Why most university spinouts are structurally doomed

8, Apr 2026

Across multiple universities, sectors, and funding programmes, the same patterns repeat. Technologies leave the lab with strong technical foundations but enter the market with critical gaps already baked in. Regulatory pathways are assumed rather than defined. Manufacturing is deferred until funding appears. Commercial responsibility is distributed across committees, advisors, and time-limited programmes.

Everyone contributes insight. No one owns the outcome.

The valley of death is really a gap in ownership

The phrase “valley of death” has become shorthand for the period between proof-of-concept and commercial traction. The framing is not wrong, but it is incomplete. What is commonly described as a funding gap is more accurately a responsibility gap. Technologies fall into it because no individual or organisation is mandated to carry them across.

Universities are optimised to create knowledge. Funding programmes are optimised to distribute risk. Advisors are optimised to provide guidance. None of these structures are designed to carry responsibility for commercial success. When every actor is doing what they are optimised for, the venture still ends up stranded — because carrying a technology from lab to market was not in anyone’s job description.

This is not a criticism of universities, TTOs, or founders. It is a structural observation about how industrial innovation is organised.

Why the pattern repeats

The sequence is predictable. Early enthusiasm from the research team and the TTO gives way to extended timelines as the commercial case takes shape slowly. Ownership of outcomes dilutes as more advisors, committees, and funding programmes become involved. Decision-making slows because no one has both the mandate and the context to make a call.

What is missing is not effort, intelligence, or intent. It is a single point of accountability for what happens next.

This is the same problem an early-stage founder solves by the simple act of incorporating a company: the company becomes the accountable entity. Everything before incorporation — and much that happens immediately after — exists in an accountability vacuum by design.

What industrial commercialisation actually requires

Successful ventures address regulatory positioning early, not after technical validation. Manufacturing realities shape technical decisions from the outset. Commercial pathways are designed alongside development plans, not added later. Most importantly, responsibility for outcomes is clearly assigned and continuously held.

When these conditions are absent, failure is not accidental. It is predictable.

These observations are not theoretical. They come from repeated exposure to the same failure modes across different institutions, sectors, and funding environments. The details vary; the structure does not.

What this means for researchers, TTOs, and founders

For researchers, it means recognising that scientific strength alone does not build a venture. The commercial work is not downstream of the research; it shapes what the research should actually produce.

For TTOs, it means choosing deliberately between supporting many technologies at shallow depth and supporting fewer technologies with the integrated commercial discipline that industrial commercialisation requires.

For pre-spinout and spinout teams, it means asking — before incorporation, ideally — who owns the commercial outcome, what they are accountable for, and whether their capability matches the size of the job.

What Hatch exists to do

Closing the ownership gap requires more than additional programmes or better advice. It requires a different operating model — one that treats commercialisation as an integrated, accountable process rather than a sequence of hand-offs.

This is the gap Hatch exists to own.

Lesley Blaine

CEO Hatch Oxford

How to win under Innovate UK’s new strategy

8, Apr 2026

Innovate UK has changed direction. The old model of chasing a grant with a strong technical story is no longer enough.

The new strategy is aimed at building high-potential UK tech businesses, not just funding isolated R&D projects. Innovate UK is focusing on six priority sectors, backing deep tech more deliberately, and putting more emphasis on growth, investment readiness, and long-term commercial impact. That means founders need to change how they apply — and, more importantly, what they apply with.

Start with strategic fit

Make it obvious where your business sits in the market, why it matters, and how it aligns with the direction Innovate UK is taking. A clever idea on its own is not enough. The application must show that the opportunity is commercially important, that the venture can become part of something bigger, and that public money will have a measurable effect on the trajectory of a business that would otherwise be under-capitalised.

Assessors are now calibrating applications against a portfolio-level view of what Innovate UK wants the UK economy to look like. Applications that cannot connect their individual work to that picture are at an increasing disadvantage.

Get serious about the commercial case

Too many applications still lean almost entirely on the technology. That is a mistake. If you cannot explain who will buy, why they care, and what happens after the project ends, the application is weak no matter how strong the science is.

Innovate UK is signalling clearly that it wants companies that can scale, attract investment, and stay in the UK. That changes what the “commercial section” of an application is for. It is no longer a supporting document; it is the case for funding.

The commercial case should name a defined beachhead market, size it credibly, describe who buys first and why, and show how the grant-funded phase connects to the phase after it. A hand-wave toward “significant market opportunity” is worth nothing.

Be honest about stage

Innovate UK has said support will be calibrated to stage and risk, with grants and loans matched more carefully to business maturity. So the ask has to fit the evidence. Overselling readiness will hurt you. Applying too early will too.

The discipline is to know what phase the venture is genuinely in — and what phase the evidence can support — and to apply into the instrument that matches. A venture that looks over-sold against its own evidence will be flagged; one that looks under-ambitious against genuinely strong evidence will be marked down too.

