Oxford spinouts are riskier but more valuable than Cambridge peers – study

Spinouts from the University of Oxford receive pre-money valuations that are on average £4m higher than their University of Cambridge counterparts but they are 2.5 times more likely to go bust, research suggests.

On top of better valuations, data compiled by accounting firm Price Bailey found that University of Oxford spinouts have more equity capital to tap into.

The research shows that between 2012 and 2022 the University of Oxford generated 99 spinouts, almost double that of the 54 produced by the University of Cambridge.

“We don’t believe that these valuation figures are driven by sector valuation norms and, therefore, what this indicates is that generally University of Oxford spinout businesses attract higher valuations than both Cambridge, and other universities across the UK,” said Chand Chudasama, partner at Price Bailey.

Almost one-fifth (19%) of Cambridge spinouts have exited and of those all of them remain active. The report found that 9% of Cambridge spinouts went on to trade for five to 15 years with a profit of £5m+ for three consecutive years or £20m+ turnover.

Chudasama added that “Oxford-founded businesses have represented a higher risk than Cambridge-founded businesses, though this risk comes with potential for a higher reward.”

Another report found that University of Cambridge spinouts deliver nearly £30bn to the economy annually.

It comes as the government has launched a review to explore how the UK can better utilise the work of university spinouts to boost economic growth.

Investors have warned that universities are deterring external investment in spinouts by taking stakes that are too large.

However, the average university stake has declined from 24.8% to 17.8% between 2013 and 2022, according to a separate study published last month.