Oxford University Innovation Responds to the U.K. Government’s Independent Review of University Spin-Out Companies

Over 300 companies created by OUI

21st November 2023

Oxford University Innovation (OUI) welcomes the Independent Review of University Spin-out companies, published today.

  • OUI welcomes recommendations to streamline spin-out creation process.
  • OUI supports creation of government policies that increase proof-of-concept and scale-up capital to unlock more investment.
  • OUI supports that many U.K. university spin-out deal terms are comparable to those of leading US universities when investment dilution is normalised.
  • OUI endorses the best practice approach set out in the USIT guide; supports both working with TenU university partners to develop additional USIT guide for software spin-outs and further university collaboration between UK Technology Transfer Offices (TTOs).

Oxford, UK, 21 November 2023 Oxford University Innovation (OUI) welcomes the Independent review of university spin-out companies, published today. The review encourages further collaboration across the UK’s innovation ecosystem and its recommendations, if successfully implemented, should enhance the economic and societal impact of university inspired innovation, deliver the UK’s ambition to become a science and technology superpower and continue to solve some of the world’s greatest challenges.

OUI is proud to have been involved in the development of the University Spin-out Investment Terms (USIT) Guide, published earlier this year by the TenU group of universities through collaboration with the British Venture Capital Association (BVCA) and leading venture capital firms. We are pleased that the review recommends adopting USIT as the template for deal negotiation, including equity splits. OUI supports the recommendation to build on USIT guidance to develop a spin-out term sheet and encourages the development of additional guidance for software spin-outs.

  • The review rightly acknowledges the importance of returning some of the licensing and equity financial benefits from spin-outs to academic IP inventors and university departments. These returns incentivise academics to commercialise their research and help universities to support the next generation of spin-outs through innovation funding and expertise, which is available to academics via TTOs such as OUI.
  • OUI welcomes further dialogue about equity distributions, including how these might vary by sector, and how intellectual and commercial contributions should be fairly considered in the process. Oxford’s current equity policy and licensing practice is well within the scope of the recommendations.
  • We note the review’s assessment of different equity models adopted by US and UK institutions and agree with the conclusions that deal terms should only be compared once the effect of investment dilution has been normalised.
  • We support the recommendation that universities should welcome competition from external venture capital providers and believe that greater support for proof-of-concept and scale-up funding will help to foster more company creation and growth in the UK. OUI works closely with Oxford Science Enterprises (OSE) and a broad range of co-investors who provide funding to form and scale-up companies.
  • We acknowledge that there are opportunities to streamline certain processes involved in the formation of spin-outs. We will continue as a member of the TenU international collaboration and PraxisAuril to work with colleagues at other institutions to deepen collaboration to ensure that knowledge is shared, best practice leveraged, and the skills required to turn IP into impact can be accessed by innovators in all institutions.
  • We understand that more data and transparency on spin-out formation is important, particularly for policymakers, and we will continue to provide data on our activities to the relevant bodies.

Adopting the recommendations set out in the review has the potential to enhance the UK’s spin-out ecosystem, attract new sources of investment, and help translate more university inspired innovation into commercially viable ventures that can solve the biggest challenges facing society today. OUI is committed to playing its role to the fullest extent possible.

Commenting on the review, Baroness Nicola Blackwood, Chair of Oxford University Innovation, said:

We welcome the recommendations in the Independent Review of University Spin-out Companies and commend the depth and quality of its reporting. We are pleased that the review recognises the role of Technology Transfer Offices (TTOs) and see many opportunities for Oxford University Innovation to further develop our thriving Oxfordshire innovation ecosystem. We will continue to collaborate and serve our academic founders, grow our investment community, and work with our TTO partners and the U.K. Government to support the creation and scale up of successful new ventures.”

Prof Chas Bountra, Pro-Vice-Chancellor for Innovation at Oxford University, added:

Since the formation of Oxford Instruments in 1959, Oxford has created over 300 spin-outs, start-ups and social ventures, over half of which have been in the past decade. From COVID-19 and malaria vaccines to autonomous vehicles and new sources of energy, innovation at Oxford has allowed us to tackle the biggest challenges and deadliest killers of our era. It is imperative that we keep pace with the rate of research commercialisation opportunities emanating from our universities with progressive policies and partnerships that support the demands and infrastructure for tomorrow’s world – all the while creating jobs and economic impact.”

Ros Deegan, CEO of OMass Therapeutics, said:

Working with Oxford University Innovation helped to successfully kick-start OMass. The independent review highlights the efforts needed in the U.K. to stimulate more investment at key stages of company growth. We also need to continue to build regional clusters of innovation to support scientific collaboration, attract investment and deals, and nurture a

Tim Haines, Managing Director and Executive Partner, Abingworth, said:

Our most successful technology firms – Solexa, Oxford Nanopore, ARM – started off life as spin-outs from a U.K. university and are highly competitive globally. The USIT Guide (University Spin-out Investment Terms Guide) will build on earlier successes and provide universities and venture capitalists with direction, advice and ‘rules of engagement’ in areas such as equity share, intellectual property and corporate governance. I, along with my investment colleagues, look forward to further collaboration with the UK’s technology transfer offices to implement the review’s recommendations and ensure that innovation in the U.K. continues to thrive.”

Read the Independent Review and HM Treasury announcement

Download the USIT Guide

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