Why is Britain failing to turn world leading science into world beating companies?

Most of it won’t.

My colleagues and I see this every year as general partners at a venture and investment firm backing university spinouts across Scotland and the North: talented, ambitious academic founders starting out and the same funding shortfall catching up with many of them, either on spinout or a few years down the line.

Last year just 141 university spinouts were founded in the UK; a figure that has been in decline since its peak in 2020/21. It's tempting to read these figures as a story of lack of talent or stalling ideas, but the opposite is true: the UK produces more VC-backed spinouts than the US, Germany or France, relative to the size of its research base, meaning our science and ambition aren’t the problem; commercialising it, scaling it and retaining the technology and the talent in the UK is.

The value of all UK acquisitions by foreign buyers has more than tripled to £128bn in the first half of 2026 alone, putting the country on track for its strongest year of foreign takeovers in two decades. Among spinouts specifically, six of the ten largest went abroad. The two flagship exits of 2025 – Oxford Ionics to IonQ and OrganOx to Japan's Terumo Corporation – both spun out of Oxford University.

If anywhere in Britain should be able to hold onto companies like these, it's Oxford. Alongside Cambridge and London, the Golden Triangle has spent 15 years building capital density with bigger ticket sizes and follow-on reserves, yet two of its biggest wins went abroad.

So what chance does the rest of the country have, when spinouts across Scotland and the North of England raise less than a quarter of their South Eastern counterparts and take twice as long to reach their first institutional raise on average? This is despite spinout formation in those regions outpacing the Golden Triangle – 29% vs 14% – and that Scottish universities win double the deeptech research income per capita than the UK average, while receiving a third less venture investment.

Every region raising a fraction of the funding means few founders getting the runway to launch, commercialise and scale their world-leading IP – and that’s if they get to build a business at all. Over a fifth of the patents filed by European universities have no plan for commercial use attached, leaving their potential unrealised before they've even got going. That IP doesn't get sold or relocated, it’s shelved until the patent lapses or a foreign company with a scouting budget swoops in.

Then, when a spinout manages to leave the lab and start to scale, it needs enough capital at later stages to sustain that growth, or we lose the company anyway. Late-stage funding makes up only 20% of total UK venture investment, against 35% in the US. Of what growth funding does exist here, more than 60% now comes from overseas. It’s little surprise, then, that so many of our best companies end up looking abroad to scale, or take the acquisition route instead, and with it, the team – often the very people the UK spent years training and funding – ends up folded into someone else's research division. Their British IP and patents become another country’s asset.

None of this requires a decade of policy review to fix. The government has taken positive steps to unlock the scale-up capital deeptech companies need, from mobilising and funding British Business Bank capital to Mansion House Reform, Local Government Pension Scheme pooling, Sovereign AI, and the proposed £1bn UK Scale-Up Fund. Money already exists in public institutions but it’s been slower, or hesitant, to reach early-stage spinouts. Universities can help here too: the median UK spinout equity stake has fallen from over 22% a decade ago to just above 16% today, and continuing that trend this year would make outside investment easier to secure from day one.

But more capital and conviction are still needed, particularly in the North of the UK. As investors sat on the sidelines in 2025, waiting for conditions to improve, spinout funding cooled and seed-stage deals dropped 27%. Yet this is exactly when the best opportunities get built: the businesses that raise well in a downturn are often the ones that define the decade after it. Rather than waiting for someone else to prove the model first, we can act now so the UK can support spinouts from university IP to UK IPO.

The new cohort of PhD students starting this month will undoubtedly produce some of the country's best spinout opportunities in the coming years. Whether those become companies of consequence for the UK and its economy depends on decisions being made today. We’re operating in competitive, global markets - remove the fear of failure and move faster.

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Andrew Noble is a General Partner at PXN Ventures.

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