Spin-offs: Driving innovation across the EU-27

University spin-offs are crucial drivers of innovation and economic growth in Europe. However, despite their potential, these ventures face significant challenges in scaling, securing funding, and navigating regulatory frameworks. 

University spin-offs facilitate knowledge transfer between universities and industry, fostering innovation ecosystems that drive regional economic growth. They generate high-skilled employment, attract investment, and contribute to the formation of technological clusters.

Despite their stability, EU spin-offs have a lower failure rate than traditional start-ups, many struggle to scale. The regulatory panorama is often fragmented, support structures are inconsistent across Member States, and access to later-stage funding remains a key challenge. Addressing these obstacles is essential to ensuring Europe maximises the potential of its research institutions in a globally competitive market.

Deep tech: an underutilised opportunity

Deep tech, a category encompassing advanced engineering, life sciences, and artificial intelligence, represents a critical area for university spin-offs. In 2023, deep tech accounted for 44% of venture capital (VC) funding in Europe. However, only 23% of spin-offs operate in this sector, compared to more than 60% of VC funded deep tech companies in the United States. This gap suggests that Europe is not fully capitalising on its research strengths.

Although the EU boasts world class research institutions and a high number of STEM graduates per capita, many deep tech spin-offs fail to attract the necessary funding to scale. Complex intellectual property (IP) regulations, high university equity stakes that deter private investors, and a lack of targeted financial instruments for later-stage growth contribute to this challenge.

Key challenges facing EU spin-offs

The report identifies several structural barriers that hinder the growth of university spin-offs:

• Bureaucracy and IP complexity: lengthy intellectual property negotiations and decentralised regulatory frameworks slow down commercialisation efforts.
• Scaling limitations: only 11% of deep tech spin-offs in the EU reach valuations comparable to their traditional start-up counterparts, limiting their ability to compete internationally.
• Equity structures: universities often retain high equity stakes in spin-offs, which can discourage private investment and reduce founder incentives.
• Fragmented support systems: while programmes such as Horizon Europe provide significant funding for research commercialisation, access to this support remains uneven across regions and institutions.

Strategies for strengthening the spin-off ecosystem

To improve the success rate and scalability of spin-offs, the report outlines key recommendations:

• Regulatory reforms: simplify IP frameworks and streamline technology transfer processes to reduce barriers to commercialisation. Standardised equity-sharing models, such as those in The Netherlands, could serve as a benchmark.
• Financial alignment: align academic funding models with VC expectations by introducing co-investment schemes, growth-stage venture funds, and corporate partnership incentives to attract private capital.
• Organisational transformation: universities should invest in entrepreneurial support structures, such as well-resourced Technology Transfer Offices (TTOs) and multidisciplinary spin-off teams that include business and financial experts alongside researchers.
• Encouraging industry collaboration: strengthen partnerships between spin-offs and established industries through tax benefits or grants to improve commercial viability and market entry.

For Europe to establish itself as a global leader in deep tech, policymakers, universities, and investors must work together to create a more cohesive and ambitious spin-off ecosystem. By implementing structural reforms and enhancing financial and organisational support, the EU can unlock new economic and technological opportunities.

The full report, Spin-offs: Reinforcing a Vector of Value Creation for EU-27, provides detailed insights and practical recommendations for driving this transformation.

Download the report below to explore how Europe can fully leverage the potential of university spin-offs.