Europe is full of brilliant ideas. From quantum computing and advanced materials to biotech and robotics, universities across the EU are producing world-leading science. But turning that knowledge into startups? That’s where things tend to get stuck.
According to a new report from the EU-funded StepUp Startups project, spin-offs formed through university research represent a largely untapped innovation pipeline. While they’re often operating in what are classified as ‘high-potential’ sectors like deep tech, climate tech, and healthtech, only a small percentage ever make it out of the lab, let alone scale.
This isn’t a new issue; the European Innovation Scoreboard consistently shows that while Europe leads the way in academic research, it lags when it comes to commercialisation and startup creation. So what’s going wrong?
Why university spin-offs struggle
The recently released report ‘Spin-offs: Reinforcing a Vector of Value Creation for EU-27’ scans all 27 EU member states to headline the key structural challenges holding spin-offs back. Pooling the expertise of project partners DEEP Ecosystems, Barrabés, EU-Startups, IRS, supported by the Startups Europe Regions Network and ESNA, the report includes insights from a deep dive workshop with 30 institutions spread across Europe. The key takeaways are that:
- Tech transfer is often slow and complex
Imagine having a breakthrough idea but waiting over a year just to secure IP rights before you can even talk to investors. - Researchers often lack business support and training
Many spin-offs are founded by scientists with limited entrepreneurial experience, making it hard to build scalable ventures or attract funding. - Academic incentives don’t always reward going to market
Publishing papers often takes priority over starting companies, leaving spin-offs without sustained founder involvement. - Early-stage funding is scarce, especially outside major hubs
Without access to local seed investors, promising startups can stall or move abroad, slowing innovation within Europe. - Scaling up is still the exception
Only 11% of deep tech spin-offs grow to match the scale of typical startups and most never make it past early traction. - Equity deals can scare off investors
When universities hold large stakes, founders have less ownership, and that makes it harder to attract private capital. - Gender gaps persist
The report shows only 15% of spin-offs include female founders, reflecting broader ecosystem challenges.
For those working at the intersection of academia and entrepreneurship, the challenges outlined in the report will sound all too familiar. Travis Todd, Head of Startups at Silicon Allee at Fraunhofer HHI, points to several of the structural hurdles that make it difficult for university research to evolve into successful spin-offs: “Most academic institutions still treat spin-offs like legal liabilities rather than potential success stories. Layers of bureaucracy, unclear IP ownership, complex and expensive licensing terms, veto rights, and equity grabs make it hard for founders and unattractive to investors. What’s missing is founder-first thinking, startup literacy, and clean, VC-ready deal structures. Without those, world-class research won’t leave the lab.”
Another such voice is Marina Valls, Senior IP Legal Officer and tech transfer expert, who explains: “Firstly, academic promotion across disciplines depends on publishing, which discourages early patent filing and confidentiality, making it harder to protect and commercialise research. Secondly, most universities lack the internal resources, legal, business, or IP expertise, to support spin-off creation. Researchers often cannot find co-founders with the business skills to take the lead. On top of that, universities frequently retain large equity stakes, which discourages investors. These issues don’t make spin-offs impossible, but they raise the threshold significantly.”
Why this matters now
As the report signals, university spin-offs are crucial drivers of innovation and economic growth in Europe. We risk wasting this opportunity – unless, of course, more university spin-offs can get the support they need.
While some countries are starting to get it right, many are falling behind, highlighting how uneven the European landscape is. For instance, Sweden and the Netherlands stand out in the Spin-offs report for their stronger university-industry collaboration, clearer IP frameworks, and dedicated spin-off support. The UK has also recently ramped up efforts to back university spin outs as a way to grow what they call “the industries of the future”.
However, across Europe as a whole, it takes more than 18 months on average to transfer research to market, despite over 70% of spin-offs working in high-potential fields like deep tech. From here, only 22% go on to raise follow-on funding.
This slow pace comes at a critical moment. As Todd puts it: “With the twin pressures of European tech sovereignty and global competition, we can’t afford to let our best ideas stagnate and waste this opportunity.” Similarly, Valls reinforces this urgency, highlighting how Europe risks falling behind: “Institutions overseas move faster and offer stronger support for early-stage spin offs and their founders. If Europe wants to retain talent and build strategic independence in key technologies, it must act now before its research is spun out elsewhere or not at all.”
The message is clear: without swift and decisive action, Europe risks losing its brightest ideas – and the competitive edge that comes with them.
All hands on deck
To increase the success rate of European researchers taking the leap into the market and scaling, the report outlines four main thematic action areas:
- Simplifying regulations: Make IP rules clearer and tech transfer processes easier, so it’s less of a hurdle to get innovations out of universities. Models like the standard equity-sharing approach used in the Netherlands could be a good example to follow.
- Better funding alignment: Adjust academic funding models so they work better with how venture capital operates — for example, by introducing co-investment schemes, growth-stage VC funds, and incentives for corporate partnerships to attract more private investment.
- Stronger university support: Universities need to back spin-offs with proper entrepreneurial support, like well-funded Technology Transfer Offices and spin-off teams that include business and finance experts, not just researchers.
- Boosting industry collaboration: Encourage partnerships between spin-offs and established companies, for instance, through tax breaks or grants to help spin-offs reach the market more effectively.
Maja Brkljacic PhD, Head of University Institute Algebra LAB at Algebra University in Croatia, explains in the report that with the right steps, Europe is well-positioned to become the global leader in spin-off innovation: “Looking ahead, the potential for European academic spin-offs is immense, but realising this potential requires a concerted effort to address existing barriers, foremost cross-border collaboration and robust support systems within academic institutions. By continuing to evolve the policy landscape and fostering a more supportive environment, Europe can improve the transformation of academic research into impactful commercial innovations”
Want to dig deeper?
Whether you are an investor, policy maker or university representative, the report, “Spin-Offs Driving Innovation Across the EU-27”, will offer you data-driven insights, a snapshot of what’s working across the continent, and recommendations.
Europe’s next breakout startup could be working in a lab at this very moment – let’s make sure they don’t hang up their white coats prematurely.
P.S. Stay tuned – this report is part of StepUp Startups, an EU-funded project delivering data-driven insights to accelerate the growth and impact of Europe’s startup ecosystem. More reports like this are on the way.
Read the orginal article: https://www.eu-startups.com/2025/07/stepup-startups-report-europes-next-startup-wave-is-brewing-in-university-labs-heres-whats-holding-it-back/
