As Cambridge, Oxford and London power ahead with the creation of more world-class university spin-outs, an Oxbridge-driven report for the UK government urges swift and concerted action to underpin momentum if Britain is to keep pace with global exemplars.

An independent review of University spin-outs by Oxford University Vice-Chancellor Professor Irene Tracey and Cambridge Innovation Capital managing partner Dr Andrew Williamson – who has worked in Silicon Valley – has produced a strong list of recommendations to help improve the creation and growth of university spin-outs.

The first is to accelerate towards innovation-friendly university policies that all parties, including investors, should adhere to where they are underpinned by guidance co-developed between investors, founders and universities.

All parties should agree spin-out deals on market terms, avoiding unnecessary negotiations. Equity splits identified via TenU’s University Spin-out Investment Terms Guide can be used as a starting point for life sciences spin-outs (10-25 per cent university equity) with exact terms varying depending on the wider commercial deal.

The authors say universities, investors, and founders should jointly develop guidance for (i) software spin-outs, where there is typically less university support and IP can be more straightforward to work around, and (ii) hardware and engineering spin-outs, which typically sit somewhere between software and life sciences.

For less IP-intensive sectors, common in software-only spin-outs, typical deal terms should be much lower, with university equity of 10 per cent or less, the report recommends.

The authors say universities, investors and founders should jointly build on the USIT guidance to develop a template for spin-out term sheets, similar to the US University Startup Basic Outlicensing Template (US-BOLT) to help streamline the negotiations process.

They add that universities should have clearly stated expectations on time to complete the stages of the spin-out process by both the university and founders. University approvals needed for a standard spin-out should be delegated to trusted individuals and not taken by committees that meet infrequently.

Founders should be encouraged to adopt amongst themselves proportionate equity distribution that both recognises the contributions to originating IP and continued intellectual support, but also the need to reward and incentivise those individuals who will commit considerable effort in taking the company forward, the report adds.

The report calls for more data and transparency on spin-outs through a national register of spin-outs, and universities publishing more information about their typical deal terms.

The authors recommend the creation of shared technology transfer offices to help build scale and critical mass in the spin-out space for smaller research universities. These could be operated through collaboration with established university TTOs and could be implemented at a regional or sector-wide level.

“We note that the latter may be particularly of interest to spin-outs from the social sciences, humanities, and the arts,” say the authors.

They call on the Government to increase financial support for proof-of-concept funds to develop confidence in the concept prior to spinning-out. These should integrate with the timing and offering of commercialisation support and venture-building programmes. Investors should lend their expertise to assessing funding bids for proof-of-concept and translational funds.

Echoing initiatives already instituted by the University of Cambridge, the authors say that founders need access to support from individuals and organisations with experience of operating successful hi-tech startups, regardless of the region founders are based in or sector they operate in. The Founders at the University of Cambridge initiative would appear to be a trailblazer in this regard.

The authors call for an independent review of university spin-out companies and argue that the startups should be given help with access not just to serial entrepreneurs but also to part time or on-call professional support in law, finance, or operations in early stages before permanent hires are needed. Access to shared equipment and facilities for rent is another strong recommendation.

The authors add that UK Research and Innovation should ensure that all PhD students they fund have a voluntary option of attending high-quality entrepreneurship training and increase the opportunities for them to undertake internships in local spin-outs, venture capital firms or TTOs.

The government should continue reforms to ensure that UK capital markets are able to provide the financing to incentivise companies to stay in the UK and improve the provision of funds to enable movement or porosity between academia and industry.

An ‘academic returner’ fellowship for researchers wishing to return to academia from the private sector is a key suggestion.

• To see the full report, visit the HMT website –