Spin-out companies from UK universities generated an “unprecedented” level of investment last year, a new report has found.

Equity investment recovered from 2023 when £2.32 billion was raised from 468 deals as geopolitical tensions resulted in smaller deal sizes, according to .

Though there were fewer deals made in 2024, the average value of equity raised rose from £5 million to £7.5 million over this period, meaning total investment increased by 44 per cent to a record £3.35 billion.

Researchers said this “unprecedented” increase reflected stronger investor appetite and a willingness to back companies with potential for global scale.

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Over a quarter of equity raised last year came from just two companies which received substantial backing – Autolus, a UCL immunotherapy spin-out (£436 million), and Bicycle Therapeutics (£435 million), a new cancer therapy from the University of Cambridge.

Even without the two largest deals in 2024, the total amount raised would have been more than the year before.

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The report said that the £709 million raised so far in 2025 is encouraging in difficult market conditions, thanks to world-class research and a growing pool of founders.

Researchers found that five of the eight largest transactions last year involved foreign investors. US-based funds participated in 113 deals in 2024, while foreign-only investment increased from £10 million to £16.1 million.

Moray Wright, chief executive of Parkwalk, said the right policy environment is needed to ensure that the UK fully leverages its potential in frontier innovation.

“Spin-outs are the future of this economy. It is where the UK has real comparative strength – capitalising on our world-leading research base. The companies raising record sums of investment in 2024 are tackling the biggest challenges of our time – from climate change to AI and healthcare.”

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The most recent 12 months of data show that 182 deals have been made in life sciences spin-outs – the most active industry.

Meanwhile, the south east, London and the east of England were found to be still the centres for spin-out investment. But the report said that Manchester-based companies secured a record £56 million investment last year, with universities in Edinburgh, Sheffield and Leeds becoming increasingly active.

However, the report did raise concerns around the challenges UK start-ups face in raising scale-up capital. Almost 1,000 spin-out companies raised up to £5 million in equity, but only 57 went on to generate between £20 million and £29.9 million.

Anne Lane, chief executive of UCL Business, said the “report shows strong signs of resurgence in the UK spinout market, but as the data makes clear, the funding gap at the growth stage threatens to undermine this success”.

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“To unlock the full potential of our world-class university research and deliver a genuine spinout boom, we need action at both ends of the journey; more proof-of-concept funding to help academics at the start, and more UK investors prepared to step up with the scale-up capital.”

patrick.jack@timeshighereduction.com