The report, ‘Capital, clusters and the scale-up gap’ uses Beauhurst data on private company funding rounds above £15m between January 2022 and May 2026.
Of 112 UK university spinouts that raised £6.3bn across 156 private growth-stage rounds, 82p in every £1 came from rounds involving at least one overseas investor, while only 8p came from rounds where every named investor was UK-based. A further 10p came from rounds where the investor domicile could not be established.
International investment is often a sign of strength, and for life sciences companies in particular, US investors bring specialist expertise and access to the world’s largest healthcare market. The risk is therefore not foreign capital itself, but that rounds priced and led from overseas tend to pull the eventual listing, headquarters and R&D decisions with them, while UK investors currently lack the scale to hold a position alongside them. When that happens, the UK misses out on future jobs and tax revenues.
The findings raise questions over whether the UK has enough domestic investment capacity to deliver the government’s own technology ambitions. The Digital and Technologies Sector Plan says that by 2035 the UK should be “one of the top three places in the world to create, invest in and scale-up a fast-growing technology business” and should secure “the UK’s first trillion-dollar technology business”.
With the government allocating a record £20.4bn to R&D in 2025/26, including £8.8bn through UK Research and Innovation, Bidwells warns that taxpayers risk funding the research that creates successful science and tech businesses, without enough of the long-term commercial value being retained in the UK.
The clearest evidence of the funding gap is at larger rounds. The report finds that no UK university spinout funding round above £75m since 2022 was funded by UK investors alone. None of the 19 rounds above £75m, and none of the nine rounds above £100m, were UK-only.
Life sciences and medical technology companies are most exposed to this funding gap. The sector accounted for £3.1bn of the £6.3bn raised by UK university spinouts in the period, almost half of all growth capital in the dataset. Yet in this strategically important sector, only 6% of growth capital came from rounds where every investor was UK-based.
The research also finds that 43 UK university spinouts have listed on London markets, but 41 of them, or 95%, did so without ever raising a private growth round above £15m. Bidwells says this suggests many UK university spinouts listed early because they could not raise further capital from private investors.
The report argues that the gap, while serious, is concentrated and therefore addressable. Twenty companies took half of the £6.3bn raised in the period, with the ten most heavily funded accounting for a third. Bidwells says this means well-directed UK capital, focused on the growth-stage rounds of a small and changing cohort of frontier companies rather than spread across the whole market, could make a material difference to whether the next generation of science champions scales from the UK.
The research comes after Business Secretary Peter Kyle said in a BBC interview on 11 June that he would have intervened to block the sale of UK microchip company Arm Holdings had he been in government at the time. Arm was bought by SoftBank in 2016 and later listed in New York. Kyle told the BBC that Arm could have been the biggest firm on the London Stock Exchange, and that it “would be 40% of the way there to the trillion-dollar company I think our country needs”. He also said he wanted to create the conditions where companies “do not want to leave in the first place”.
Sue Foxley, Research Director at Bidwells, said: “The UK has spent decades building one of the best university research bases in the world, but too often we do not have the domestic capital needed to turn these ideas into serious scale-up companies.
“Arm Holdings’ US listing shows what is at stake. It remains one of the finest examples of UK innovation, headquartered in Cambridge – but the fact ministers now say they shouldn’t have allowed its sale should be a wake-up call. The answer is not to shut out international capital, which is vital to UK science, but to make sure British capital can sit alongside other investors.
“The Mansion House reforms, now on the statute book, can help close that gap, but only if the money reaches the larger investment rounds where globally competitive businesses are made. Otherwise, the UK will keep doing the hard work of creating companies whose value is ultimately captured elsewhere.”
Henry Whorwood, Managing Director, Beauhurst Insights, said: “What this data shows is that the UK’s spinout problem is not one of supply, nor of early-stage funding. Universities are producing companies that can attract serious capital.
“The bottleneck comes later, when the most successful companies need much larger investment rounds to compete globally.
“That should give policymakers and investors some confidence. But for everyone to share in the success of the UK’s IP-generating capacity we need to help domestic capital compete at the later stages.”
Bidwells is calling for three simple policy changes:
● Mansion House capital should be channelled through the British Growth Partnership into later-stage UK spinouts. The government should give the British Business Bank’s British Growth Partnership a clear mandate to scale up UK university spinouts, so pension capital raised under the Mansion House Accord backs Series B, Series C and later growth rounds, particularly above £75m.
● UK pension savers should be offered an opt-in fund that targets British growth companies. The fund should give diversified exposure to UK private growth companies and UK-listed growth businesses, using regulated structures.
● Expand the Life Sciences Sector Plan’s scale-up service to frontier spinouts. The government already plans a dedicated service to help 10 to 20 high-potential UK life sciences companies scale, attract investment and remain domiciled in the UK. That model should be widened to priority university spinouts in AI, quantum, engineering biology, semiconductors and other frontier technologies.
