Innovation
Sector pulse: University spinouts - events, funding and regional clusters
- Innovation
- Article
- 4 minutes read
Every month, HSBC Innovation Banking’s early-stage relationship management team digs into one sector or trend. This time, we’re looking at university spinouts. What are early-stage founders and investors thinking? What news and data is getting the market excited? As universities start the new academic year, we’re looking at the UK’s spinout ecosystem with Jenni Hamilton, who specialises in supporting very early-stage startups, including university spinouts.
- Environment for spinouts is improving: University spinouts are becoming more attractive to investors as universities adopt founder-friendly equity models and take smaller ownership stakes.¹ This shift is helping to remove barriers and create a foundation for early-stage investment.
- Capital is available, but investors are becoming more selective: The challenge for founders today is not a lack of capital, but standing out in a crowded market. Investors are increasingly concentrating funding on companies with the strongest technologies and clearest commercial pathways².
- Collaboration is strengthening the ecosystem: Universities, investors and industry partners are working closely to support academic founders. Across the UK, it is felt that the ecosystem is evolving to help breakthrough technologies successfully make the journey from research to commercial impact.
What is the general sentiment right now among university spinout founders and those investing in spinouts?
Jenni: At a high level, there is definitely movement in the market that is getting spinout founders excited. Spinouts used to be regarded quite sceptically by VC investors, partly because of the size of the equity stake retained by universities1. Today, universities are generally taking lower percentages of the spinouts they help produce3, which makes the upside of these investments more attractive for that crucial first institutional investment round.
But at the same time, funding levels in themselves have dipped since 2020-2021. Looking forward, we will hopefully see the new focus on deep tech in UK venture (63% of all VC cash went to deep tech and AI companies last year) translate into greater funding appetite for spinouts with genuinely innovative technology.
The UK’s spinouts offer investors access to genuinely new ideas and innovations at the earliest stages. Standout examples like Dundee spinout Exscientia, which was acquired by Recursion in 2024 for $688 million, show that UK spinouts can create genuinely significant enterprise value and stellar outcomes for investors.
What’s an especially interesting or memorable insight from the university spinout ecosystem you’ve read or heard recently?
Jenni: Law firm Penningtons Manches Cooper observed in their Investment into Spinouts 2026 report that a total of £1.96 billion raised in 2025 implied “a more selective market, not a broken one”.
That seems like a fair assessment of a fundraising climate where more capital is being channelled to fewer companies overall, with investors coalescing around the likeliest ‘category winners’.2
We spoke to Dr Amany Kassem, UCL researcher and co-founder of Nibras to get a sense of what’s top of mind for academic founders. Nibras designs communication systems that carry information via photonic signals, and is a member of the UK government’s latest Chipstart cohort of promising early-stage semiconductor innovators.)
Amany said: "There are certainly positive things happening in the UK, like the smaller equity stakes universities hang on to when you spin out, and the general amount of capital that the successful startups can attract. At the same time, though, spinout founders constantly ask themselves, 'wouldn't all this be much quicker and easier in the US?'
"There are all sorts of stories about founders leaving for the States and raising capital within weeks: now, this won't necessarily happen with every spinout, but we are very aware that the UK is one node in an increasingly global marketplace for the best academic talent."
How is the spinout community fostering more collaboration between universities, investors and industry?
Jenni: Spinouts and their early-stage investors are taking more lessons from the likes of Stanford in the US. There, academics preparing to spin out have extraordinary access to investors and corporates who can support them as they commercialise their innovations.
We’re seeing more networking, more events and more community building happening, all with the aim of making future founders feel as supported as possible as they build toward this critical inflection point.
Have you read any interesting reports relating to your sector or territory in the last month?
Jenni: The Royal Academy of Engineering’s annual spinout report was a fascinating read.
"On top of the fundraising data, they highlighted the growing regional diversity of the spinout ecosystem. They also celebrate the likes of the University of Bristol which has now spun out 46 VC-backed startups, of which 15 have raised $10 million or more in venture financing."
We are proud of our global leaders like Oxford, Cambridge and Imperial, but it’s important that investors are reaching wider to help bring about a broad-based and resilient network of spinouts right across the UK.
From lab to market
When UK academics turn their research into businesses, they're often bringing some of the world's most exciting new technologies out of the lab and into the market. So, when leading-edge tech is disrupting so many markets, it’s almost strange that spinouts are attracting less capital than a few years ago.1
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