In fact, St Andrews is the English-speaking world’s third oldest university and regularly features among the UK’s top-performing academic establishments.

However, it is also well known that the ground-breaking research that places them on the map has not always translated into commercial opportunity. It was a point recently made by Professor Sir Jim McDonald, vice-chancellor of the University of Strathclyde, citing statistics that indicate Scottish universities spend more on Research & Development projects than their peers elsewhere in the UK, but create spinouts at 50% of the rate.

The good news is that there is some evidence that this trend may be beginning to reverse. The British Business Bank’s recently published Small Business Equity Tracker found that while Scotland is home to 9% of the UK’s higher education institutions, last year it accounted for nearly 20% of UK equity deals involving spinouts.

Two Scottish universities stood out for the number of affiliated businesses which received equity investment last year. The University of Strathclyde and the University of Edinburgh both had a dozen spinouts receive equity funding – only Cambridge, Oxford, and the University of Bristol saw more during 2023.

Overall, there were 40 deals involving spinouts in Scotland last year, accounting for 24% of all equity deals for smaller businesses. That is the second highest proportion of all UK regions and devolved nations, behind only Northern Ireland. It has to be said, though, that this is partly because the total number of equity deals involving smaller businesses fell 21% on 2022, broadly in line with elsewhere in the UK.

Despite the tough funding environment, there were a number of deals involving spinouts with huge potential. Among them was Chemify, a University of Glasgow spinout which raised £36 million to ‘digitise chemistry’ and attracted investment from the USA and Hong Kong, as well as the UK. Its founder, Professor Lee Cronin, has signalled his intention to turn Chemify into a $10 billion (£7.8bn) company in the future.

Another recent notable deal involved Prothea Technologies from the University of Edinburgh, which secured €12m (£10.3m) of investment. The business is developing a medical device which could streamline biopsy and treatment for lung cancer into a single hospital visit, reducing the ‘time-to-treat’ from weeks to potentially just minutes.

The success of Scotland-based spinouts over a longer period of time is evident from separate data. Edinburgh ranked fifth among UK cities outside London for European venture capital investment over the last decade, securing £1.3bn with life sciences among the most active sectors thanks to the strength of the city’s universities.

Recent evidence suggests there are solid foundations to build on and address the commercialisation question that has plagued Scottish universities for years. Supporting that aim, last year the British Business Bank launched our £150m Investment Fund for Scotland (IFS), aiming to increase the availability and supply of finance to smaller businesses across the country, high-growth potential spinouts included.

Scotland has world-leading research facilities and top talent coming out of its universities, making it an ideal place for spinouts. It is highly encouraging to see them secure such a high share of UK equity funding for smaller businesses and, with access to a significant new source of finance, we hope to see that figure growth even further.

Susan Nightingale is UK network director for Scotland at the British Business Bank