New research commissioned by Midlands Innovation and Forging Ahead provides fresh insight into what influences university spinouts to stay, move and grow, challenging previous assumptions around spinout mobility in the Midlands.
The new Enterprise Research Centre report, What determines the mobility of university spinouts?, examines the location decisions of university spinouts linked to Midlands universities, drawing on 21 in-depth interviews with founders, CEOs, directors and other senior decision-makers.
Commissioned in response to evidence suggesting that the Midlands experiences a higher rate of spinout “attrition” than many other UK regions, the research explores why spinouts relocate, how location decisions are made, and what interventions could help the Midlands retain more of its knowledge-intensive businesses over the long term.
Its findings reveal a more complex, but broadly positive, picture.
A positive picture of the Midlands
Interviewees were broadly positive about the Midlands business environment, highlighting the region’s universities as important sources of technical talent and valuing the quality of its research ecosystem. Businesses also identified the Midlands’ central location and transport connectivity as strengths.
Taken together, the findings challenge a simple interpretation of spinout mobility as an indication of weakness in the Midlands business and innovation environment.
What really influences where spinouts grow?
One of the most striking findings was the importance of people.
In almost every case where a spinout relocated across regional boundaries, the move was tied to where senior decision-makers were personally based or, to a lesser extent, perceived investor location requirements.
There were also cases of businesses being identified as having moved out of the region when, in fact, they had only registered small outposts closer to target investors while maintaining business activity in the Midlands.
These findings suggest that spinout mobility should not necessarily be viewed as a sign of regional failure, but rather as reflecting the hypermobility and dependence on specific expertise that spinout businesses have in their early years.
Where can the Midlands make a difference?
While many location decisions are influenced by factors that regional actors cannot easily control, the research also highlights circumstances where the environment in which businesses are growing can make a difference.
One notable example is access to specialist infrastructure. Two advanced materials spinouts reported difficulties finding suitable, up-to-date laboratory space in the Midlands. For one business, the absence of the facilities it needed led it to relocate to the Golden Triangle, despite the founder indicating that it would have preferred to remain in the Midlands.
Views on funding were more mixed. Some businesses reported successfully accessing grants, angel finance and venture capital, while others described generating investor interest as challenging. Many regarded these difficulties as national issues rather than specific to the Midlands, although some perceived stronger investor networks and start-up support within the Golden Triangle.
The report concludes that the Midlands appears well placed to retain many of its spinouts, but that retention depends on supporting firms as they grow. It points to specialist facilities, affordable laboratory and office space, scale-up finance, commercialisation support and continued investment in talent development as areas of focus.
For Midlands Innovation and Forging Ahead, the findings raise three important questions for further exploration:
- How can we continue to develop and connect commercial talent within the region?
- How can we strengthen the profile of the Midlands with investors based elsewhere?
- How can we better connect scaling businesses with suitable sites and specialist facilities across the region?
There are strong foundations to build on. Forging Ahead’s Commercial Champions programme is developing a regional talent pool by bringing external commercial expertise into spinout teams. Midlands Mindforge provides patient capital and company-building support, while the Invest in UK University R&D – Midlands Campaign created a joined-up proposition to showcase the region’s research and innovation strengths to international investors.
Relationships with UK Science Park Association Central Group and West Midlands Regional Innovation Asset Network (WMRIAN) also offer opportunities to strengthen connections across the region’s innovation infrastructure.
Joshua Hawkins, Assistant Director at Midlands Innovation, said: “This report provides important new insights into what really sits behind spinout mobility, including some findings that challenge our previous assumptions, and many that are positive for the Midlands.
“It also gives us confidence that work already underway across the region is addressing some of the right challenges. Importantly, the research provides a strong evidence base to help us focus our collective efforts and continue the conversation about how we create the conditions for more innovative businesses to start, scale and stay in the Midlands.”
