University spin-outs: opportunities and challenges in 2026

As global markets increasingly channel capital into R&D-heavy innovation - particularly in AI, life sciences and clean tech - spin-outs are well-positioned to benefit from this momentum. The spin-out market represents a clear opportunity for investment: both by universities looking to commercialise their research, and investors looking to support the next generation of technologies.

Where does the market sit?

In recent years, there has been a significant shift towards greater transparency in the university spin-out ecosystem, resulting in far more openness about spin-out models and deal terms. This growing visibility has enabled universities, funders and investors to benchmark spin-outs more effectively and make more informed decisions.

This shift follows a drive led by the UK government and the research and higher education sectors, beginning with the 2023 Independent Review of University Spin-outs Companies, which formed part of the UK government’s ambition to position the UK as a science and technology superpower.

The same year saw the release of TenU’s University Spin-Out Investment Terms (USIT) guide which established a clear reference point for investment and licencing practice, with a particular focus on the life sciences sector. The USIT guide was followed up by the release of USIT for Software, which focused on know-how, data, data-based rights and copyrights. In February 2025, as reported by the Royal Academy of Engineering, university equity stakes dropped to a decade low of 16.1% equity in 2024, down from 21.5% in 2023.

This reduction aligns with recommendations from the Independent Review and the USIT guide, both of which encouraged universities to adopt lower equity positions to attract investment, stimulate spin-out activity and support long-term growth.

In summer 2025, the National Spin-Out Register was published by the Higher Education Statistics Agency (HESA) and JISC in partnership with Research England and the Policy Evidence Unit for University Commercialisation and Innovation at the University of Cambridge. The register provides a free, online database of all university spin-outs in the UK and, in line with other recent developments, enables stakeholders and investors to benchmark performance, assess regional innovation activity and analyse sector-level investment trends.

Opportunities and challenges in 2026

We expect the adoption of concepts from the USIT guide to increase throughout 2026, helping to streamline spin‑out investment processes and accelerate funding timelines – an encouraging development for investors, universities and academic founders alike. As practices become more embedded, we anticipate a clearer alignment between university equity positions and board representation with universities taking board seats only where equity stakes justify it, with a gradual transition off spin‑out boards as their equity stakes reduce.

The life sciences sector is expected to remain the leading area for university spin‑outs in 2026, bolstered by several high‑profile exits in the previous year, most notably the $1 billion acquisition of OrganOx by Terumo Corporation and the sale of Cytora to Applied Systems. Investment in AI‑focused spin‑outs is also set to remain strong, accompanied by continued growth across emerging sectors such as clean tech and digital health.

Historically, spin‑outs have faced significant financial and geographic barriers when trying to access affordable, high‑quality research facilities close to their home universities. However, growing investment in innovation campuses - often developed through partnerships between universities and third‑party funders - is helping to address these challenges. The University of Birmingham’s Health Innovation Campus is a good example of this and demonstrates how a well‑located laboratory and incubation space can accelerate the growth and development of spin‑outs.

However, ongoing challenges persist for universities and academic teams in securing sufficient proof‑of‑concept (PoC) funding, which remains essential for bridging the gap between early‑stage research and commercial viability. Although the UK government announced a five‑year, £40 million PoC fund in 2024, the overall availability of such funding has continued to decline. As a result, there are fewer proof‑of‑concept funding options in 2026 than were available just a few years ago, creating a potential bottleneck for spin‑outs seeking to conduct further testing and studies of innovations ahead of seeking investment.