Adoption of independent review of university spin-out companies recommendations
We welcome the independent review of university spin-out companies. The review makes a set of recommendations that aim to improve the speed and efficiency of university spin-out formation and facilitate the development of innovation ecosystems that create more and better spin-out companies.
These recommendations include the adoption of the best practice approach to spin-out creation as set out in the University Spin-Out Investment Terms (USIT) guides.
We have a strong track record in spin-out creation, with a current portfolio of approximately 40 companies that employ more than 1,425 people, have a combined turnover of more than of £137m and have attracted over £51m of new investment in 2023/24.
To further enhance our activities, we have undertaken considerable work to streamline and improve our spin-out processes. Our approach aims to provide significant support and resources to enable our entrepreneurial founders to create high quality investable opportunities and secure appropriate investment to build and scale their businesses.
From 1 August 2024, we have further reduced the founder equity that we hold in spin-out companies, reducing this from 30% to a 20% shareholding in our IP-rich spin-outs and 10% for less IP-intensive spin-outs. The balance of the initial equity, 80% to 90%, is deployed to reward and incentivise academic and management founders.
We are committed to playing a pivotal role in the development of our innovation ecosystem and maximise our contribution to the vitality and prosperity of our region. Significant developments include Nexus, our £40m investment to build a community of innovators from across business, technology and academia and the establishment of Northern Gritstone, an independent investment company focused on university spinouts and IP-rich businesses that has created a step change in the North of England investment landscape.
Our policies and practices fully align with the review of university spin-out companies recommendations and we will continue to proactively review our activities to ensure future alignment with best practice.