Many of the UK's universities have adopted recommendations to lower equity stakes in the companies they commercialise to at or below 25%.
Forty-nine universities across England, Wales and Scotland have adopted guidelines that call for universities to take between 10% and 25% equity in life science spinouts, according to research and knowledge transfer body Research England.
The UK is home to 90 universities on the QS World University Rankings.
The uptake of the recommendations set out by TenU, the international association of tech transfer offices created to develop best practices, was announced at an innovation summit hosted by the group in London this week.
The adoption of the USIT Guides — templates for term sheet negotiations published by TenU that provide guidelines for how much universities should take in life science and software spinouts — was one of the recommendations in the UK government’s spinout review, published a year ago.
The review recommended that universities should take no more than 25% of equity in the life science startup companies they spin out — and in many cases less than 10% — to encourage more academics to turn their research into commercial ventures.
The UK government’s spinout review has also led to the introduction of a £40m ($50m) proof-of-concept fund, announced by the government last month. Proof-of-concept funding allows academic researchers to prove the feasibility of their technologies and is critical to attracting private investment.
The UK has to rely on government funding for proof-of-concept because the private sector has not historically committed capital to this area.
Despite the UK government pledging more money for proof-of-concept, it still lags behind other countries. It’s only a fifth of what, for example, universities in the Flanders part of Belgium have access to, says Paul van Dun, general manager of tech transfer office KU Leuven Research and Development.
Andrew Williamson, managing partner of venture investor Cambridge Innovation Capital and a co-author of the spinout review, noted that the need for such financing was highlighted by every single one of the roughly 50 universities he interviewed for the review.
Thierry Heles
Thierry Heles is editor-at-large of Global University Venturing and Global Corporate Venturing, and host of the Beyond the Breakthrough podcast.
