Eight Midlands universities have launched a £250m investment vehicle to fund research spin-offs, as the UK looks to harness advances in science and technology to fuel regional growth.
Midlands Innovation, a group of institutions including Loughborough University, the University of Birmingham and the University of Warwick, launched Midlands Mindforge on Monday, aiming to provide investment and support to early-stage technology companies in the region.
The launch reflects a shift among universities towards commercialization of research and regional economic strategy, as the government turns to the sector as a growth engine that drives upgrading and increases productivity.
In last month’s Budget, Chancellor Jeremy Hunt announced that he would create 12 low-tax “investment zones” focused on universities, each of which would receive £80m in the form of tax breaks and investment over five years.
Mindforge follows the lead of similar university investment vehicles such as Northern Gritstone, which was created by the universities of Leeds, Manchester and Sheffield. So far, it has raised £215m to build what it hopes will become a northern innovation hub.
Professor Trevor McMillan, chairman of the board of Midlands Innovation and vice-chancellor of Keele University, a co-founder, said the vehicle would be a “catalyst for building innovative businesses”, creating highly-skilled jobs and driving growth.
Loughborough University. The launch reflects a shift among the institutions towards commercialization of research and regional economic strategy © APS (UK)/Alamy
“By cultivating an environment where business-minded graduate students and researchers can benefit from early access to investment, we can create opportunities for our people, place and society to thrive,” said McMillan.
The vehicle will target companies in areas like AI and cleantech based on university-level research, providing funding at crucial early stages of their development when they may be overlooked by mainstream investors.
It plans to raise £250m from corporate partners, institutional investors and individuals. The Midlands currently accounts for 15 per cent of high-growth SMEs, but attracts 5 per cent of investment value, he said.
George Freeman, the science minister, said there was an “urgent” need to commercialize UK science and technology. “As we in government ramp up UK public R&D to a record £20bn a year, the key is private funding supporting spin-offs and extensions,” he said.
Henry Whorwood, an analyst at consultancy Beauhurst, said investment vehicles could play an important role in improving access to capital, a problem for start-ups, especially in regions of Britain.
However, he added, a “comfortable” relationship with funding vehicles could give universities more power over which companies receive funding and the conditions academic institutions place on startup founders.
The work of investment vehicles such as Mindforge would be independent of but complementary to the government’s investment zone policy, Whorwood added. The former help companies get started by offering them capital, while investment zones provide incentives for companies to stay in the regions after establishing themselves.
“They are two quite different levers that could have the same results.”
West Midlands Mayor Andy Street said the investment vehicle would support his mission to drive regional recovery and create high-quality jobs and sustainable economic growth.