HEFCE, the body that distributes teaching and tech transfer funding for English universities, announced a change in the way it gives out money to encourage universities to share knowledge with businesses.

The Higher Education Investment Fund is a pot of about £150m that is currently divvied up between universities, helping to pay for technology transfer offices and other business outreach efforts. Some of these do a great job for the UK’s growth businesses.

Take Silicon SouthWest, run by the Universities of Bath and Bristol, which acts as a hub for the South West’s burgeoning semiconductor design businesses, providing office space, business networking, and incubation – cheap for the benefits it brings.

Focusing funding

But quality is variable.

It’s widely recognised that many knowledge transfer operations are sub scale, and it is inevitable that some universities have more transferable knowledge than others.

NESTA has argued before (for example in our work with Sir James Dyson, p 37) that in a time of limited resources, it would make more sense to focus funding on universities that do a demonstrably better job of working with business.

Simplification

Of course, the challenge will be measuring it.

The new proposals focus funding on universities that generate more money from businesses, with revenues from small businesses counting double. And they remove the income floor for the least active universities.

This seems like a reasonable simplification.

Connected universities

But it’s important to remember that the most important interactions between businesses and universities are often the least formal ones – and don’t always involve money changing hands.

Supply of graduates, informal idea exchange, and the role of universities as hubs all rate highly in what businesses say they value about universities (see NESTA’s The Connected University, p 10).

And increasingly, the best universities are treating tech transfer, incubation, spin-outs and student entrepreneurship as part of a unified whole (consider UCL Advances, or the US universities profiled in this report).

So hurray for more focused spending on knowledge transfer – but don’t miss the hidden value that universities provide.