Universities have lowered the shareholdings they expect scientists and engineers to forfeit in exchange for investing in their spin-out ventures.

The Royal Academy of Engineering’s fifth annual Spotlight on Spinouts report shows that equity stakes taken by educational institutions in spinout companies fell last year to 16%, against 22% in 2023.

Lower university equity stakes have been identified as key to incentivising exceptional academic founders to launch and scale their spinout companies.

A review commissioned by the Treasury in 2023 called for universities to take stakes of 10% or less in spinouts with limited new intellectual property, such as software companies. Where more IP-intensive companies, such as life sciences businesses, were involved a figure of about 25% was considered.

This may already be producing results as last year saw UK university spinouts securing over £2.6bn in funding, 38% more than in 2023. This compares favourably with the wider equity market for high-growth companies, which faced a near 16% decline in the same period.  

Today’s report reflects a similar trend to the Academy’s recent State of UK Deep Tech report, whereby the number of deals has fallen but the overall amount secured has held up, pointing to investor caution coupled with an increase in the average value of individual deals.   

London has the highest regional concentration of the UK’s spinouts, hosting 19% (384) of the spinout population. Its status as a leading financial hub and access to funding networks continues make it an attractive spinout base.

The South East follows with 16% (321 spinouts), then Scotland with 12% (243 spinouts), and the East of England with 11% (218 spinouts).   Scotland has three universities in the top 20: Edinburgh (8th), Strathclyde (16th) and Glasgow (19th).

Parkwalk Advisors remains the top investor by value and number of deals, and most of the top five investors (in number of equity deals), tend to prioritise funding for spinouts in their region: notably Scottish Enterprise, Cambridge Enterprise and Oxford Science Enterprises.

Continuing gender disparity   

The report, commissioned from research company Beauhurst, finds that over 75% of spinouts have all-male founding teams, with 17% mixed-gender and 7% solely female founders and this is similar to 2024, with a slightly improved figure for mixed teams (16% in 2024) but lower for female founders (8.6% in 2024).

More gender diversity is seen at director level with male and female directors of spinouts at 43% and all male directors at 54%. In 2024 that figure was 52% for all male directors and 45% for male and female directors.  

Life sciences remain a strong sector for the UK, with a world-class research base fueling commercialisation. Some 399 life science spinouts have been created as of January 2025, concentrated in the ‘Golden Triangle’. The University of Oxford created 53 companies, the University of Cambridge 38 and University College London 31 spinouts.   

Data provision and analysis ranks second as a sector – this is the leading spinout area for Manchester University – and electronics  hardware ranks third.  AI remains dominant in the emerging tech sector, followed by cloud-based software and CleanTech.   

As highlighted in the government’s Invest 2035 Industrial Strategy  both established and emerging tech industries like life sciences, AI and quantum computing are seen as drivers of economic growth, key technologies and of strategic importance.   

Royal Academy of Engineering Enterprise committee chair, Paul Taylor said: “It’s encouraging to note that average university equity stakes are now at a decade low of 16% and are moving towards the recent recommendations from the Independent Review of University Spinout Companies. This aligned with much of what we have long called for as an independent advisory body.”