Staff Services Student Enterprise

New report to accelerate university spin-outs

24 Apr 2023

The UK’s potential as a science super-power has been given a significant boost with the launch of unique guidance that will accelerate and support the founding of a new generation of spin-outs.

Dr George Baxter, Chief Executive of Edinburgh Innovations, the University of Edinburgh’s commercialisation service contributed to the publication; “University Spin-Out Investment Terms” which was supported by TenU, an international collaboration formed to capture effective practices in research commercialisation and share these with governments and higher education communities.

TenU members include the University of Cambridge, Columbia University, University of Edinburgh, Imperial College London, KU Leuven, University of Manchester, MIT, University of Oxford, Stanford University, and UCL.

Leading investors and universities came together to launch the USIT Guide, which will boost the way that the Higher Education sector spins out new companies that take advantage of research breakthroughs.

Many of this country’s most successful technology firms – Solexa, Oxford Nanopore, ARM – started off life as spin-outs from a university, and the publication’s authors believe many more will now be forthcoming.

This is an area that the UK already excels in. London’s universities, for example, are more efficient in turning research and development expenditure into spinout companies than many others. They produce a spin-out for every £35.35 million invested in research and development compared with £60.42 million, £42.6 million and £54.5 million for Boston, Los Angeles and New York, respectively.

Between them the group behind the new guidance – which includes venture capitalist firms Abingworth, Sofinnova and Cambridge Investment Capital, and the Universities of Edinburgh, Oxford and Cambridge among others - has helped set up 376 new companies in the last five years, raising over £8.6 billion in investment.

But the USIT Guide's backers believe it can build on this success and allow both universities and venture capitalists to ramp up the whole process of setting up spin-outs by providing direction and advice in such areas as equity share and IP. As it stands, many of these deals are created from scratch, which is both inefficient and sometimes fails to learn the lessons from previous success stories.

Dr George Baxter, Chief Executive of Edinburgh Innovations said:

The USIT Guide marks a great step forward in unlocking innovation throughout our higher education sector. It will significantly help academics apply their ideas in real world settings and improve funders abilities to create sustainable, thriving businesses. Moreover, this has been an extremely collaborative process capitalising on the excellent and increasing partnerships between Universities, businesses and investment funds

Dr Diarmuid O’Brien, Chief Executive of Cambridge Enterprise and chair of the USIT Guide working group said:

The USIT Guide can unlock the full potential from UK universities research, helping to create more spin-outs faster and attracting increased venture investment. USIT can support our universities create the companies that can contribute to solving the great challenges of our time, from climate to health and the digital revolution.

Professor Dame Jessica Corner, the Executive Chair of Research England, which funded the initiative, said:

The USIT Guide has come out of the deep professionalism and commitment of UK tech transfer offices to collaboration: sharing approaches internationally, and working with others – particularly investors - to make our ecosystem more effective.

Tim Haines, Executive Partner at Abingworth, added:

Universities are a key engine for innovation in the UK. The USIT guide will enable the investment community to work more closely with our universities to create high impact businesses that can drive UK economic growth.

The USIT Guide was created over a 16-month period from January 2022, and supported by a sector-wide consultation which was supported by BioIndustry Association (BIA), the British Private Equity & Venture Capital Association (BVCA) and PraxisAuril.

Read the full report on the TenU website