The UK government is being urged to secure binding commitments from foreign buyers of British technology and life sciences start-ups to maintain jobs and research activities within the country, according to a recent paper from Cambridge University’s Judge Business School. The report emphasizes the importance of preserving the UK’s productive capacity rather than ensuring that start-ups remain British-owned.
The report, authored by Pascal Levensohn, chair of the global advisory board for the Cambridge Innovation Hub, highlights that foreign acquisition and ownership are not inherently problematic. Instead, the focus should be on sustaining the UK footprint of companies that originate domestically, especially those nurtured by taxpayer-funded research. Levensohn argues that the value created by UK innovation can still benefit the country even when ownership changes hands internationally.
On average, 40 UK deep-tech firms have been acquired annually between 2015 and 2025. The paper suggests that if half of these deals included binding commitments to create 25 new UK-based jobs over five years, this could generate roughly £2.5 billion in gross value added over a decade. It points to examples such as SoftBank’s acquisition of semiconductor designer Arm in 2016, which included a pledge to keep Arm’s headquarters in Cambridge and at least double its UK workforce within five years. Similarly, DeepMind’s decision to remain in London following its acquisition by Google in 2014 has contributed to the founding of several prominent UK tech companies.
The paper calls on government bodies, universities, founders, and investors to collectively seek commitments from foreign investors to support job creation and maintain a significant UK presence. It suggests that existing contractual tools, funding conditions, and reputational incentives could be used to enforce such commitments, despite the challenges posed by the private nature of many transactions.
Ensuring the retention and growth of high-potential tech and life sciences companies aligns with UK government priorities, which include encouraging pension funds to invest domestically and reforming rules to facilitate listings on the London Stock Exchange. However, while officials have ruled out imposing an exit tax on university spin-outs that relocate abroad, there are discussions about tightening conditions attached to public grants to retain intellectual property within the UK. Sir Ian Chapman, chief executive of UK Research and Innovation (UKRI), acknowledged that the current IP terms are the most liberal among G7 nations but are under review following consultations.
Recent data indicates roughly 4 percent of university spin-outs have moved operations overseas in recent years. Meanwhile, UK start-ups have attracted $23.4 billion in investment in the current year, accounting for just over a third of the total haul in Europe, and are on track to set a new record. Despite this, companies face difficulties in accessing domestic capital for scaling, with UK sources comprising only 16 percent of capital in funding rounds over $250 million during the first half of the year.
A government spokesperson stated that efforts are underway to make Britain one of the top global locations for starting, scaling, and growing businesses, noting that more than £3 billion has been secured in investment during the first year of the life sciences sector plan.