Universities Call for Government Action to Support Start-Up Growth

Lack of Funding Forces UK Start-Ups to Seek Global Opportunities

The sustainability of start-up ventures emerging from UK universities is becoming a pressing issue, as university leaders have raised concerns over their ability to thrive within the country. Many of these start-ups are increasingly seeking opportunities overseas due to insufficient funding for scaling operations in the UK. According to Universities UK (UUK), an organisation representing 141 universities, this trend threatens to turn the UK into an “incubator economy,” where promising tech start-ups are developed domestically but are eventually acquired by international competitors. To address this, UUK has called on the government to ensure universities receive adequate funding to support these businesses and prevent the loss of innovation to global markets.

UUK’s analysis indicates that with appropriate financial support, approximately 27,000 new start-ups could be launched at UK universities by 2028, potentially generating £10.8 billion in turnover. Data from the Higher Education Statistics Agency (HESA) highlights a remarkable 70% increase in university-supported start-ups between 2014/15 and 2022/23, with over 4,300 firms being registered annually. Universities are playing a pivotal role in fostering these ventures by offering business mentorship, facilities, investor networks, and opportunities for collaboration through events. While praising the success of university-backed start-ups, Vivienne Stern, CEO of UUK, emphasized the importance of additional efforts to retain and grow these businesses within the UK.

Concerns have been expressed that the UK’s innovation potential could be undermined if more tech start-ups are acquired by international competitors. Experts have cautioned that such a trend could hinder the government’s broader growth ambitions and result in a significant loss of talent. However, in collaboration with investment firms, universities are actively working to provide the necessary resources and opportunities to help start-ups scale domestically.

To create a supportive ecosystem for start-ups, it has been suggested that the government and higher education institutions collaborate more closely to ensure universities have sufficient funding. Tina McKenzie, policy chair at the Federation of Small Businesses, underscored the importance of supporting young entrepreneurs, not only for fostering innovation but also for promoting local economic growth and job creation. She further highlighted regional disparities in entrepreneurship exposure, noting that students in London benefit from greater opportunities compared to those in other regions. McKenzie urged universities to enhance collaboration and extend support to students in less advantaged areas.

In response, a government spokesperson acknowledged the critical role of innovation and entrepreneurship in driving economic growth. They commended UK universities for their contributions to the rise of start-ups while noting the challenging financial landscape inherited by the government in the higher education sector. The spokesperson reiterated the government’s commitment to stabilizing university finances and reaffirmed the objectives of the Plan for Change, which aims to restore universities as key drivers of opportunity and economic progress. The issue of funding and support for start-ups remains a critical challenge, and it is evident that close collaboration between universities and the government is essential to ensure long-term sustainability and prevent the UK from losing its innovative edge.

Editor's Note:

The UK’s goal to become a global leader in innovation is at risk. While universities are fostering talented entrepreneurs and start-ups, a lack of funding and support threatens this progress. Without proper investment, these ventures are being drawn abroad, putting the UK at risk of becoming an "incubator economy" where innovation benefits other countries. Universities are doing their part, offering mentorship and global connections, but they can’t do it alone. The government must provide real support to ensure these start-ups can thrive and stay in the UK. A clear strategy combining university efforts with government funding and policy reforms is essential.

According to Skoobuzz’s overview, if the UK wants to be a leader in innovation, it must act now to support and grow its homegrown talent. Delaying action would result in losing both economic potential and the opportunity to shape the future of global innovation.