This article was published in the Times on 17 November 2025.
Labour must be careful not to “squeeze universities too hard” and “kill the golden goose”, Jeremy Hunt, the former chancellor, has warned.
Hunt said that university spin-outs were vital to the UK’s competitiveness and an incredible success story, adding that the UK could become home to the next Silicon Valley if it made more of its innovations and tech parks.
However while many universities hope the next generation of spin-out companies will help balance their books, investors and founders say that the system for commercialising research remains “broken” and bogged down in bureaucracy.
Spin-out companies are created by academics, with backers, to commercialise their research and intellectual property. This can make money for universities through ownership and licensing.
More than 2,400 spin-out companies were created at UK universities between 2014 and 2024, according to the Higher Education Statistics Agency (HESA).
Universities have been stepping up efforts to commercialise their expertise amid fears that the government’s proposed six per cent levy on international student fees could deter lucrative overseas enrolments. Domestic tuition fees rose this autumn for the first time in seven years but the benefit has already been wiped out by a rise in employers’ national insurance contributions.
Hunt told The Times that the university spin-out sector was an “incredible UK success story and it has only happened in the last decade, starting with the Oxford, Cambridge and Imperial ‘triangle’ and it is spreading out beyond, to Edinburgh, Manchester, Sheffield, Leeds”.
He said: “That is why people don’t scoff at the idea that, if we play our cards right, we could become the next Silicon Valley. We are the only country outside the United States where that has happened on university campuses at this scale.
“It’s really important to our economic future because you’ve got countries like France who are working really hard to snatch the European AI crown from us and the one thing that they can’t compete with is the strength of our university research, the spin-outs and the tech parks, and the fact that there are so many entrepreneurs who come here to make their fame and fortune. So it’s very strategic, not just for the universities but for the UK.”
Hunt said that universities had been much better funded since the introduction of tuition fees and that the government now “needs to be really careful not to squeeze them so hard that we end up killing the golden goose”.
When chancellor, he commissioned a report into spin-outs in 2023 by Irene Tracey, vice-chancellor of Oxford University. This concluded that existing partnerships, while heading in the right direction, had not yet matured to the extent of being “truly self-reinforcing”.
University investment in spin-outs soared from £1.06 billion in 2014 to £5.3 billion in 2021, the review said, but this had put extra pressure on budgets, particularly at institutions without significant endowments.
Hunt added: “I’m sure that the desire to make money is a factor for the universities but that’s no bad thing. I started a tech startup and there were voices saying that universities were too greedy when it comes to intellectual property and they insist on a stake that’s too high and it’s not competitive compared with the offering by American universities. But Irene Tracey’s report concluded that that wasn’t the case anymore, and that the offers you would get as a spin-out are very similar in Harvard and Oxford because it’s a global market.
“It concluded that the biggest problem [was that] some of the universities further down the pyramid, the Russell Group universities, were struggling a little bit and that we could do a lot to include them in the action, given that they’re doing some fantastic research.”
Rachel Reeves was supportive of spin-outs, he added.
Oxford and Cambridge have more spin-outs than any other universities, with nearly 200 active companies from Oxford and more than 270 at Cambridge, according to HESA figures, which updated its list in September.
The investment company Northern Gritstone was founded by the universities of Manchester, Leeds and Sheffield; the business incubator SETsquared was created by the universities of Bristol, Bath, Cardiff, Exeter, Southampton and Surrey; and the capital investment company Midlands Mindforge brings together the universities of Birmingham, Nottingham, Warwick, Leicester, Keele, Cranfield, Loughborough and Aston.
However, some critics say that university technology transfer offices (TTOs), which handle commercialisation, are inefficient and greedy, taking large stakes without providing sufficient support to startups.
Nathan Benaich, the founder and general partner at the venture firm Air Street Capital, said that the UK’s university-to-market pipeline was “structurally inefficient” and “broken”. TTOs often prioritised short-term income over scaling ventures, he said.
Benaich launched Spinout.fyi in 2021, a platform tracking equity terms, timelines and founder satisfaction to inform reform of the UK university-to-market pipeline.
It found that two-thirds of spin-out deals took more than six months and 27 per cent took more than a year to negotiate. He described the delay as “deeply damaging, especially in fast-moving technology sectors”
However, some critics say that university technology transfer offices (TTOs), which handle commercialisation, are inefficient and greedy, taking large stakes without providing sufficient support to startups.
Nathan Benaich, the founder and general partner at the venture firm Air Street Capital, said that the UK’s university-to-market pipeline was “structurally inefficient” and “broken”. TTOs often prioritised short-term income over scaling ventures, he said.
Benaich launched Spinout.fyi in 2021, a platform tracking equity terms, timelines and founder satisfaction to inform reform of the UK university-to-market pipeline.
It found that two-thirds of spin-out deals took more than six months and 27 per cent took more than a year to negotiate. He described the delay as “deeply damaging, especially in fast-moving technology sectors”
Benaich said that the UK spin-out pipeline was “in many cases counterproductive” and “broken because the mechanics of converting excellent research into investable companies do not align with the incentives and processes of many TTOs”.
He added: “Universities are publicly funded and accountable to many stakeholders and the TTO model is often inward-facing rather than [focusing on] founding and scaling companies. In many cases, the academic inventors have little leverage in negotiations and lack the transparency, market data or bargaining strength to secure founder-friendly terms.”
Tracey’s report chimed with several of Benaich’s recommendations, saying that Britain could harness the strength of its universities and disciplines to build an “innovation ecosystem” more ambitious than a replica of Silicon Valley.
David Mott, a venture capitalist based in Oxford who has been investing in spin-outs for more than 25 years, suggested that the government was creating a less-supportive climate.
Oxford Capital, where he is founder-partner, has invested more than £500 million into 100-plus spin-outs including those from the universities of Oxford, Cambridge, Nottingham, Southampton, Bristol, Dundee, Durham, Manchester and UCL.
He said: “The government is making it more challenging for founders with higher employment costs and higher taxes on the people that would typically invest in their businesses.
“The number of spin-outs has risen sharply in recent years. The quality of companies, management teams and funding has also improved significantly in recent years and across the UK. The technology transfer offices of universities have become better at creating and launching companies.
“At Oxford, becoming a founder is the top career choice for graduates today, ahead of banking, law or other professions and some 27,000 graduates from the university have gone on to start a business …
“A growing numbers of ambitious and talented graduates looking to pursue entrepreneurial careers. Most of these companies need early stage funding to get going and invest in development and growth.”
