Start-up firms established at universities could be lost to overseas competitors
20 March 2025, 11:04
The UK risks becoming an ‘incubator economy’, as tech start-ups are being ‘snapped up’ by international competitors, according to Universities UK.
Start-up firms established at universities are being tempted to take their talents and innovations overseas because of a lack of funding available to scale up in the UK, university chiefs have said.
The UK risks becoming an “incubator economy”, as tech start-ups are already being “snapped up” by international competitors, according to Universities UK.
The organisation, which represents 141 universities across the UK, has called on the Government to ensure universities are “adequately funded” so they can continue supporting start-ups at British institutions.
An analysis by Universities UK (UUK) has suggested that by 2028, about 27,000 new start-ups, with a predicted turnover of about £10.8 billion, could be established at institutions across the UK with the right support.
Figures from Higher Education Statistics Agency (HESA) show there has been a rise of start-ups supported by universities in the country in the last decade.
HESA data shows that the number of active start-ups established at universities increased by 70% from 2014/15 to 2022/23, with more than 4,300 firms registered on average each year.
This support consists of business mentors, providing space and facilities, connecting with investors and hosting networking events.
Vivienne Stern, chief executive of UUK, said: “The growth in university supported start-ups over the last decade has been a staggering success but we can do more, both to encourage and support new businesses born in our universities, and to ensure that they can remain in the UK and grow here.
“However, with innovative tech start-ups in particular being snapped up by international competitors, the UK risks becoming an ‘incubator economy’.
“Losing these companies could impact the Government’s economic growth plans as well as see the country lose some of its most talented minds.
“Fortunately, universities are working hard alongside investment firms to provide start-ups and spinouts with the necessary tools to scale up here in the UK.
“To ensure these start-ups have a more friendly environment in which to thrive, the Government and higher education sector need to work closely together to ensure universities are adequately funded to continue supporting a strong pipeline of innovative new companies.”
Tina McKenzie, policy chairwoman at the Federation of Small Businesses, said: “Supporting young people to build their own businesses fuels local growth, creates jobs and strengthens economic resilience.
“Universities can be incredibly effective at providing the knowledge, guidance and support needed to set up a business.
“But there can be significant regional disparities between them, with young people educated at university level in London most likely to have had exposure to enterprise.
“We need to see universities working together to make sure those that run student entrepreneurship programmes can help those that lack the relevant support.”
A Government spokesperson said: “We recognise the vital role that innovation and entrepreneurship play in driving economic growth, and we are delighted that our world-leading universities have been a powerhouse for the surge in start-ups.
“This government inherited a sector facing serious financial risk and has already taken tough decisions to fix the foundations of higher education to deliver change for students.
“While institutions are autonomous, we remain committed to boosting the sector’s long-term financial sustainability and helping to deliver our Plan for Change, restoring universities as engines of opportunity, aspiration and growth.”
