University spinouts raise £11bn of equity investment over past decade

Over a thousand university spinouts have gone through 3,000 plus equity rounds between 2012 and 2021, with America being by far the most active foreign investor

Investors have ploughed almost £11bn into UK university spinouts over the past decade, according to latest research from Beauhurst.

There were over 3,000 equity deals secured by spinouts between 2012 and 2021, with American investors being by far the most active, involved in 378 deals. The Netherlands was the second most-active foreign investor with 37 deals and 33 for China.

More than a thousand academic spinouts have raised equity investment between 2012 and 2021 in sectors such as diagnostics and medical devices, pharmaceuticals and other healthcare, materials technology, and clean energy.

And 166 of these have gone on to exit via going public or being bought outright.

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Last year alone, £2.54bn was invested in British university spinouts, compared with just £405m in 2012.

Oxford Nanopore Technologies, spun out of the University of Oxford, which develops DNA and RNA sequencing technology, received last year’s biggest equity investment in May 2021 at £195m.

Graphcore, the University of Bristol spinout which creates processors for AI computing, was last year’s second biggest university spinout equity investment recipient at £162m.

Foreign investor interest in UK university spinout deals doubled last year, with international backers participating in 40 per cent of last year’s deals compared with 20 per cent in 2020.

However, the amount of money invested in first-time equity deals last year halved from £128m in 2020 to £63.3m last year, due to the ongoing effects of Covid.

The median deal size secured by a spinout in 2021 was £842,000.

Parkwalk Advisors was the biggest single investor into spinouts with 31 deals closed. Parkwalk manages funds directly tied to the universities of Cambridge, Edinburgh, Bristol and Imperial College, as well as EIS schemes investing in university spinouts.

>See also: Parkwalk raising £200m scale-up fund for university tech spinouts

National fund Scottish Enterprise was the second-most active investor in 2021, involved in 31 deals.

And the Government’s £1.14bn Future Fund, designed to help fast-growth companies get through the Covid crisis, was involved in 18 university spinout investments last year.

As for which universities are the most active when it comes to spinout equity investments, Oxford was the busiest with 57 deals, followed by Cambridge with 42, and the University of Bristol rose to third place, with 25 deals including Graphcore and regenerative medicine firm Mogrify.

In terms of which universities equity deals were allied to, Oxford was again in pole position with £743m raised by firms spun out from the university, followed by Cambridge (£501m) and Bristol (£266m).

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