Scots spin-offs fail to impress as third go under

July 17, 2008

Almost a third of the businesses set up to exploit ideas from Scotland's universities have failed, according to new research that recommends that fewer spin-off companies should be supported.

Research by consultants Targeting Innovation found that about 200 spin-offs from Scottish universities have been set up since 1967. Among the two thirds that have not collapsed, some 55 per cent have fewer than ten employees and only 16 firms employ more than 50 people.

George Boag, chief executive of Targeting Innovation, said: "It has long been recognised that technology from Scotland's universities represents a great opportunity, but this study shows that efforts so far to exploit it have had limited success.

"A choice needs to be made between spreading resources thinly to give as many spin-offs as possible a chance or progressively focusing on a select few," he said.

"Effort and funding might be better directed to ensuring that fewer spin-offs emerged, and were nearer to market when they did, and that they employed stronger commercial management sooner."

The report - which is based on information from all Scottish universities and interviews with university commercialisation staff, the firms themselves and private-equity backers - found no evidence of any Scottish university making money from spin-offs.

Comments from university staff included "Spin-outs take a lot of work, and there generally isn't much to show for it at the end" and "Only Stanford and MIT make a financial return on their activities".

Mr Boag said: "Universities often develop novel research that isn't aimed at any specific market. Because there is a lot of risk at this stage, the private sector is wary of investing until it is clearer how the technology can be exploited and which market it is aimed at.

"Therefore, there is a gap in the market that universities are not well equipped to address," he added.

Scottish Enterprise, the national development agency, funds a "proof of concept" scheme to bridge this gap, but the report says that there is a widespread view that academics see it mainly as a source of research funding.

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