Universities to give academics a larger share of spin-out equity

Academics and students who commercialise their ideas will be able to keep a larger proportion of the equity in their ventures, after 49 universities adopted new guidelines.
The 44 universities in England, including Newcastle, Lancaster and Bristol, as well as three in Scotland and two in Wales, have said they will reduce the amount of equity they expect to receive from software-related ventures commercialising technology developed using their resources.
A Treasury-backed report, undertaken by Irene Tracey, the vice-chancellor of Oxford University, and Andrew Williamson, the managing partner of Cambridge Innovation Capital, a venture fund, recommended last November that universities take stakes of 10 per cent or less in spin-outs with limited new intellectual property, such as software companies.
The review also suggested the upper limit for more IP-intensive companies, such as life sciences businesses, should be 25 per cent.
Prior to the review, universities took stakes of 22.8 per cent stakes, according to research firm Beauhurst, but that average masked a wide range of outcomes, from 11.8 per cent at Cambridge University to 42.3 per cent at Leeds University.
Anne Lane, chief executive of the University College London’s technology transfer office, UCL Business, said universities had accepted the rationale behind the reforms. “Spin-outs represent the bridge between ground-breaking research and real-world impact, generating jobs, driving economic growth, and transforming lives,” she said.
However, she called for the government to follow through with all the report’s recommendations, which included additional funding to support academics with the expensive process of proving the technology they have developed could work outside the lab.
The government’s autumn budget gave £40 million over five years to proof-of-concept funding, which allows the viability of innovative ideas to be tested before being marketed. Universities believe more funding is required.
A report in September from Beauhurst and Parkwalk Advisors, a specialist investor, said that in the first half of the year, £1 billion was poured into start-ups that had emerged from universities, putting the year on track to be higher than 2023, when £1.75 billion was raised. Total equity investment in UK spin-outs peaked at £2.7 billion in 2021.