How to use this handbook

First, understand that this book is by necessity an approximation. Every university has its own processes, and each sector brings its own unique requirements. We could never do justice to a document covering all variations, so we have split the process into five cyclical stages, covering these core questions:

1. Does the idea have potential?

2. Should you try to spinout?

3. How do you get approval to spinout?

4. How to grow the business

5. What comes after success?

Each section contains information on key tasks associated with that stage, decisions which need to be made, and a handy checklist to be completed before progressing to the next stage.

In writing this handbook, we have drawn upon experience gained running the Academy’s Enterprise Fellowships programme, a process which is led by Academy Fellows. We’ve harnessed the expertise of our Fellowship in general, the programme alumni and our wider support network of commercialisation experts. It should be noted that we recognise our programme and Fellowship represents a specific subset of spinouts and sectors, which is not necessarily reflective of the wider community. It is a rich data source from which learning can be derived, though.

We ran a survey in October 2021, inviting comments from the wider community. This attracted some two hundred respondents from across the UK, a subset of whom were invited to workshops to delve deeper into areas of interest. We have also reviewed a great many resources that already exist, found either through our own research or suggested by contributors. Rather than replicate their good work, where we have little to add we will merely summarise their concepts for the benefit of those unfamiliar with it, and point them in the direction of where to learn more. Some sections are therefore significantly longer than others, but this shouldn’t be taken as an indication of relative importance or difficulty. Rather, it allows us to concentrate on sections where we feel we can add most value in drawing on our own experience and community input.

Throughout the guide, we will draw upon all of these inputs. We’ll highlight areas where the different stakeholder groups hold competing views or diverging aims, which can slow the process down. We will explain why the stakeholders have these priorities, and offer advice on how to best to navigate through these points of contention to meet the needs of all parties. The core groups are academic entrepreneurs, investors, and Technology Transfer Officers.

Jargon buster

As with all sectors, this process comes with its own jargon. Any words or phrases marked in orange have been defined in the glossary.

Two phrases you must know before we progress further are ‘startup’ and ‘spinout’. All spinouts are startups, but not all startups are spinouts – in fact, very few of them are.

A startup is essentially a new company (legally formed or just a concept), seeking to establish itself as a self-sustaining entity. See here for general reading on startups.

By contrast, a spinout is a specialised type of startup which is focused on commercialising an innovation owned by a university.

The spinout may or may not be led by current or former university staff. The crucial distinction here is that a spinout is taking something away from the university.

The founder wishes to use knowledge and intellectual property rights (IPR) owned by the university to form a company and enact their plan. In such cases, the permission of the university is required as the owner of the IP, and potentially as the employer of the founder.

Every university has their own approach to spinning out, and it’s unlikely that any process will exactly match this one. The precise order doesn’t matter because it’s the lessons contained within that count. Our aim here is provide a map to all the different stages. Should you wish to follow it from inception to exit, focus on the most relevant stages, or simply understand how a section fits within the whole.

How the process is visualised in this handbook

Schematic flow diagram showing the cyclical nature of each stage

The process (green) draws on inputs (yellow) to yield outputs (blue). In each stage the process is repeated until all necessary outputs have been achieved, before moving onto the next stage.

Each of the five stages is treated as a distinct cycle for you to loop through as many times as necessary before you are ready to pass through to the next cycle. The reality is somewhat less clean in that you find yourself working concurrently on several sections at once. You may even find yourself pursuing multiple cycles in something akin to a 60:30:10 workload split as you progress through them.

Each stage will start with a simplified process map, displaying just the inputs (yellow) and all processes (green). As we explain each process, we will highlight the most relevant inputs and the corresponding outputs (blue). At the end of each stage all processes will be combined to form a complete, detailed process map. Here, you’ll also find a checklist to be completed before advancing to the next stage, as well as links to further reading, should you require more insight. These lists are indicative only and should be adapted to your needs.

Lastly, a “+” embedded within a diagram or picture indicates further information is available with a click.

