Strains and Signals: latest data on University-Business collaboration

Interactions between universities and businesses are foundational to the UK’s innovation ecosystem, enabling cutting-edge research and fostering the conditions for a vibrant economy.

New data from the annual Higher Education-Business and Community Interaction (HE-BCI) survey offers invaluable insight into these relationships, and the headline figures present a sobering picture. As shown in Figure 1, total business collaboration income (BCI) fell 3.7% in real terms in 2024/25, continuing a pattern in which modest nominal gains are eroded by inflation. University-business interactions also dipped slightly, falling 0.5% from 81,499 to 81,094.

These results mirror the broader economic headwinds of the period: the data spans August 2024 to July 2025, including a period of flat-lining GDP and continued declines in R&D investment. Yet the aggregate figures are only part of the story. This blog presents early insights from this rich dataset, looking beneath the headlines to identify divergent patterns across business size and different forms of engagement — headwinds and counter-currents that together paint a more textured picture.

A note on the data before proceeding. The HE-BCI survey is self-reported, which can introduce volatility — where institutional interpretation of reporting guidance shifts, this can produce significant year-on-year swings that reflect changes in reporting practice rather than underlying activity. The survey also focuses primarily on formal, transactional interactions — contracted research, consultancy, facilities use, and IP arrangements — meaning that informal knowledge exchange, the circulation of talent between universities and industry, and collaborative activity not structured around a financial transaction are largely invisible in the data. The picture of university-business collaboration is therefore likely more active than the figures alone suggest. The patterns described here should be read with this in mind.

The drivers become clearer when we split BCI into its two principal components: knowledge services (consultancy, contracted research and use of facilities and equipment) and IP commercialisation (licensing and other IP arrangements). In 2024, knowledge services income fell by 5.4%, while IP income rose by 5.3%. Knowledge services constitute the largest component of BCI, accounting for 82.7% of total income, so its decline more than absorbed IP income gains in the aggregate.

Mixed signals across scales: SME and large businesses diverge

Meanwhile, unpacking the headline figures by size of firm, total income from interactions with large businesses dropped 5.6% — a third consecutive year of real-terms decline — while SME-related income grew slightly, by 2.3% (see Figure 2).

Breaking income patterns down further by type of arrangement in combination with business size, income fell across all forms of knowledge services bar one: consultancy with large businesses rose 6.8%. On the other hand, IP-related income surged for interactions with SMEs by 47.2%, but fell by 9.9% for large businesses (Figure 3).

Most concerningly, contracted research — by far the largest component of knowledge services income — fell 7.5%, a worrying indicator for the overall strength of university-business engagement.

Knowledge services income: declining volume, diverging value

While income for knowledge services fell across both SMEs and large businesses, examining income alongside interaction volumes and values-per-interaction reveal markedly different trajectories across the two groups (see Figure 4).

After reaching a nine-year high in 2023/24, average value-per-interaction fell 4.9% to £13,661. But for SMEs, interaction volume grew 2.8% despite falling income, pushing value-per-interaction down 9.5%. For larger businesses, the pattern was reversed: income and volumes both fell, but income declined less sharply, yielding fewer but higher-value interactions (averaging £37,109, up 3.5%).

The medium-term trajectories mirror this pattern, with knowledge services income remaining relatively flat across collaborations with both SMEs and large businesses, but with patterns of volume of interactions and value-per-interaction diverging, representing a higher volume of smaller, lower-value engagements between universities and smaller firms, and potentially signalling a shift towards more strategic, long-term partnerships with larger private-sector organisations.

Regional variations were also stark (see Figure 5). In the South East, income from large business rose by 5.0%, while SME income fell by 21.9%. The North East saw the opposite pattern. However, London, the East Midlands, the North West, Scotland and Wales, all experienced declines in both SME and large business income related to knowledge services. At this level of granularity, significant volatility should be noted. For instance, Northern Ireland saw a sharp contraction in 2023/24, before rebounding strongly in 2024/25.

IP Income Increases, with Mixed Signals Across Commercialisation Activities

The HE-BCI survey also offers insights on trends in commercialisation. After two consecutive years of decline, IP income rose 5.3%, driven entirely by SME engagement, which jumped 47.2% from £58.5m to £86.1m, partially offset by a 9.9% fall in large business IP income (Figure 6).

The sharp rise in SME-related IP income indicates strong engagement between universities and smaller firms across licensing and other IP arrangements.

By contrast, a continuing decline in large business IP income looks alarming. However, as noted in our State of the relationship report, universities reported that many large corporates increasingly prefer technologies to first be developed and derisked through spinouts, before being acquired at a later stage, rather than licensed earlier in their development. But caution is warranted before assuming any straightforward offset, particularly as equity-based spinout models often offer less stable income than licensing arrangements, especially given potential warning signs in the spinout data itself discussed below.

The number of spinouts remaining active after three years continued to rise, increasing 5.3% from 1,687 to 1,776 (Figure 7). However, newly registered spinouts have declined year-on-year since their 2020/21 peak, and survival rates lag registration trends. Addressing barriers to spinout formation remains critical to sustaining a pipeline of enduring, competitive companies emerging from universities.

Despite positive signals from overall IP income and spinout survival rates, patent trends are concerning (Figure 8). Patents granted dipped 13.0%, from 1,779 to 1,548, coinciding with a second consecutive annual decline in the cumulative patent portfolio after eight years of consistent growth, suggesting active patents are lapsing faster than new ones are granted and pointing to a weakening of innovation output.

The overall picture from the HE-BCI data is a sector under strain, but one with pockets of genuine resilience. Increased average value-per-interaction between universities and large businesses, strong SME-related IP growth and improving spinout survival rates all indicate that universities are continuing to invest in collaboration, despite mounting resourcing pressures. However, the warnings are stark: falling interaction volumes with large businesses, declining new spinout registrations, a shrinking cumulative patent portfolio, and geographically concentrated downturns.

Understanding these patterns matters. University–business collaboration is not merely a barometer of economic conditions; it has the potential to be a countercyclical force, underpinning a resilient innovation economy even as wider headwinds persist. NCUB will continue building on this early analysis through the Collaboration Progress Monitor and State of the Relationship report, drawing on university and business stakeholder expertise. NCUB will be convening university and business voices to interrogate these patterns further — if these trends resonate with, or equally diverge from, your experience, we would welcome hearing from you.

Main contact: sarah-jane.phelan@ncub.co.uk