Hello Rainmakers,
Scotland punches well above its weight academically, with world-leading research in areas of commercial potential like life sciences and technology.
It seems like there’s a university spin-out funding story on an almost weekly basis at the moment, but this is perhaps papering-over some growing investment gaps.
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The British Business Bank’s annual Small Business Equity Tracker revealed in July that Scotland surpassed London in the number of spin-out deals completed – 45 versus 28 – with the University of Edinburgh emerging as Scotland’s most active institution, completing 16 deals in 2025.
However, the Royal Academy of Engineering’s latest report into the topic found Scottish spin-out deals fell by a third from 2024 to 2025 and investment value more than halved during the year.
Andrew Noble, chief operating officer at PXN Group, thinks that Scotland doesn’t have a research or talent problem, but not enough specialist capital needed to turn it into successful companies.
“Our university base across the nine institutions makes up about 10% of the total UK university base, and Scots achieve about 10% of patents granted and 12% of grants won,” he explained. “We also get about 15% of deeptech research income - twice that of the rest of the UK - so should be capitalising on that position of strength, but just don’t have the investment infrastructure.”
PXN has backed 35 spin-outs across 18 UK universities and Noble says it is always trying to find opportunities outwith the so-called golden triangle - of London, Oxford and Cambridge - adding “it would be nice to see investment managers based outside of there with a similar outlook”.
He concedes that many investors are put off by the long return horizons and risky propositions of life sciences and healthtech companies, stating: “It can take longer to find scale, but they often have defensive moats, unique intellectual property (IP), and, as some of these technologies are aimed at solving key future challenges, they can become highly valuable assets.”
Noble’s other argument is further down the pipeline, as spin-outs scale and become attractive propositions for foreign buyers.
“I think sovereign capability building is becoming ever more important - the UK Government has made moves to mobilise capital around modern industrial sectors and national development funds are pursuing a more joined-up approach to helping companies scale here without selling too early,” he stated.
Indeed, the Scottish National Investment Bank’s recent 2026/27 Business Plan detailed plans “to design a fund to support innovative businesses emerging from Scottish universities in the coming year”, building upon the £100m it has already invested in the sector.
