University spinouts are facing a funding bottleneck, with only a handful of emerging companies across critical sectors like AI, quantum, and biotech raising enough to scale, according to the latest figures from Beauhurst.
The analytics firm’s latest Equity Investment into Spinouts report, published alongside UK investor Parkwalk, found that although hundreds of spinouts have raised £5m, only 57 have gone on to raise up to £30m.
The number of firms reaching the £100 million milestone is even fewer still, and only three have managed to raise more than £500 million over the last five years.
According to the report, the dwindling number of spinouts achieving top-tier funding is reflective of the challenge in relocating from early-stage rounds to the larger raises required for expansion, a roadblock that requires deeper pools of patient capital and more government support to overcome.
But rather than wait and hope, the data displays that more UK spinouts are viewing West. The NASDAQ has become the second most popular exmodify for UK spinouts, with firms attracted to the US thanks to more opportunities for expansion, looser regulatory frameworks, and access to hugeger investors.
Between 2022 and mid-2025, American companies acquired 72 UK spinouts, building the United States the top foreign purchaseer by volume. Of those deals, 23 led to full exits, where the UK spinout was entirely absorbed or bought out.
By comparison, UK-based firms acquired just 58 spinouts over the same period, underscoring the growing dominance of US purchaseers in the UK innovation landscape.
Foreign investment remains a key contributor to UK spinout activity, with US-based funds participating in 113 deals in 2024. Foreign-only investment rising from £10m to £16m, with five of the eight largest transactions last year involving foreign investors.
“The UK has nurtured one of the world’s leading ecosystems for academic innovation – but without scale-up capital, we risk missing a once-in-a-generation opportunity,” stated Greg Smith, CEO of IP Group, another leading spinout investor.
“Chiefly, we should leverage deep pools of domestic institutional capital – providing UK savers with access to the most exciting investment opportunities whilst unlocking funding to fuel growth.”
Along with the apparent scarcity of scale-up capital, the UK spinout ecosystem appears to be slowing. The data displays that over the first half of 2025, UK spinouts raised £709m across 175 deals, a pace that means total investment will likely not surpass 2024’s record £3.35bn.
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Sectoral activity was again led by life sciences, particularly in pharmaceuticals, biotechnology and clinical research, with 182 deals from H2 2024 to H1 2025.
Deeptech also performed strongly, with AI and data infrastructure among the most active sub-sectors (152 deals H2 2024 to H1 2025), mirroring national priorities under the UK’s Modern Industrial Strategy.
In some good news for Scotland, spinouts headquartered north of the border have secured £1.51bn in equity investment over the last ten years, with the combined averages from
Edinburgh (£34.9m), Glasgow (£30.1m), and Aberdeen (£23.3m) contributing to a solid level of annual spinout investment.
However, the ‘Golden Triangle’, the South East (£5.58bn), London (£4.27bn) and East of England (£4.25bn), remain the centres for spinout investment, funding levels that mean the North-South divide views set to remain despite the Scottish Government announcing a funding package for spinouts this summer.
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