The investment company created by Midlands universities to support research spin-outs will eventually attract more funding than a similar venture run by institutions in the north of England, one of its founding vice-chancellors has claimed.

Recent news that Northern Gritstone, a venture capital outfit created by the universities of Leeds, Manchester and Sheffield, has secured  just over two years after its launch in July 2021 would seem to set a high bar for its Midlands counterpart,  which was formed last year.

But Aleks Subic, vice-chancellor of Aston University, which has joined forces with the universities of Birmingham, Leicester, Nottingham and Warwick, as well as Cranfield, Keele and Loughborough universities, told ̽����Ƶ that the funding goal was eminently achievable.

“It will surpass Northern Gritstone,” said Professor Subic. “With eight universities – including big universities – I think we should.”

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For Professor Subic, who previously chaired the prime minister’s industry task force in Australia while he was based at Swinburne and RMIT universities, a specialist vehicle that can attract major funding and then invest in innovation-led companies at scale tackles a major structural problem faced by Midlands universities.

“In Australia, we used to say, ‘Start up is easy but scale up is hard.’ There are a lot of grants available but scaling up businesses requires someone to take risks,” explained Professor Subic, adding that this could “require hundreds of millions of pounds, not a few £20,000 grants”.

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Given the medium-sized nature of many of Midlands Mindforge’s institutions, investing to the required degree in a variety of start-ups, or providing additional funding, was impossible for individual universities, he continued.

“No one can do this on their own – to support 100 start-ups a year in which maybe five have the ability to truly scale [will not happen]. If we come together, then we give ourselves a chance,” said Professor Subic.

Despite the historic links of many Midlands universities to nearby employers in what is often considered Britain’s manufacturing heartland, substantial investment in potential spin-outs had still proved difficult, he added. “The majority of companies here are small- to medium-sized enterprises, so industry does not want to take the risk either,” Professor Subic said. Just 5 per cent of UK equity finance deals centre on the Midlands despite it having some 11 per cent of fast-growing SMEs, he notes.

Midlands Mindforge, which has emerged from the Midlands Innovation partnership started in 2015, will focus on commercialising research in three key areas: life sciences including health technology, green technology including agriculture, and deep tech such as AI. In total, its university income is £3.7 billion and its institutions have more than 15,000 academics and 54,000 postgraduates.

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That research power is, however, been underutilised, with Midlands university spin-outs garnering about a sixth of the investment gained by golden triangle start-ups, said Lisa Smith, Midlands Mindforge’s chief executive.

“Oxford and Cambridge didn’t just suddenly start doing this kind of work – they had purpose-built vehicles to do this,” said Dr Smith, noting that the formation of Oxford Sciences Enterprises in 2015 has been followed by a quadrupling of the number of spin-outs created annually from Oxford research, while investment funding has increased sixfold to about £800 million a year.

“A����, we will have true and deep relationships with our partner universities and, as a project evolves, we will be able to help these companies down a commercial pathway and find the right money [to scale companies],” she said.

jack.grove@timeshighereducation.com