Following the independent review of university spinout companies published by the government, Ana Avaliani, Director, Enterprise, at the Royal Academy of Engineering, said:
“Founders of spinout companies need to have a high enough equity stake that incentivises them to commercialise the pioneering engineering and deep tech innovations that are in the public interest and can make a difference to people’s lives and contribute to local economic growth and employment opportunities. The division of equity should incentivise exceptional academic founders to drive the company forward and the amount and quality of support provided by the university should be reflected in the stakes it seeks. We welcome the Review’s call for guidance for spinout policies to be co-developed between investors, founders and universities, that provide equity stakes that are needed to incentivise founders, with clear expectations of time for the spinout process. We call upon stakeholders within the UK spinout ecosystem to take action and implement these founder-friendly policies.
“Training programmes for academics interested in commercialising their research should be expanded so that they know how to access commercialisation training – and avenues for rewarding and incentivising commercialisation activity appropriately should be explored by the university sector, for example, by enhancing opportunities for promotion.
“Further tangible change in the spinout landscape can only be achieved by increasing the amount of data available on UK spinouts. We’re pleased to see that the Review the calls for data transparency as the Academy has been advocating for within our annual Spotlight on spinouts report on the spinout landscape. We encourage stakeholders from across the UK spinout ecosystem – from TTOs, founders, and investors – to share data about how different spinout companies have been formed in the past and where they have succeeded and failed. Importantly, there’s also a data gap that needs to be filled as to why some academic innovators who express a desire to spinout ultimately fail to do so. As recipients of public funding all university spinout policies should be publicly available, and the realised spinout deal terms published.
“With just 9 universities accounting for over 50% of the UKs spinouts in the last 10 years, we welcome initiatives to share best practice and streamline the process for spinning out companies and look forward to seeing how the recommendation for shared TTOs will operate in practise.
“From supporting academic entrepreneurs through the Royal Academy of Engineering Enterprise Hub, we know that many spinout companies struggle to secure patient growth capital beyond Series A funding, which often can result in these companies exiting earlier than desirable for the UK ecosystem or having to move offshore, particularly to the US, to seek further investment more easily. The Academy’s upcoming report on the UK’s Deep Tech ecosystem with Beauhurst, the first of its kind in the UK, will soon publish data that will show that North American acquirers have accounted for nearly a third (32%) of the total of 176 acquisitions of UK deep tech companies over the past 10 years, for example.
“The Mansion House reforms announced earlier this year to increase the supply of UK institutional investment to deepen the pool of domestic capital available is an important first step. We need government to deliver on this. The speed at which these reforms materialise and start making a difference will be key. We call upon the government to create further avenues to support engineering and deep tech spinouts to access the funding they need to thrive and continue to be commercially successful.”