive growth, and spinouts are key to that. But too many breakthroughs stall without early support. 

“This event highlights the breadth of support behind a renewed vision for PoC funding — and the opportunity to leverage the UK’s world-class research for societal and economic impact.” 

 

PoC defined 

Proof of Concept programmes are critical translational initiatives in research organisations that bridge the gap between academic research findings and de-risked product/service opportunities ready for new company creation, licensing to existing companies or other commercial applications. TenU’s analysis shows that such funds bring a significant return on investment and help create an eco-system for commercialisation. 

The 2023 independent spinout review recommended an increase in PoC funding. The previous Government committed £20m towards a new 3-year fund. In the Autumn Budget the Chancellor increased the fund to £40m over 5 years.  

The Government is planning to announce the recipients of the £9m PoC fund in the summer. Expressions of interest for the first UKRI PoC funding round totalled 2750, around 30 times more than grants available.