A long-running funding crisis among UK universities could diminish the country’s talent pipeline and see nascent spinouts shut down, experts have warned.
Britain’s universities have played a vital role in building the country’s tech ecosystem, with close to 100,000 students graduating with computer science degrees each year, according to nonprofit National Student Clearinghouse.
Earlier this month, higher education regulator the Office for Students reported that the financial situation among the UK’s universities had worsened, warning this made the “sudden market exit” of a large provider more likely.
Callum Usher-Dodd, head of programmes at the Oxford Saïd Entrepreneurship Centre, University of Oxford, says: “If any number of UK universities were to collapse, the consequences for startup recruitment would be severe.
“Universities are a primary source of technical talent and a catalyst of entrepreneurial activity. Their decline would drastically shrink the pipeline both regionally and nationally, forcing startups to compete for a diminishing pool of skilled graduates.”
Rising costs, a fall in the number of high-paying overseas students and a freeze on tuition fees since 2019 have all been cited as contributing to the current crisis.
“If universities start to fail, the impact on the recruitment pipeline will be severe, with fewer skilled graduates entering the job market and greater competition for those who do,” says Neil Armstrong, chief commercial officer at Tribepad, a talent acquisition tech platform.
“And competition is fierce enough at the moment, with an astonishing 35.5 applications for every role [at a tech company], according to our latest data.”
Under threat
Spinouts are also under threat. Since 2011, more than 2,000 companies have been built off the back of founders’ academic research, with pharmaceuticals, data analysis and electronic hardware among the most prominent sectors.
“University-backed spinouts often rely on access to research labs, academic mentorship and early-stage funding all of which is at risk of disappearing, stifling innovation at its source,” says Usher-Dodd.
“The UK has long benefited from this model, but its fragility is becoming increasingly clear as universities make severe cuts in a bid to survive.”
Professor Sir Anthony Finkelstein, president of City St George’s, University of London, told Sifted that while it was unlikely many UK universities will go bust, some would likely be forced to cut staff, close courses and dispose of assets.
“Enterprise and innovation activities are mostly a cost for institutions, and they are a clear target for cost-cutting in institutions that face difficulties.”
Solutions
While the future of some of the UK’s universities remains uncertain, those close to the sector told Sifted there were still some options on the table.
“Three things: invest, invest and invest,” says Rafael Carazo Salas, founder of CellVoyant, an AI biotech company which spun out of Bristol University. “The government has made it clear that it wants the UK to be a world leader in research,” he tells Sifted.
“To fully capitalise on the country’s rich talent pool and groundbreaking research, the government must support innovation across the UK- North, South, East and West — without geographical constraints.”
Usher-Dodd agrees: “The tech ecosystem has a unique opportunity to collaborate and co-create progress through corporate-backed university funds, accelerators and stronger ties between academia and industry.
“A more integrated approach can help to de-risk universities’ innovation efforts and ease financial pressures on universities. But without intervention, the UK risks losing its edge in deep tech, AI and life sciences sectors.”
Sifted approached the Department of Education for comment.
Read the orginal article: https://sifted.eu/articles/uk-university-funding-crisis-startups-spinouts/
