UK universities ready to pick up the pace of commercialisation in 2025

The UK is entering 2025 with many of the ingredients necessary for university venturing to receive a boost — from harmonising spinout processes, making sure founders have the right conversations with investors to making proof-of-concept funding available. The past 12 months have proven to be a paradigm shift for the country.

The USIT Guides, guidance for spinout negotiations published by international tech transfer association TenU, have led, via the UK government’s Spinout Review, to 49 universities across the country to reduce their stakes in life science spinouts to between 10% and 25%. It has settled the debate about how much equity universities should take in companies they have helped to commercialise, which “had taken on an outsized proportion of attention”, says Andrew Williamson, managing partner of venture capital investor Cambridge Innovation Capital and a co-author of the review.

Michele Barbour, pro vice-chancellor for enterprise and innovation at the University of Bristol, in the UK, says this standardisation “at an institutional and sector level” will dramatically improve a culture where faculty founders and investors can have the kind of collaborative relationship in which “open, challenging conversations” that create real value are the norm.

Barbour points to the recently announced partnership that SETsquared — a group that includes the University of Bristol, as well as the universities of Bath, Cardiff, Exeter, Southampton and Surrey — has entered with VC firm QantX to launch a $390m investment vehicle to invest in spinouts from the partner academic institutions.

“The whole process, all the hard work has led up to this and the announcement, and then of course, all the much more hard work that’s going forward, all that couldn’t be achieved if we didn’t have that really collaborative, open relationship,” she says, adding that the university has also built collaborative relationships with angel investors.

Diana Galpin, director of enterprise and knowledge exchange at the University of Southampton, has been using the culture shift not only to build relations with investors but also to hire commercialisation fellows and entrepreneurs-in-residence.

Galpin is also working with investors, lawyers and other institutions, on a guidelines for speeding up the pace of spinout financing. “It will include templates, checklists and process improvement to try and harmonise what we do, to make sure that we can get deals going out sooner — as well as guidance about the whys,” she says.

The measures build on guidance from USIT, she adds, but takes it “to the next level of being a practical, really easy-to-use resource”. Galpin hopes the toolkit will be a relevant resource for licensing deals on top of spinout negotiations.

At a national level, the UK will also benefit from recently announced government funding for proof of concept. The money is a critical part of the commercialisation of spinouts as it is used to prove the commercial viability of academic research before it is spun out into a company. Private investors typically are not willing to provide this funding.

The £40m ($50m) pot is another result of the UK government’s Spinout Review and will be deployed over five years. It is, however, a small sum by international standards. The Flemish government, for example, has provided proof-of-concept funding to its five universities for the past 17 years. Its commitment consists of €45m ($47m) per year, nearly five times as much as the 166 universities in the UK will have access to.

UK has much to learn from European peers

Now that the UK has secured proof-of-concept funding, discussion has turned to how best to distribute the limited funds. Some experts have called for the funding to be distributed from a central body with researchers applying for the funding without revealing the universities they represent. This is to avoid biased distribution of funds to academic institutions favoured by investors in the golden triangle of London, Cambridge and Oxford.

The UK could learn from the universities in Flanders in how they distribute funds. These academic institutions appoint people from academia and industry to decide which projects should get funding. “Each university that gets money has to install a panel composed according to certain equilibria, people from industry and people from the university, and it’s that panel that will decide which projects will get the money,” says Paul Van Dun, managing director of KU Leuven Research and Development, the tech transfer office of the Belgian university.

The composition of panels that allocate funding also changes every three years. “I’ve seen that the level of ability and the level of understanding from both the academic members and the industry members has grown by working together and deciding together on which projects are to be financed,” Van Dun says. “Through that mechanism, we’ve seen now 15 years later that there’s a whole cohort of academics who have a better understanding of this is how my colleague from industry reasons.”

… but not every professor should be a founder

For universities to be successful in 2025, they also need to put the right people in place at their spinouts. Many institutions are pushing their faculty to be more entrepreneurial. The University of Bristol’s Michele Barbour, for example, says: “I think an academic can lead a world-leading research group and go out and raise £100m in investment.”

But there is evidence to suggest that may lessen a spinout’s odds of succeeding. “The idea in this stream of work is that if you have specialised knowledge or resources that no one else has, that this should enable you to build a sustainable competitive advantage over the long run,” says Maria Roche, a researcher at Harvard University. “Our notion going in was, ‘oh my gosh, this should be amazing’, right? These startups have knowledge that no one else in the world has, and potentially even the only person who knows how to do this. No one can copy this. So, this should be valued very highly.”

But the data collected by Roche shows that if the inventor is the founder, it has a negative impact on raising funding while it makes no difference to a spinout’s chances of being acquired.

“It’s really important to understand what your exit strategy is going in with your startup; that may tell you what you need to build your startup around,” says Roche.