This time last year, most of the conversations I had with spinout folk in the UK were about greedy universities; specifically, institutions taking too big an equity stake in their spinouts and putting off investors.
That doesn’t seem to come up as much anymore. The message I’m hearing at the moment is we’re on the way to fixing that (are we, actually? Or do we still have a long way to go?), and there are bigger fish to fry. Now, the biggest hurdle many people tell me is a valley of death created by a lack of proof-of-concept (PoC) funding — the money needed to test and demonstrate an idea and prove it can be taken to market (read: get it ready for venture capital funding).
“It’s about that gap from what pops out at the end of a research grant and what is needed to be in a position to commercialise the IP,” Steven Schooling, managing director of UCL Business (University College London’s tech transfer office), told me recently.
The new Labour government has made some moves in this area. In chancellor Rachel Reeves’s first Budget on Wednesday, she announced the Treasury would provide at least £40m in proof-of-concept funding over the next five years. That was a relief for many in the sector — before the Budget some told me they were worried the £20m pledged for that by the last government might be cut.
But is it enough? Some thought the £20m, which was to be spread over three years, fell short of what was needed; £40m over five isn’t that much more.
“£40m is just the start and clearly more can be done,” says Moray Wright, the CEO of Parkwalk Advisors, a prominent spinout investor.
“Encouragingly, the chancellor also pulled levers to help crowd in private sector capital, including extending the Enterprise Investment Scheme (EIS) back in September.
“I’d caution that capital alone won’t transform our universities into unicorn nurseries. We need researchers to become scientific entrepreneurs and to build commercial teams in the UK.”
Schooling adds: “It’s good to see the government has listened to calls from the tech transfer sector and understood the importance of supporting early-stage technologies from our universities to get them investment-ready.
“However, while this is an uplift from the £20m pledged [but not distributed] by the previous government, it remains significantly lower than that invested by our international competitors in the EU and the US.”
Full story: Spinout valley of death: How proof-of-concept funding is faring in the UK | Sifted
