Last week, The Times reported that the average stake taken by universities in tech spinout ventures dropped to 16.1 per cent, a ten-year low, having been as high as 24 per cent in 2019 – based on a study commissioned by The Royal Academy of Engineering.

I was very encouraged to see this statistic as I have, first hand,  seen the tension that comes when a business wants to spin out from a university environment and the university wants to take a significant equity stake.  Where businesses can be formed with relatively little capital and can be inspired by concepts that do not need access to significant physical assets to prove them then it doesn’t seem reasonable for universities to take significant stakes in the spin out.  However, it seems entirely reasonable that universities should be rewarded appropriately for creating the environment for an idea to become a business and for enabling and supporting the early stages along with providing access to academic insight and supervision.

I expect that a more proportionate approach will lead to more businesses being established, as the risk / reward trade off for founders who decide to take the leap to create a business is more favourable to them and I also suspect that such moves will encourage founders to look to the university to help (and therefore they will take a stake) rather than seeking to avoid it.

In the long run, I believe this trend will lead to more innovation, entrepreneurship and therefore, one could argue, greater total returns for the university sector.

Universities have a key role to play in nurturing and promoting innovation and translation into impact and this modernisation of the equity position they take in spin outs is, I believe, a positive move for all.

Read The Times article here

Follow us on LinkedIn