Growing numbers of university-based start-ups will relocate overseas if the UK higher education sector cannot be funded properly to support them, vice-chancellors have warned.
Universities UK warned on 20 March that the UK risked becoming an “incubator economy” where innovative firms are tempted to relocate offshore – or move to London from the regions – because of a lack of funding available to scale them up.
Launching a new campaign showcasing the work of student-led start-ups, “Unis Start Up the UK”, UUK said that the number of active start-ups established at universities had increased by 70 per cent between 2014-15 and 2022-23, with more than 4,300 firms registered on average each year. Over the past decade, 38,750 have emerged with the support of universities, and in 2022-23 these firms employed 64,384 people – up 177 per cent compared?with 10 years ago.
UUK estimated that 27,000 additional start-ups could be established by university students and staff by 2028 if the sector gets the support that it needs.
Universities have set up investment outfits such as Northern Gritstone and Midlands Mindforge to help secure private funding for start-ups and spin-outs, and operate 400 accelerators and 300 incubation hubs to help firms grow.
But universities are facing a mounting financial crisis, with the English sector regulator, the Office for Students, warning that more than seven in 10 could be in deficit by next year. Thousands of job cuts have been announced by institutions already this year.
UUK is calling on the Westminster government to make a “long-term commitment” to supporting the 黑料吃瓜网 Innovation Fund, echoing last week’s call by the Russell Group for the fund to be expanded.
The vice-chancellors’ association said ministers should also support the establishment of collaborative investment partnerships across the UK, and help universities to work in partnership with businesses and local leaders to support growth.
“The growth in university supported start-ups over the last decade has been a staggering success. We can do more – both to encourage and support new businesses born in our universities, and to ensure that they can remain in the UK and grow here,” said Vivienne Stern, UUK’s chief executive.
“This is just one of the ways that our universities can put their shoulders to the wheel with government to achieve stronger growth. Of course, they need to be on a firm financial footing to do this.”
Support provided for start-ups by UK universities includes providing business mentors, space and facilities, as well as connections with investors and other backers. Three-quarters of UK universities offer additional or elective modules in enterprise to support budding entrepreneurs.
UUK said that between 2014 and 2015 the turnover of student start-ups increased by more than 750 per cent, from ?574 million to ?4.9 billion. External investment increased by almost 350 per cent, from ?303 million to ?1.4 billion.
Four active UK “unicorn” companies – start-ups with a valuation of at least $1 billion (?780 million) – started live as university start-ups: Oxford Nanopore Technologies, Graphcore, Synthesia and Darktrace.
“Universities provide a foundation for economic growth through the knowledge exchange they conduct, and the graduates they educate. Few people know that they also work closely with businesses to help them grow too,” Stern added.
“Using their kit and equipment, and their expertise, they support start-ups, generate their own spin-out companies, and work with businesses from the wider economy to provide practical assistance to help them grow.”
The intervention comes ahead of chancellor Rachel Reeves’ Spring Statement, amid fears that universities’ quality-related (QR) research funding could be cut or given a flat-cash settlement. Institutions use this money to fund the salaries of researchers, build and maintain laboratories, provide teaching relief for early-career researchers and conduct other research-related activities.
