Entrepreneurial impact: The vital role of universities in the future of deep tech

At some point in time, all the technologies we have come to rely on most have been categorised as deep tech. These technologies have illuminated our homes, given us the facility to travel thousands of miles in a matter of hours and put people on the moon. Deep tech is innovation in its purest form, built on scientific breakthrough and capable of fundamentally disrupting markets – or creating new ones entirely. But it requires specific conditions to flourish.

In 2020, the world saw the power of deep tech firsthand, when two revolutionary MRNA vaccines made history and helped us overcome a pandemic that threatened the lives of millions. The technology underpinning these vaccines was developed, painstakingly and over years, in two European institutions: the University of Oxford, and Johannes Gutenberg University Mainz. This points to an unavoidable fact: Universities are the cradle of deep tech innovation.

In our new report, Gateways to Growth: The Entrepreneurial Impact Report 2023, we set out to highlight the crucial role universities play in nurturing the technologies and businesses that offer promising solutions to some of the major challenges we face. For the first time since 2020, we’ve also updated our Entrepreneurial Impact Ranking – a list of the universities having the most success in spinning their groundbreaking research out into world-changing businesses.

With the report we hope to demonstrate a truth, namely that a multistakeholder approach is essential if those specific conditions deep tech needs are to be met – and solutions in the field are to fulfil their extraordinary potential. You can find a link to download the report at the bottom of the page, but first here are a few of our key findings.

Business sense

Unfortunately, we’re past the point at which an incremental improvement can help mitigate against some of the challenges the world faces. What we need are transformational solutions – at scale. Semiconductors, biotechnology and AI will drive change, and universities are at the forefront of research and development.

But university spin-outs don’t just offer solutions to critical challenges. They also make a huge economic contribution. The year 2018/2019 saw universities contribute £95 billion in gross output to the economy and support over 815,000 jobs.

For every £1 the government invests in research, it sees around £3.60 in terms of economic benefit. In 2020/2021 alone, businesses spun out from the UK’s Russel Group of universities created around 33,000 jobs and secured £4.9 billion of investment. As the report shows, fostering an environment hospitable to spin-outs offers an enormous boost to the economy.

The Entrepreneurial Impact Ranking

For the first time since 2020, we’ve worked with Ideas2Impact to update our list of the universities enjoying the most success at building thriving companies out of academic achievement. Drawing on metrics including disclosures, patents and financial transactions associated with exits, the ranking offers a straightforward look at the best-performing universities.

This year, we’re celebrating a new leader to the ranking. The University of Dundee has risen to the top spot, thanks to an incredibly high average exit value for its spin-outs. The ranking also highlights the wealth of academic strength distributed across the UK, with the top two performing universities, and 60% of the top ten, lying outside the golden triangle of Cambridge, Oxford and London.

With the report painting a picture of national excellence across the UK, we offer closer analysis and highlight some of the consortiums and partnerships doing great work in fostering entrepreneurialism in higher education institutions and driving spin-out success.

Opportunities, challenges and building the right environment

In putting together Gateways to Growth, we hoped to demonstrate what is needed to bolster the extraordinary work being done in the UK’s university research community and ensure that deep tech innovations have what they need to spin-out and into the market. The report looks in depth at the key challenges that need to be overcome, and in doing so identifies the opportunities for stakeholders looking to make a difference.

We found that the impact of Brexit has been disproportionately felt by the UK’s academic community, with European-funded research grants drawing to a close, inclusion in future horizon programmes uncertain and a shortfall in funding opportunities for European talent in UK institutions.

Globally, PhD candidates face a crisis of opportunity, with only 3.5% of students completing a PhD securing a permanent research position at a university. These factors are likely to have a negative impact on the training of the next generation of academics and are cause for concern. But, as the report argues, entrepreneurship can offer a credible career alternative to PhD students and postgraduates concerned by their prospects in academia. A concentrated combination of fellowships, funding and training could help incentivise the next generation of talent.

We also evaluate the effects of uncertainty and talent distribution. The macroeconomic context has seen a wave of redundancies, leaving an abundance of deep tech talent seeking their next opportunity. This is something the next generation of university spin-outs stand to benefit from. The report argues that the ecosystem needs to learn from foundations such as the Cambridge Consultants, an organisation that has done exceptional work in retaining and recycling leading talent.

Resources, from infrastructure to capital, are essential to budding spin-outs. In the report, we explore the ways private and government investment is supporting UK researchers in providing much needed lab space, while there are exciting developments in funding allocation across the north of the country and the midlands. Still, an increase in capital for infrastructure and spin-out funding is needed to further galvanise growth across the UK.

Working together

Fundamentally, Gateways to Growth underscores the need for a joined-up approach to building and maintaining a world-leading support structure for university spin-outs. Government strategy, private capital and universities themselves all have a part to play.

Clear government strategies, with commitment and clarity on funding models, can be supplemented by investors with an appetite for risk and the understanding that deep tech requires patience if its successes are going to be felt. Technology transfer offices offer a conduit between academics, industry and investors – and they need to be maintained.

Gateways to Growth explores the real value of university spin-outs. With the right environment, they may yet play a starring role in shaping a better future.

Download your copy of Gateways to Growth: Entrepreneurial Impact Report 2023 and learn how UK universities can fuel economic growth and solve society’s biggest challenges.