For university spin-outs the early days, weeks and months can be both exhilarating and nerve wracking. Ideas and inventions developed in the relative safety of a university lab or department are now the centre piece of a fledgling business. The technology needs to hold its own in a commercial environment – investors need to see its value and future worth, customers need to want it enough to buy it (and keep buying it) and you need to build a team of staff who believe in your ideas as much as you do.

For a founder all of this will be a dizzying world away from academia and we haven’t even got to the practical joys of a running a small company – dealing with the legals, the financials, the people. And the thing that will wake any founder or start-up entrepreneur up in the middle of the night is cashflow and payroll. Is there enough money in the bank to pay people this month?

But this is life under normal circumstances – and these in every stretch of the imagination are not normal times. How are spin-outs coping through these unprecedented, uncertain times? Insights from universities across the UK this week would suggest this situation is perilous. The Chancellor has announced unprecedented measures to support businesses across the UK with an array of schemes and interventions. But are spin-outs eligible? In many instances they are falling through these safety nets.

Spin-outs from universities are often incurring upfront losses through investing in their ideas and technology with the idea of potential returns in 5-10 years time. They are heavily reliant on equity funding and so not suitable for debt. And their real intellectual property is their people. Sidelining or furloughing their staff (even if they were eligible) is in effect closing down the essence of the company.

Affecting all businesses will be the impacts of social distancing and lockdown measures. Customers and sales have dried up in many sectors and for spin-outs often operating in new markets and creating new sectors this will be particularly acute. Developing sales pipelines is a time-consuming task at the best of times but for spin-outs you are asking prospective customers to take leaps of faith on something very different and cutting edge. Risk appetite for new ideas falls away in a crisis (unless it fixes the crisis).

And so spin-outs are left even more reliant on the support of equity funding and will likely need capital in the middle of the pandemic from new or previous investors when capital is drying up in some places. Many investors won’t have enough “dry powder” to meet increased demand from so many of their portfolio for bridge investment.

Many universities are already stepping up (as they are in so many areas – #UniSupport), technology transfer offices are doing whatever they can to support and aid their spin-outs. From offering free-rent periods if operating on university properties to hands on help with finance and contingency planning. But as everyone gets over the immediate shock of the crisis – the realities are beginning to bite for many spin-outs whose time horizons have always been framed in days, weeks and months but now might be viewed in terms of days, hours and minutes.

What can be done to help? Surfacing the problems has been critical in order to suggest targeted solutions. Government is increasingly aware and this administration in particular knows that many of these companies are absolutely vital not only in aiding our road to recovery but being the frontier companies that define our future economy. We need to collectively make sure these spin-outs don’t spin through the net and are lost forever.