New research commissioned by Parkwalk, a UK growth EIS fund manager, has found that the total volume of equity investment secured by spinouts between 2012 and 2021 is GBP10.9 billion, a record amount.
The total number of equity deals secured by spinouts between 2012 and 2021 now stands at 3,207 and the number of first-time equity deals secured by spinouts in 2021 is 102. The number of international investors who participated in equity deals in 2021 has also increased to 40 per cent, whilst the number of exits via IPO or acquisition undertaken by spinouts between 2012 and 2021, stands at 166.
The record levels of foreign investment into spinouts in the UK during 2021, was likely bolstered by the government’s new GBP1.4 billion investment fund to help encourage overseas investment in key, knowledge intensive sectors including electric car manufacturing, offshore wind and life sciences. Whilst encouraging overseas investment is critical there is still a large amount of dry powder in the UK that can be deployed into EIS funds to help innovative UK businesses that are looking to scale up. Not only would greater encouragement for investors to make use of such funds help support key sectors within the UK, but it would help support the government’s R&D spending commitment of GBP22 billion by 2024-25.
The jump in the number of first time deals can be explained by fund managers’ increased confidence as we emerge from the pandemic. 2020 saw greater focus on existing portfolio companies but the increase in first time funding is a positive step to ensure the growth of the next cohort of large university spinout companies.
