University research ‘spinouts’ to be reviewed by UK government

The government is set to review how universities “spin out” companies from academic research, as it looks for ways to boost innovation in the UK economy.

The Treasury will on Thursday establish a committee to focus on research commercialisation, examining issues including the size of equity stakes that universities retain, said people familiar with the discussions.

The review follows an increase in the number of companies created from academic research, with universities investing millions annually into activities such as patenting, attracting investors and providing laboratory space for nascent start-ups.

University leaders say the work is essential in turning academic work into viable businesses and projects.

Critics say the UK is underperforming on spinout success, with some entrepreneurs arguing universities impose bureaucratic demands and excessive equity stakes that inhibit growth.

According to Beauhurst, a consultancy, equity investment in spinouts increased from £405mn to £2.54bn in the decade to 2021, but they make up just 3 per cent of the UK’s high-growth companies.

It found universities retain an average equity stake of 24 per cent in spinout companies, although the amount varies.

Nathan Benaich, partner at Air Street Capital, a venture capital funder, said universities should retain smaller stakes in companies and called for the government to legislate for standard terms.

However, a university leader warned against stricter rules, arguing it would impose an “oversimplified solution to a complex problem”.

The review will be chaired by University of Oxford vice-chancellor Irene Tracey and Andrew Williamson, managing partner of funding vehicle Cambridge Innovation Capital, said one person familiar with the plans.

The government did not respond to requests for comment.

Additional reporting by George Parker