Ideas to impact public sector support for research commercialisation: strengths, ambition and progress report

Executive Summary

The universities of Scotland are recognised around the world as some of the greatest and impactful that have ever existed.

From early pioneering figures such as Mary Somerville, whose mathematical and astronomical insights shaped the modern understanding of the physical sciences and became the first person in the world to be termed a ‘scientist’.

To the University of Edinburgh graduate Elsie Inglis’ medical research and innovation that was so critical in advancing women’s healthcare, and John James Rickard Macleod of the University of Aberdeen co-discovering insulin, winning a Nobel Prize for the breakthrough in diabetes treatment.

From St Andrews University (Dundee Campus) graduate Robert Watson-Watt’s critical work on developing practical radar proving crucial to Allied success in WWII, to James Goodfellow, graduate of Paisley College of Technology and now part of University of the West of Scotland, creating the PIN system and the first workable design for an ATM – an invention adopted worldwide.

All the way through to Professor Geoffrey Hinton, alumni of the University of Edinburgh and often termed ‘the Godfather of AI’, 2024 Nobel Prize winner for his work on machine learning. Our universities and their graduates have shaped the modern world and set a precedent for our nation’s brightest minds to follow.

And they are following, building high-growth companies to help bring their world-changing innovations to global markets and solve real-world challenges, from 3D-bioprinted living tumours developed by Ishani Malhotra at the University of Edinburgh to sustainable, low carbon bricks created by Gabriela Medero at Heriot-Watt University, Scotland is leading the way in scientific breakthroughs that are having real-world impacts.

Strengths

Scotland has built a strong and evolving system of public sector support for the commercialisation of research by individuals like those mentioned above. We are building a system that centres around our world-class universities and is underpinned by public and private support organisations, vibrant innovation clusters of young, high-growth businesses and sustained strategic investments in supporting R&D infrastructure.

We have a positive international reputation for investing in research and have ‘world-leading’ research occurring in every Scottish university, and this research often has significant potential to translate into new and innovative businesses, products and services that can stimulate economic growth.1 The universities of Edinburgh, Glasgow and Strathclyde all appear in the UK top twenty for total spinouts created since 2011, and Scotland is the best performing UK region for spinout investment after the Golden Triangle. Some of the UK’s largest ever spinout exits have originated from Scottish universities, including life sciences spinout Exscentia, which was valued at £2.2 billion in 2021.

Public and private funding has and will continue to strengthen translational infrastructure, support and expand the pipeline of emerging high-growth spinout companies, and improve the connectivity between research, industry and investors, all helping to convert scientific excellence into economic and societal value for Scotland.

Ambition

Our ambition is clear: to position Scotland as a globally competitive, innovation-led economy where world-leading research drives the consistent creation of new businesses, products and services, contributing to regional growth and providing solutions to real-world problems. This ambition is reflected in long-term policy alignment, an increased focus on our strengths, and a growing emphasis on scale-up, patient capital and internationalisation, led in partnership by the Scottish Government and our delivery agencies.

This emphasis is providing an increasingly rich pipeline of investable opportunities emerging particularly from our universities. We will continue to build upon our ever-evolving and increasingly well-funded ecosystem with the ambition that we will build on our strengths as a nation that:

• rewards performance excellence, adequately incentivising and rewarding success in translating world leading research into economic and societal outcomes for Scotland
• strengthens the pipeline of spinout companies able to scale and embed themselves in Scotland’s economy, providing jobs, expanding supply chains and accelerating sectoral cluster development
• ensures our most innovative researchers and spinouts remain in Scotland to maximise economic impact
• builds Scotland’s brand on a global stage as a place of excellence for world leading research and the formation of high growth, scaleable companies that drive our national economy.

Progress

Our progress to date toward realising this ambition is evident, and is highlighted and celebrated in this report. Over the last few years Scotland has consistently outperformed the UK average on spinout formation per capita, has worked to improve the maturity of its commercialisation pipelines, and has strengthened collaboration across universities, enterprise agencies, and the private sector.

This year alone as a public sector we’ve:

• increased our core investment in research and innovation to £328.5 million for FY 2025–26 to maintain and strengthen Scotland’s excellent research base. This includes £25 million for the Knowledge Exchange and Innovation Fund (KEIF), supporting university knowledge exchange and innovation by enabling collaboration, commercialisation, and the delivery of economic, societal, and environmental benefits.
• we also continue to fund a portfolio of knowledge exchange and innovation investments, including the Innovation Centres, Interface and Converge
• piloted a £2.9 million Proof of Concept Fund for early to mid-stage commercialisation activities, helping researchers to develop prototypes, de-risk new technologies and attract early-stage investment
• committed up to £7 million for a dedicated impact venture spinout pipeline to ensure that we are enabling impact ventures to navigate the complex startup and scaleup path
• piloted an £800,000 Spinout Pipeline Project, being delivered through a collaboration between university institutions to support high-growth ventures nationally
• currently supporting 46 spinout projects through Scottish Enterprise’s High Growth Spinout Programme
• invested in Dundee’s £40 million Life Sciences Innovation Hub and Aberdeen’s £40 million ONE BioHub

The list is not exhaustive, and of course many challenges still remain that are holding us back which we have to work together to address. These include addressing further funding gaps at proof of concept and series A stages, shortages in founder entrepreneurial and professional business skills and access to supportive C-suite talent, constraints in specialist spinout infrastructure, and addressing particular barriers for female founders on an intersectional basis to help us more effectively embed diversity and inclusion into our evolving commercialisation landscape.

Future Vision and Next Steps

Scotland’s research and university spinouts represent a significant priority for our future economy. The Scottish Government and its agencies will work in close partnership with our universities to maximise the economic impact of Scotland’s research excellence.

We are actively working together to deliver funding, investment and support to build the pipeline of spinouts and to help them scale in Scotland.

This report sets out the actions we are taking to build and support the pipeline (through Proof of Concept funding and the High Growth Spinout Programme) and to help our highest potential spinouts and companies to scale in Scotland (through the Scottish Innovation Fund).

We will monitor our progress through a number of key metrics around funding and the emerging spinout pipeline, and also commit to improve the monitoring of diversity data and filling data gaps where identified to help redress imbalances in the system. Turning the dial on research commercialisation and seeing realised economic impact takes time to take effect, and we will therefore monitor and update on our progress with a follow-up five year progress report in 2031.