How University SpinOuts Support Metro Growth

Great Britain’s world-renowned universities create jobs in many ways. Real estate investors need take note, as those job creators need buildings.
About a decade ago there was a great deal of discussion on how higher education institutions, HEIs, can affect a local economy with “spin-out” companies. These are the entrepreneurial ventures that arise from research and other intellectual products that universities naturally produce.
Those discussions were well placed, given how spin-outs have been remarkably successful. This takes the value of universities to a new level: where once HEIs were a good employer providing a baseline of economic benefit to a city, they now spawn new businesses that stimulate local economies in all the ways that growing enterprises do.
Where those ventures are and how to get involved early. Indeed, it can be a very smart move – although it bears mentioning that even brilliant innovations from the brightest minds of UK universities do sometimes fail or fail to live up to full expectation. But the investor’s attention might be drawn to ancillary businesses, including the need for commercial and residential real estate development when those spin-out businesses begin to grow.
Examples of successful spin-outs may have already come to the reader’s attention:
Cambridge Nanosystems – Manchester University physicists developed graphene, the stronger-than-steel, lightweight material that conducts electricity and heat for a variety of applications, including in semiconductors. This firm derives the material from waste biogas and is expected to generate £2 million in sales by 2016; it already employs ten people with 20 more hires anticipated in 2015.
Adaptimmune – This life sciences company has drawn £104 million in funding, including from the University of Oxford as well as private equity companies. The Sunday Telegraph reports that venture capital funding for life sciences companies, particularly those spun out from the “research golden triangle” (London, Oxford and Cambridge) reached £527 million in 2014.
PureLiFi – An Edinburgh University spin-out, this start-up has drawn £6.2 million in funding from investors that see a future for its inventive technology that can turn an ordinary light fitting into a LiFi internet access point. It will enable wireless networking in the home of everyday devices such as thermostats and home security systems.
Tandem Nano – From the University of Liverpool, this technology improves the solubility of medications. This reduces the risk of toxicity while increasing medicine uptake in patients.
But despite these successes, and the increasing number of them, a study conducted by the City Growth Commission – a single-project organisation that in 2013 studied factors that help cities and their broader metro areas to thrive – identified one confounding factor. In a research study report, the Commission said “The skills valued by many knowledge intensive service sector firms – including numeracy, analytical capacity, IT proficiency, creativity and entrepreneurialism – are highly transferable across sectors. Universities play an important role in developing these skills and clustering talented people… Yet graduate retention and attraction strategies are a relatively unexplored aspect of economic development, especially at the metro level.”
In other words, keep those growing companies local is not apparently orchestrated by municipal leaders. At best, conditions of the local economy – including the availability of affordable commercial space and housing, for entrepreneurs and their workforces – may play a role.
This might be where the real estate investor can provide more than just property. it might have a synergistic effect on boosting the local economy by making it a preferred place to set up shop.
But given the tangible nature of property, it’s hard not to think about the legacy that buildings create in towns and cities. This is a good motivator in alternative investing, but financiers are always advised to speak with an independent financial advisor in order to remain objective about the project.

To the individual drawn to UK alternative investments, it might seem like a smart idea to identify. When property fund partners join together to increase the stock of homes and commercial space where spin-out firms need it.

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