London universities draw up plans for £500m spinouts fund

Some of London’s leading universities are plotting to create a £500m fund to back start-ups created by their academics, even as the wider higher education sector confronts a growing financial crisis.

Sky News has learnt that University College London (UCL), Kings College London and Queen Mary University are in talks to establish a jointly owned vehicle that would back spinout companies across sectors such as healthcare and cybersecurity.

The Francis Crick Institute has also been approached about participating in the new entity, which has been given the working title of London Atrium.

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A source close to one of the institutions said that London Atrium would seek to raise at least £500m from third-party investors.

A successful fundraising and launch of the initiative could help to alleviate concerns about the difficulties faced by academic-founded start-ups in the UK when trying to access funding.

One insider likened the new vehicle to Northern Gritstone, a fund chaired by Lord O’Neill, the former Treasury minister and architect of the Northern Powerhouse.

Northern Gritstone has invested in dozens of spinouts founded by academics from universities in Leeds, Sheffield, Manchester and other cities.

A search is understood to be under way for a chair and chief executive for London Atrium.

In a statement issued to Sky News, a UCL spokesperson said: “UCL is currently exploring options for a successor to its two previous Technology Investment Funds, which have already supported a wide range of highly successful spinout businesses emerging from UCL’s world class research and innovation.

“These discussions are at a very early stage and we are exploring a range of potential initiatives and partners.”

A source said the collective annual research spend of London Atrium’s partners was more than £1.4bn.

This compared to roughly £1.6bn and £1.5bn at MIT and Stanford in the US, and £900m at Oxford University.

UCL alone has over 9,000 academic staff members and research income of approximately £700m each year.

Its existing funds have backed a handful of companies which have subsequently gone public, including Autolus and MeiraGTX.

Sources said there was a belief that the potency of London’s academic research pool lent itself to the creation of such a vehicle.

British and overseas pension funds are expected to be among those approached to back London Atrium.

Imperial College London is understood to be pursuing its own investment vehicle.

Oxford Science Enterprises, which was founded in 2015, has had a mixed track record despite backing a string of ultimately well-known companies.

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A number of other spinout vehicles have also been set up by British universities, including Midlands Mindforge, which is backed by institutions including Aston, Birmingham and Nottingham.

The prospective launch of London Atrium comes amid growing concerns about the wider financial health of Britain’s universities.

In an interview with The Sunday Times last weekend, the interim head of the universities watchdog said the funding challenge facing the sector was “significant”.