Tie-up puts northern universities in big league for spin-offs

Combining the research expertise and budgets of three leading northern universities will help them to emulate Oxbridge’s track record of attracting capital to support innovative start-ups, according to a new science investment company dedicated to commercialising research in the north of England.

Northern Gritstone, which has been created by the universities of Leeds, Manchester and Sheffield, is aiming to raise up to £500 million to help turn ideas and research developed at the three redbrick institutions into start-up companies and to support existing high-tech businesses linked to the universities.

While the three universities have already spun out successful companies, the economies of scale created by aligning the three institutions under the Northern Gritstone banner will interest much larger international investors looking to put money into science- or technology-based companies, Russell Schofield-Bezer, the company’s chief investment adviser, told Times Higher Education.

The combined annual research budgets of Leeds, Sheffield and Manchester total about £650 million, a sum comparable to the golden triangle institutions of the University of Oxford (£770 million), the University of Cambridge (£592 million) and UCL (£480 million), according to data available in the universities’ financial statements.

“The golden triangle institutions have been very successful in attracting external capital, and it’s partly to do with their scale, particularly for international investors,” explained Mr Schofield-Bezer, a former managing director at JP Morgan and chief investment officer at HSBC’s private banking division in the Americas.

“By combining the three universities, you start to become relevant to these international investors,” he said.

Northern Gritstone was also well placed to capitalise on the government’s ambition to “level up” the regions and on a growing appetite from investors for science-related start-ups, many of which have prospered despite the economic turbulence of the pandemic, added Mr Schofield-Bezer.

“If you think about what is driving investor capital in the post-Covid era, it is heading to R&D-led companies not just in vaccines but things aligned to clean technology and net zero, and more broadly companies using intellectual property to address social and environmental problems,” he said.

“When you also consider the levelling-up agenda, we fall right into that sweet spot for investment.”

The company builds on the success of the similar Northern Triangle Initiative, which saw Leeds, Sheffield and Manchester awarded a £5 million award from Research England’s Connecting Capability Fund in 2018, which has since supported about 20 commercially viable projects.

Mr Schofield-Bezer, a Manchester alumnus, said he believed the company would also help build on the institutions’ expertise in advanced manufacturing, as well as capitalise on different strengths found within the three institutions.

“We have the advantage of a long history of helping advanced manufacturing that distinguishes us from other areas,” he said, pointing to the strong work undertaken at the Henry Royce Institute for materials science, headquartered in Manchester, and the University of Sheffield’s Advanced Manufacturing Research Centre.

Deepening intellectual partnerships between areas of excellence could prove “very appealing” for investors, said Mr Schofield-Bezer.

“At Manchester, you have advanced materials, cancer research and energy innovation; while there is a real strength around neuroscience, multimorbidity, sustainability and clean tech at Sheffield; and at Leeds there is some great work on robotics, biomedical engineering, and immersive technologies – when you put all that together, it’s a different set of opportunities for commercial investors.”

jack.grove@timeshighereducation.com