Write like a business worth backing

Innovate UK is building specialist sector teams and a new support service, Velocity, to help promising businesses move from early engagement to fundraising and growth. That tells you exactly what assessors will be looking for: clarity, credibility, traction, and a believable route to scale.

Applications that read like grant applications will lose to applications that read like business cases. The distinction is not cosmetic. A grant application describes a project that will be done with money. A business case describes a venture that will be funded, of which this grant is one part.

The best applications start before the form opens

Under the new strategy, Innovate UK is less interested in funding interesting projects for their own sake. It is looking for businesses with the potential to matter.

That shifts the timeline. A good application cannot be written in two weeks from a cold start; it requires the commercial case, the business model, and the funding strategy to be aligned before the form is opened. The founders who will win under the new strategy are the ones who have done that alignment work months in advance.

What Hatch does

At Hatch, this is the work we do. We help founders align technology, commercial opportunity, and funding strategy so the Innovate UK application is not a separate exercise — it is a shorter version of the case the venture is already making to investors, partners, and customers.

Chris Gregory

COO Hatch Oxford

Engineering and commercial decisions are the same decision

8, Apr 2026

A commercialisation engagement typically begins with a version of the same question: what should the technology actually be, and for whom?

The question is asked of the commercial advisor. The answer depends on information only the engineering team has. The engineering team is solving a different problem that week. By the time the two conversations reconverge, a month has passed, a decision has been made on one side that constrains the other, and the venture has quietly drifted into a position no one chose.

This is not dysfunction. It is the default operating model of most deeptech advisory relationships. And it is where ventures lose the most value.

The integration problem, named

In deeptech, engineering and commercial decisions are the same decision, applied in different registers. The choice of beachhead market determines what the product has to do. The choice of business model determines where the venture should own value and where it should partner — which in turn shapes what the engineering team has to build, what can be licensed, what can be outsourced, and what must be proprietary.

Treating these as sequential — define the market, then scope the engineering, then revisit the business model — is the standard failure pattern. The decisions are coupled. Making them sequentially means each one is made with incomplete information about the others.

The alternative is to make the decisions together, in the same room, with both capabilities represented.

What the split actually costs

There are three costs, and they are substantial.

The first is time. Every decision made on one side that has to be revisited on the other is a round trip of weeks or months. Three or four such round trips is a year of runway.

The second is optionality. Engineering choices made without commercial context frequently close off applications the venture has not yet discovered it should pursue. Commercial choices made without engineering context frequently commit to markets the technology cannot actually serve at scale. Both kinds of mistake are harder to undo than to avoid.

The third is narrative. By the time the venture presents to investors, the engineering story and the commercial story have been built on different timelines by different people. The gaps show. Sophisticated investors read those gaps as an indicator of how the venture will be run post-investment — and price accordingly.

What integration actually looks like

Integration is not a meeting format. It is an operating model.

In an integrated engagement, the same two or three people are responsible for both the engineering roadmap and the business model. They attend customer conversations together. They review the commercial screen and the technical roadmap in the same session. When a commercial decision is proposed, the engineering implications are stress-tested on the spot; when an engineering decision is proposed, the commercial implications are stress-tested on the spot.

The point is not that everyone in the room has dual expertise. The point is that the two expertises are applied to the same problem at the same time, with the same shared context.

This is uncomfortable for the standard advisory model. It requires a firm that has both capabilities in house rather than stitched together across partners. It also requires the people with those capabilities to actually trust each other’s judgement enough to make joint calls rather than staging them through a client.

The artefacts of integration

A venture that has worked this way produces different artefacts than one that has not.

The engineering roadmap reads as a product roadmap. Milestones are tied to customer-observable capabilities, not to academic validation. Cost-down and manufacturability appear as first-class concerns, not as post-hoc additions.

The business model reflects actual engineering constraints. Where the venture owns value and where it partners is a decision, not a default — and the decision reflects where differentiation is real and defensible, not where ambition is highest. Our engagement with eThermflex repositioned the venture from an integrated product company to a cell manufacturer working through partners for exactly this reason: it is where the engineering differentiation actually lives.

The investor narrative carries a single logic. The engineering roadmap and the commercial case support each other in every frame. There is no “engineering section” or “commercial section” — the document is one argument, made in two vocabularies.

Why this matters now

Deeptech ventures are being underwritten by investors who have watched the last generation of deeptech companies struggle through the gap between demonstrator and traction. The ones who reach Series A in defensible positions are, almost without exception, the ones that never allowed engineering and commercial decisions to be made on separate tracks. It is the single highest-leverage operating choice a venture can make in its first eighteen months.

What Hatch does

Hatch was built to operate this way. Engineering judgement and commercialisation discipline in the same firm, applied to the same problem, at the same time. Not because it is a differentiator — although it is — but because it is the only operating model that actually works for research-led technology.

Chris Gregory

COO Hatch Oxford