Meet your squad

Starting a company from scratch can feel like the lonely endeavour of a single dedicated entrepreneur, but all successful projects have required a team effort. Here, we examine the three core groups that populate the spinout process, covering the expertise they bring and their motivation to get involved. It is from these individuals and their distinct (but broadly aligned) interests that you must form a team, or else the chances of success are minimal. To get them all aligned, first you need to understand their perspectives…

1. The aspiring academic entrepreneur

Our survey asked academics and entrepreneurs ‘What are your own motivations for spinning out?’

The answers were varied, and collated into themes to create this wordcloud:

Essential to any spinout is the academic team with entrepreneurial aspirations which forms the driving force behind the vison. They will be dedicating a significant amount of time to the project and expect to take a leadership role within it, in the short term at least. They will be considered the founding team, having spent years conducting the background research, and being there are the formation of the company. They’ll likely consider this idea to be their pet project, and will be both protective and proud of it. The founding team is essential for both its knowledge of the innovation and as a workhorse; all the tasks in this handbook take time, and no one else is going to do it for you.

The founding team might be an individual and they could be at any career stage. In our programme’s experience, the lead is often a post-doctoral researcher committing 100% of their time to the project, while a senior colleague or two remain predominantly in academia providing expert technical advice. In this handbook, we are assuming you are the leading academic, seeking to join the company as the CEO or CTO role. When we refer to ‘entrepreneurial academics’, we mean only those who see it as their main form of employment – at least for the short term.

Core positive motivations often include a desire to see their research put to good use, to make a profit from it, or to develop an exciting career. Be wary of those who are unwilling to dedicate significant time to the project and yet expect significant control and/or ownership in the company, or who are mostly motivated by improving their CV. This rarely works out well, as they don’t commit the time necessary for success and there are better ways to improve a CV. As you will see later, this can cause problems, so it’s good to tackle team members with poor motivations early on.

2. The investor

Our survey asked investors ‘What are your own motivations for working with spin outs?’

The answers were varied, and collated into themes to create this wordcloud:

There are several types of investor who fund startups, all outlined below. For the purposes of this guide, ’investors’ should be taken to mean angel investors, venture capitalists and corporate venture capitalists. We define these terms below, and highlight where they differ. Unsurprisingly, our survey showed investors have a consistent motivation behind their interactions with spinouts. ‘Investing in them’ and ‘finding great companies that can be very large’ pretty much covers it. Bear this in mind when working with any investor; mentoring an entrepreneur and working on a new technology may excite them, but one eye is always on the cash prize.

Business angels / Angel investors - These are wealthy people, or high net worth (HNW) individuals as they are known in the financial sector. They like to invest in early-stage businesses for the purpose of making a profit, hoping they can sell their investment portion for much more at a later stage. Often former entrepreneurs themselves, they may be experienced in starting and growing businesses. Angels take a personable approach, since this is a passion as much as a job. With many seeing involvement through mentoring as a form of ‘giving back’, be sure to find angels you are happy to work closely with.

Angels typically invest between £25,000 to £250,000 each, and sometimes come together to form a ‘collective’ and invest up to £1.5 million. If the company fails, they can lose all of this money, so naturally they will be cautious about who they give it to and will want a decent share of the company in return. They’re often sector specific, seeking early stage companies with talented founders whose ideas excite them.

“I enjoy seeing people realise their potential and turn ideas into impactful businesses.” – Angel investor

Venture capitalists (VC) – These are firms whose purpose is to invest at a large scale in what can be considered ‘risky’ companies, typically startups and SMEs. These companies are risky in the sense that they tend to focus on a new and unproven idea or technology, or an existing technology being used in a novel way. The risk is that there is often little or no proof people will pay for it. This risk means that the company may fail completely, and it’s a venture into the unknown. It is the nature and level of risk that distinguishes Venture Capitalist from Private Equity, the latter of which invests in more established businesses with proven business models.

While an angel investor is often looking to help a company prove it has a good product and to make initial sales, a venture capitalist typically has their sights set on a grander and bolder vision of helping the company to expand. It’s mostly a question of scale; VCs can make seven-figure investments with bigger growth expectations, and they want the company to grow significantly. This can be by at least tenfold. Finding potential returns on this scale requires them to take big risks. Venture capitalists are often sector-specific and only interested in companies that have reached a particular stage, which is generally a later stage than angels.

