Guest blog | UK Synthetic Biology Startup Survey - 2019
A recent survey of synthetic biology start-ups in the UK reveals the rise in the number of new companies exploiting the latest technological changes transforming life sciences. These changes, under the banner of synthetic biology, have been catalysed by a convergence of developments in molecular and cell biology, chemistry, engineering, automation, computational modelling, and artificial intelligence and are now transforming how we engineer biology. The start-ups in the survey are applying developments in synthetic biology to everything from the production of chemicals and biofuels to cancer therapy.
Information on synthetic biology start-ups, used in combination with financial and investment information supplied by Beauhurst, illustrates a growing synthetic biology innovation ecosystem at work in the UK. The survey found that there has been a steady year-on-year increase in the overall number of synthetic biology companies in the UK, since 2005. On average, over this period the number of synthetic biology companies has doubled every five years. A survey of the number of companies provides no qualitative interpretation on the individual companies, but simply attempts to give an overview of the sector. Given the natural attrition that occurs when starting and running companies, the continued entry of innovative new start-ups into this sector is a welcome sign for the overall health of the life sciences industry.
The survey identified universities as the source of over half the UK synthetic biology start-ups, although the number of start-ups created by each university varied considerably. There are signs of an increasing correlation between universities with Synthetic Biology Research Centres and the number of companies spun out from those institutions. For the first time, the growth rate of synthetic biology non-university start-ups have overtaken the number of university start-ups.
Matching the rise in new synthetic biology companies has been an increase in the amount of private investment raised to fuel their growth. Between 2005 and 2018, synthetic biology start-ups received £1.1 billion in equity funding. Despite a drop in the number of deals, a record of £268m of equity finance was invested in synthetic biology start-ups in 2018.
The average deal sizes have more than doubled from £4.3m in 2015 to £9.9m in 2018. Health Tech received most of all equity funding in 2018, which is increasingly been driven by foreign investment. The steady flow of capital from outside the UK continued to grow in 2018 with more than 58% of funds raised had at least one foreign investor. Early-stage companies continue to dominate investment, with 84% of all equity deals in 2018 at the seed and venture stage - forming the largest segment of the market.
The survey found that the majority of synthetic biology companies are predominantly based in the south of the UK. The East of England dominates the scene, with almost a third (27%) of synthetic biology companies in the UK, London comes second (18%), followed by Scotland (15%) and the South East region (14%). This leaves a fairly thin spread of companies across the rest of the UK, with just 4% in the West Midlands, North West, North East, and Wales, 3% in East Midlands and a low of 2% in Yorkshire and the Humber. Recent start-up activity in Bristol has driven the share of companies in the South West to 6%, the highest level in England outside the Golden Triangle.
While UK synthetic biology start-up activity is booming, the sector struggles to scale-up many of these companies. Only 5% of synthetic biology companies achieve the sustained growth required to reach scale-up status and the majority of start-ups fail to progress beyond the venture stage. The easy part is starting a company, the challenge ahead is scaling and creating a profitable business, which is much more difficult.
The full survey can be read here.