New analysis by Universities UK reveals rapid rise in uni start-ups, but leaders warn of risk of losing them to international competitors

New analysis by Universities UK (UUK) has revealed that by 2028, around 27,000 new start-ups – with a predicted turnover of around £10.8bn - could be established at institutions in the UK.

Figures from Higher Education Statistics Agency (HESA) show there has been an explosion in the last decade of start-ups supported by universities up and down the country, as more institutions have set up business incubators and begun teaching students enterprise skills. HESA data on interactions between higher education, businesses and communities reveals the following:

• From 2014-15 to 2022-23 the number of active start-ups established at universities increased by 70%, with more than 4,300 firms registered on average each year

• 38,750 companies have emerged with the support of universities since 2014/15

• Over the same period, student start-up turnover across the higher education sector increased by over 750% from £574,082,000 to £4,920,969,000 and external investment into these start-ups increased by almost 350% from £302,791,000 to 1,351,585,000

• Start-ups established at universities are creating local jobs. In the academic year (2022-23) 64,384 people were employed by start-ups that had emerged from universities. This figure has grown in the last decade by a staggering 177%

In order to continue seeing the growth of innovative start-ups at UK institutions, UUK warns that our world-leading universities must be sustainably funded. Universities UK's analysis suggests that, if current positive trends continue, over the next three years around 27,000 new start-ups are estimated to be established at UK universities.  

This support consists of business mentors, providing space and facilities, connecting with investors and hosting networking events. As well as practical support for start-ups, three quarters of UK institutions offer additional or elective modules in enterprise, ensuring that budding entrepreneurs feel confident taking their first steps in the world of business. Currently three quarters of universities also support social enterprises.

Altered Carbon, a student created start-up at UWE Bristol, has benefitted from practical support from the university for the past seven years. The group developed an AI-driven Digital Nose, an innovative scent detection technology that utilises patented graphene chips and an AI platform capable of learning and distinguishing scents. The system detects gases, volatile organic compounds (VOCs), and complex scent compounds, with applications in environmental monitoring, food storage and waste reduction, and health.

iamproperty was founded by students at Northumbria University who spotted a gap in the market for a property auction service that benefited both Estate Agents and consumers. With the support of the university, they started the now multi award-winning iamsold, pioneering the Modern Method of Auction (MMoA) to bring much needed speed and security to the market. In 2023, iamproperty sold over 9,000 properties via this method, accounting for 1% of all UK property transactions. It has a team of around 700 employees across the UK and is used by over 600 estate agency branches.

University leaders are now warning the government that more firms established at their institutions are being tempted to take their talents and innovations to London or overseas due to a lack of funding available to scale up. This trend is already happening with tech start-ups, leaving some to describe the UK as an ‘incubator economy' where firms thrive only to be sold or relocated overseas.

However, universities are actively working to prevent this from happening. To stem the flow of science and tech start-ups and spinouts from leaving British soil, investment firms such as Northern Gritstone and Midlands Mindforge have worked with universities and budding entrepreneurs to ensure they have the necessary tools and private investment to scale up.

Many university start-ups have also benefited from the foundational funding provided by the Higher Education Innovation Fund (HEIF) which supports the development of knowledge exchange. Recent findings from UKRI revealed that the return to HEIF investment in supporting student entrepreneurship and enterprise is £15.6 for every £1. UUK is calling on government to make a long-term commitment to this programme, as well as support the establishment of collaborative investment partnerships across the UK, and to help universities to work in partnership with businesses and local leaders to support local growth and opportunity in all economic areas and emerging clusters.

Vivienne Stern MBE, Chief Executive of Universities UK said: “The growth in university supported start-ups over the last decade has been a staggering success. 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. This is just one of the ways that our universities can put their shoulders to the wheel with government to achieve stronger growth. Of course, they need to be on a firm financial footing to do this.

“Universities provide a foundation for economic growth through the knowledge exchange they conduct, and the graduates they educate. Few people know that they also work closely with businesses to help them grow too. Using their kit and equipment, and their expertise, they support start-ups, generate their own spin out companies, and work with businesses from the wider economy to provide practical assistance to help them grow.”

Today, Universities UK (UUK) launched Unis Start Up the UK, the group's latest initiative to showcase the amazing student start-ups and the work universities are doing to support them. The initiative also aims to highlight the vital role these start-ups play in boosting economic growth nationally and locally by creating jobs and attracting investors, as well as how universities are equipping entrepreneurs with the right skills through incubator hubs.

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Notes to editors

• The data used comes from HESA's Higher Education Business and Community Interaction Survey (HEB-CI) which measures the volume and direction of interactions between UK HE providers and business and the wider community

• As of May 2023, over 750 structured business start-up programmes were active across the UK (including 400 incubators and 300 accelerators) supporting in the founding of thousands of start-ups. Business incubator and accelerator programmes have nearly doubled in numberbetween 2017 – 2023, 205 incubators, 163 accelerators (2017).

• While the largest concentration is in London, there are now incubators in every region in England as well as across Scotland, Northern Ireland and Wales, the first time such a spread has been identified. Data from May 2023 shows at 269 incubators and accelerators located or co-located at universities.

• Coined in 2013, the term unicorn refers to start-ups that are private companies with a valuation of at least £780 m ($1 billion). Currently there are 43 active unicorns headquartered in the UK, four of which began life as university start-ups (Oxford Nanopore Technologies, Graphcore, Synthesia and Darktrace).

• Using existing HEB-CI data the figure of 27,000 new start-ups over the next three years was determined through linear regression analysis to find out historical trends in order to estimate future figures.

• University start-ups have grown the length and breadth of the UK. The UUK data is based on location of the start-up when founded, and the analysis shows:

• Today, Universities UK (UUK) launched Unis Start Up the UK, [link goes live at 00:01] the group's latest initiative to showcase the amazing student start-ups and the work universities are doing to support them.