Corporate venture capitalists (CVC) – A CVC involves an established (usually multinational) company having an investment division. Naturally they will know their sector very well, and will normally stick to it. They often use investment to supplement their own research and development, particularly if their culture does not encourage risk-taking. Buying in ideas provides a quicker route to innovation, staying competitive and entering new markets.

3. The Technology Transfer Office

Our survey asked Technology Transfer Officers ‘What are your own motivations for spinning out / working with spinouts?’

The answers were varied, and collated into themes to create this wordcloud:

The Technology Transfer Office (TTO) is responsible for protecting and commercialising intellectual property developed in their university, for social and economic benefit, domestically and internationally. It may be a university department, or a separate legal entity to the university. In either case, they typically control the commercial use of any and all intellectual property created by the university and its staff. This is a crucial first lesson for any aspiring academic entrepreneur – you do not own ‘your’ idea. You’re an employee of a university that owns all your work output, and the TTO represents the university’s interests in commercial matters. With ownership comes control, meaning any academic interested in spinning out must first acknowledge that step one is to obtain the consent of the Technology Transfer Office before setting out on the commercialisation journey. The quickest sure-fire way to start the relationship off on the wrong foot is to press ahead without their involvement.

It's important to note that there are some exceptions to this. Undergraduate students and sometimes PhD students may own the IPR they create. As a priority, check your contract of employment/enrolment and any relevant university policies to confirm IP ownership.

In this handbook, ‘TTO’ refers to both the department itself, and the individuals working for the Technology Transfer Office. The TTO’s motivations are likely closely aligned with yours, such as delivering world-changing products and services from IP developed in academia, or attempting to improve society by getting new technology into use and into the market.

Remember that the TTO does this for a living, and can bring tremendous value to your venture. They are experts in guiding you through the spinout process. Some of their primary areas of expertise include:

1. IPR in general, and particularly the patenting and licensing process

2. Market research

3. Business strategy

4. Commercialisation grants

5. Fundraising

6. Negotiation

Don’t be fearful of barriers that a TTO might put in your way – which they do have a reputation for! The processes or administrative burdens they highlight must be viewed in the context of what you are trying to do here, which is to build a company worth tens (if not hundreds) of millions of pounds by irrevocably transferring ownership of university IPR to a new company. This needs to be done right, and doing it right takes time.

Because you are essential to driving this venture forward, the TTO won’t stand in your way if you demonstrate that you know what you’re doing by being proactive, drawing upon their skills when necessary and keeping them informed. They may tell you what the barriers are, but they didn’t create those barriers and their job is to help you overcome them (or to help you realise that you never will). Treat them as a teammate rather than a gatekeeper, and get them on your side so they can unlock certain doors.

For TTOs, spinning out is part of a risk/reward strategy. They don’t always want to do it, as academics are often ill-equipped to build a business. The potential reward may well be high in financial returns and case studies, but the risk is high in that the potential to succeed is fairly low. They will likely look to safer commercialisation strategies instead as a first recourse, targeting the low-hanging fruit, which is precisely what TTOs are doing through licensing. There is sound logic to this approach, especially when operating at scale within tight budgetary constraints.

Unite your team

At its simplest, spinning out requires you to take these three disparate stakeholders groups with competing interests and turn them into a unified team. The sooner and more firmly all parties can align on the core aim of creating a successful spinout, the higher the chances of success. Securing such alignment should be your top priority, and respecting each other’s motivations and input is a crucial first step.

The diagram below summarises the results from the survey, notably that the three stakeholders do not always see each other in a positive light. Click on the ‘+’ to see each perspective. The extent to which perspectives are justified and who is correct is irrelevant; just be aware of tensions and conflicting motivations, and the need to tread carefully.

At its simplest, spinning out requires you to take these three disparate stakeholders groups with competing interests and turn them into a unified team. The sooner and more firmly all parties can align on the core aim of creating a successful spinout, the higher the chances of success. Securing such alignment should be your top priority, and respecting each other’s motivations and input is a crucial first step.

