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The Spin-Out Review is a good starting point, but we can’t ignore the complexities

The Spin-Out Review is a good starting point, but we can’t ignore the complexities

The university research commercialisation landscape is steeped in complexity, risk, and opportunity. Risk on the part of the university, the academic founders, and investors; complexity for funders and KE professionals; but also, huge opportunity and potential for positive environmental and social impact and financial rewards for those involved.

The Independent Review of University Spinout Companies (the Spin-Out Review), published in late 2023, is the latest independent evaluation of best practices in university research commercialisation and company creation. It was commissioned by the Chancellor and implemented by a team drawn from both the Treasury and the Department of Science, Innovation and Technology (DSIT), signalling the significance ascribed to university spin-outs for UK economic growth and innovation. The Review was Chaired by Oxford’s Vice-Chancellor, Irene Tracey, and Cambridge Innovation Capital’s Andrew Williamson, with a focus on the university process to encourage more founders and to make spin-outs more ‘investable’ from an early stage.

Initially, there was perhaps some weariness on the universities’ side, not only because the commercialisation process has been under so much scrutiny for many years but also because it was felt that the Review was coming very much from the investor’s perspective, where there is not necessarily the best perspective on how Tech Transfer Offices (TTOs) have to work in practice and all elements that have to be taken into consideration when commercialising research.

Having said that, when the Review got underway there was a shift in perception as the process and impetus behind it felt much more positive than had been true for other consultations. It had a tighter focus and a clear desire to complete it in a short time. From PraxisAuril’s perspective, we were involved right from the start, and it was clear that our members were a key audience for engagement with the Review team and that their views would be sought and respected as inputs to eventual recommendations.

Overall, the Review has been positively received on all sides. It’s concise, and the recommendations were widely socialised before it was published which helped to manage expectations when it landed. The Government also responded right away, which is certainly not always the case, positioning the Review and recommendations alongside the November statement.

But it’s important now not to lose momentum and equally important to avoid oversimplifying the commercialisation landscape.

The Spin-Out Review came close on the heels of the USIT Guide which was developed by TenU, a collaboration of TTOs from ten international research universities (six of which are based in the UK). TenU is an initiative funded by Research England to share international good practice around commercialisation and initiate collaborative projects, such as the USIT Guide, which sets out the parameters for good practice in licensing and commercialisation to improve transparency between the investor community and TTOs. The USIT guide itself took inspiration from a US initiative led by the TTO at Columbia University.

TenU’s engagement with the investor community deepened the university-investor dialogue around commercialisation and laid a lot of the groundwork for the Spin-Out review. It started to address a key complaint from some parts of the investor community around the level of equity share taken by universities in new ventures, which, they claimed, deterred future investment.

The USIT Guide addressed these concerns and recommended an equity range of between 10% and 25%, So, even before the Spin-Out Review, we were seeing some universities move to a lower equity share environment.  The USIT Guide certainly helps to de-mystify much of the licencing process but its examples are drawn mainly from the life sciences sector and feel applicable mainly to universities with advanced research commercialisation ecosystems; the challenge is how applicable it is to other sectors and other types of universities? The Spin-Out Review was also addressing this question, from the perspective of creating more commercialisation capacity nationwide.

I started this post by framing university commercialisation around risk and complexity; often the hidden ‘wiring’ behind the headlines. As with so many attempts to understand ‘what works’ in knowledge exchange, the Review encourages quite a simple picture of how commercialisation takes place from idea, through disclosure, to company creation and investment. The next thing you know, there’s a launch on the market, and investors pile in to create a unicorn.

I’m exaggerating for effect, but the perspective from a TTO is so much more complex than that. You must take into consideration foreground and background IP. You’re thinking about the number of funders who’ve contributed along the research journey and who may have different expectations about how they might be recognised – and possibly rewarded – when commercialisation takes place and seeking consent for that. Then you’ve got industry partners, students, and postdocs, as well as the resources that the university may have assigned to a very early-stage company before it got to the stage of attracting external investment. Also, the use of labs and other infrastructure – some of which will also come with funder conditions. It is not straightforward. There’s no denying that the process can be improved, but there are good reasons for some of this complexity that should be respected and risks that need to be considered.

