Scots innovation clusters thrive amid spinout push

Edinburgh, Fife and Mid and West Lothian is one of the UK’s top innovation clusters outside the golden triangle of London, Oxford and Cambridge, according to the British Business Bank’s third annual Nations and Regions Tracker.

Edinburgh, Fife and Mid and West Lothian had 475 deals with an investment value of roughly £700 million.

Greater Manchester had 342 deals with an investment value of about £1.1 billion.

Greater Glasgow had 257 deals with an investment value of roughly £400 million.

Bristol and Bath (219 deals, investment value £0.9bn) and Newcastle upon-Tyne-Gateshead-Sunderland-Tyneside (179 deals, investment value £0.3bn) also did well.

“University spinouts play a crucial role in supporting emerging innovation-led clusters,” said the report.

“Academic spinouts make up 23% of Technology/IP-related deals across these clusters between 2011 and the second quarter (Q2) of 2023, but their share of deal activity is even greater in a variety of innovative sectors such as  materials technology, where they are responsible for 53% of deals;  nanotechnology (63%); life sciences (50%); medical technology (41%); and hardware (27%).

“While their large contribution to the success of clusters in the golden triangle (encompassing Cambridge, London and Oxford) is well known, it is as substantial in clusters located elsewhere in the UK.

“These include, among others, Greater Glasgow and Aberdeen, where spinouts represent 47% and 46% of deals; Swansea (45%); Belfast (37%); Coventry & Warwickshire (34%).”

British Business Bank CEO Louis Taylor said: “We are seeing promising signs that the use of external finance among smaller businesses is recovering after a decline in 2022.

“Unsurprisingly, our world-class universities continue to play a crucial role in this, supporting emerging innovation-led clusters across the UK.

“This year’s Nations and Regions Tracker shows that smaller businesses in coastal towns face several challenges that impact their success, including low productivity and a reduced appetite for external finance.

“However, coastal towns experience greater than average specialisation in net-zero sectors, evidence that improved access to external finance will enable smaller businesses in coastal towns to expand and further develop innovative climate solutions.

“We need to ensure that more is done to support these areas, which will in turn help reinvigorate smaller businesses’ resilience and growth ambitions.”