Approaches to commercialisation

There are currently around 160 spinouts a year in the UK, which is about the same as the number of UK universities, although some produce several spinouts per year and others produce less than one a year. Although we would like the total figure to rise, in practical terms even a tenfold increase would mean spinouts are relatively rare considering there are 275,000 university researchers generating 62,000 university licensing deals. Outside of the university sector, over 810,000 new companies are registered in the UK every year. At the start of 2021 there were 5.6 million businesses in the UK, 5.5 million of which had fewer than 50 staff.

While spinouts are incredibly rare, they are also hardy. The oft-quoted statistic that 90% of companies fail in the first five years paints a pessimistic picture, but for spinouts the reverse is true, with nearly 90% making it to 5 years. That is of course predicated upon successfully navigating through the spinout process in the first place, which as will be seen later is where the majority fail. Taking the failures to launch into account, the failure rate of initial plans to spinout is fairly close to 90%. This is a difficult path to choose, but that’s not to say you shouldn’t take the risk.

“Spinout founders should not fear failure as much as they do. In the biographies of the founders of successful companies, one will always find examples of failures. It’s just part of the risk we all face.”

Academic entrepreneur, successful spinout to trade sale in six years

Image: © This is Engineering

For universities, licensing is by far the more common approach to commercialise research innovation. If your motivation to spinout is ‘to get the technology used’, then licensing is generally the best course of action (see caveat below). Licensing shouldn’t be seen as a lesser route to be avoided, because it’s the standard practice central to technology transfer. This is an area your TTO will have a lot of expertise in and is best placed to cover, so this handbook won’t go into details as to the ins and outs of it. You should speak to the TTO if you require more information, and certainly as soon as any potential partners express an interest in licensing your innovation.

Licensing is particularly common in certain sectors, such as pharmaceuticals, manufacturing, automobiles, chemicals, and energy generation where both the set-up costs and expertise requirements are exceptionally high. It can create a steady income for the university and reward the staff involved, gaining global implementation quickly while minimising risk.

When is it appropriate to spinout?

There are many answers to this question, but ultimately only one matters: when it is the best way to get the technology into use. There are other ways to make money if that’s your motivation, and other startups to get involved in if that excites you.

So what determines if it is the best way or not? What really counts is whether a great technology will be left unused if you don’t make it happen. If licensing isn’t practical, with little funding to support product development at universities, spinouts are the final option as a vehicle for raising the money you need to develop that technology to the point at which it can be marketed to customers.

“The commercial opportunity and market should determine whether a spinout or license approach (or both) are used. The commercial development and success of the product or service in the marketplace determine the level of returns or rewards to university or individuals. Too little effort and emphasis is placed on supporting the downstream commercial enterprise post-license deal or post-formation of the spinout.”

Retired academic entrepreneur who has spun out or started up three companies

If you’re reading this wanting to know how to spinout, you’re arguably asking the wrong question. Your aim should not be to spinout at all – instead, ask how the technology can be best put to use, as widely as possible. If an existing company can take on your tech and successfully deploy it, using their existing know-how, supply chain and resources, this relatively quick and easy option is almost certainly the best route to go down. If you find your TTO is resisting your desire to spinout, they’re probably being practical rather than difficult.

Spinning out is more suited to when there are no existing suitable partners to license to (because those in the sector wouldn’t know how to deliver the technology at scale), or if there is no pre-existing market to sell to (because the customer doesn’t even know they want it yet). In these scenarios, you have to create the interest in it and create the ability to deliver the technology at scale.

It might seem a counterintuitive stance for this guide to take, but spinning out really should be the option of last resort.

“There are three drivers for academic entrepreneurs in my experience: money, a deeply-held wish to see their product in the market, and self-glorification. The latter is to be avoided at all costs. The first two drivers are legitimate and powerful.”

Investor with over 40 years of investing experience, 20 years of which have been focused on university tech



Major stakeholder groups

What is IP, how to protect and commercialise it

Why spinout

A founder’s Guide to Spinouts, Imperial College London

Imperial FAQ guide

When is spinning out appropriate


You can download a PDF version of the Handbook here.


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