It’s not always easy to negotiate with all parties and give a balanced outcome. And, of course, it’s very difficult to predict what might happen to any individual spin-out company at its outset. It’s an achievement to secure investment in the first place and launch a company. You don’t quite know what’s going to happen further down the line, how much additional investment will be needed, and how many regulatory hurdles will have to be able to overcome. So, you’re always taking risks as a founder and as a university spin-out, your institution is taking risks alongside you (if not of money, then of time invested in your project).

Post-review, we are starting to see some really innovative examples of universities coming together to streamline and share best practices. SETsquared’s IMPACT-IP, funded by UK Research and Innovation’s Connecting Capability Fund, is a great example of this. Six universities coming together to co-create new training initiatives, toolkits, deal templates and standards for university tech transfer teams and investment communities to drive positive change in how we deliver commercialisation and knowledge transfer.

Given the changing landscape, there are some short-term things we at PraxisAuril can do, too. Reviews like this one are always a great opportunity to bring members together, to get into the nitty-gritty of what they do, what they care about, what the red lines are in terms of university policies, and what would make their lives easier. We have a solid track record of training tech transfer professionals and will incorporate learning from the Review into professional development and other frameworks such as the KE Concordat.

It’s also about putting the investor community in front of our members to increase dialogue and transparency to ensure there’s a better understanding of research commercialisation but also of investor priorities. And because we’re a national organisation with a remit across all university types, it’s not just about the research-intensive universities that create a lot of spin-outs but also the likes of Bristol and Sheffield, which have very vibrant commercialisation ecosystems, and the North-East where the Northern Accelerator has been scaling up commercialisation activity for several years now.

As well as stimulating change within universities, if the Spin-Out Review doesn’t produce a more positive stance and more proactive seeking out of opportunities from investors, it will also have failed. We need to look outside the easy targets to see where new commercialisation models are developing, and part of PraxisAuril’s role is to draw attention to those. We also need to broaden the conversation about commercialisation and help institutions that want to do more, who want to realise untapped ambition in this respect, to scale activity through recruitment of staff and training for existing teams.

With the Review landing just before Christmas and New Year, let alone the prospect of an election in the next six to nine months, it’s going to be quite challenging to keep up the momentum on the Review and on how we, as a sector, keep talking and thinking about these things alongside the many other challenges and opportunities that the university sector faces.

One opportunity to do that will be at our Annual Conference this year where we’ll be taking ‘change’ as our theme and talking about the future of commercialisation (among many other things), including ideas from tech transfer offices about how to work smarter and quicker. We hope to hear from research and innovation funders and investors about how the programmes they run might help improve commercialisation processes and outcomes across the disciplinary base and industry sectors.

The Spin-Out Review process itself was a positive step forward in terms of raising the profile for commercialisation practice and establishing essential relationships with investors that are needed to create successful spinouts. I’m certainly seeing that change in the ecosystem and the conversations we have about commercialisation as a result. And as our CEO, David Russell, said in response to the Review’s launch, it provides a great opportunity for the sector to show that we can absorb evidence-based critique and respond to that by improving the quality and impact of our work. As the UK’s association for KE professionals, we are committed to supporting our members and sector partners to do just that in pursuit of our common goal – ultimately – to create sustained economic and social impact from the UK’s world-leading research base.


Get all of the insights on the Spin-Out Review and more in our full Investment Future Insights Report series

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Any investors interested in getting involved with IMPACT-IP can register their interest by visiting the SETsquared website

Find out more about the IMPACT-IP programme


The Spin-Out Review will also be discussed during a fireside chat at Investor Ladder: Bristol happening on 6 March. Investors can join the conversation by registering on the Investor Ladder website

Register for Investor Ladder

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