Oxbridge To Bring £78bn To Economy and Become “Europe’s Silicon Valley”

Bodleian Library, Oxford. Copyright: Ben Seymour

This week chancellor Rachel Reeves announced a new Oxbridge corridor that is expected to add £78bn to the economy. The Chancellor, speaking at Siemens Healthineers in Eynsham, emphasised the untapped potential of linking these two hubs, describing them as key sites for innovation in life sciences, manufacturing, and AI. She proclaimed that this connection would “offer huge economic potential for our nation’s growth prospects”. 

Positioned just 66 miles apart, these historic intellectual powerhouses could become "Europe’s Silicon Valley”, according to Reeves. Growth is presently hindered by transport inefficiencies and high living costs. To address these challenges, the government announced major infrastructure investments, including nine new reservoirs, East-West Rail funding, new community developments, and the establishment of a Growth Commission for Oxford. Sir Patrick Vallance has been appointed to oversee the corridor’s development and ensure its success.  

Universities are becoming key hubs for start-up innovation, with nearly 5,000 new ventures launched in UK institutions between 2022 and 2023. Global giants like Google, Facebook, and FedEx exemplify the potential of university-founded businesses. In Britain Oxford, Cambridge, University College London, and Imperial College London dominate in the incubation of startups.

In 2023, Oxford achieved a remarkable milestone, having launched 300 companies, half of which were created in the last decade alone. These ventures have collectively raised £6 billion in investment and generated 9,000 jobs. Matt Perkins, CEO of Oxford University Innovation, said: ‘We are proud to reach this milestone of creating 300 companies. Our goal is to support the development of innovative ideas from the University into impactful businesses that benefit society. This milestone is a testament to the dedication of our academics, the hard work of our team, and the strength of the Oxford innovation ecosystem”. 

Investment trends indicate continued growth, with Oxford Science Enterprises, an independent investment company supporting University of Oxford spinouts, significantly increasing its funding from an average of £125 million per year to £880 million annually.

At the other end of the corridor, Cambridge is equally committed to transforming research into successful ventures. Accelerate Cambridge provides a structured three-month programme, offering entrepreneurship training, mentorship, and access to shared workspace. Since its launch in 2013, the initiative has supported 405 ventures, raised £720 million in funding, and maintained a 68% business survival rate.

As the sector grows, UK universities are increasingly establishing affiliated investment funds specifically aimed at supporting spin-outs. These private funds are separate from the universities' internal seed funds, but often involve the university in their formation, with seats on the board and agreements providing favorable access to spin-outs. The creation of these university-affiliated funds has paralleled the rise in spin-outs and the increasing equity they’ve raised. Overall, investment in university spin-outs has risen sharply, increasing from £1.11 billion in 2015/16 to £5.29 billion in 2021/22.  

The rise of university spin-outs has captured the attention of corporate investors, largely due to their robust intellectual property (IP) foundations. These start-ups, built on university-generated IP, are attractive investment opportunities. A strong IP base provides a significant competitive edge, offering market exclusivity, and the potential for long-term growth. When well-protected IP can lead to higher profitability and reduced risks for investors compared to businesses without strong IP protection. IP protection is key to securing investment outside academic settings. Start-ups are 2.5 times more likely to obtain seed funding after filing for a trademark and 2.9 times more likely after filing for a patent.

Sustainable Times is closely following these developments. Next month, we will cover the Oxford Venture Capital Network’s Bio-Symposium, where researchers from the UK’s leading universities will discuss investment opportunities and the viability of start-ups in the biotech sector. With government backing, increasing corporate interest, and a maturing investment ecosystem, now is the perfect time for investors to explore the high-potential start-ups emerging from academic spaces.