Understanding that success requires more than just good ideas, universities are partnering within innovation ecosystems, which are backed by Government to provide essential resources. With access to state-of-the-art facilities, staffing support, networks, and even funding, they are taking proactive steps to help academics transition into successful founders with agility and speed.

Historically, universities have often been criticised for overly restrictive and complex spin-out processes. However, the recent University Spin-out Investment Term (USIT) Guidelines represent a significant shift in how universities approach company creation and academic entrepreneurship.

By capping university equity at 20% and promoting the creation of employee option pools, these guidelines signal a more nuanced approach to supporting academic spin-out companies that differs from the previous model, where universities sought to take 50% equity.

The new USIT guidelines represent a strategic reorientation towards creating more founder-friendly and commercially viable ecosystems. One that the University of Liverpool, along with many others, has signed up for to encourage more academics to create innovative companies.

By changing the model to cap a university’s equity position at 20%, the guidelines dramatically increase the potential upside for academic founders and early-stage employees. This approach addresses a critical pain point in academic entrepreneurship – the perception that universities extract disproportionate value from innovative research.

What value do universities offer founders within their institutions?🔗

Intellectual Property (IP) support🔗

First things first, IP is not cheap, but often an IP portfolio can make a company appealing to a range of investors. Universities have dedicated teams that support IP Management and can advise academics on how best to protect their innovations which include:

• Conducting patent searches
• Filing patent applications
• Helping to manage the IP in the formation years.

If engaged early, the Technology Transfer Office (TTO) can ensure the right protections are in place, preventing any issues for the company once it begins receiving investment.Additionally, in the early stages, the university often covers costs while the company is still in formation and cannot afford the expenses associated with IP protection.

Company creation support🔗

When creating a company, the ‘boring’ aspects are often overlooked in the rush to get the company up and running. While it should not be the sole focus, poorly structured companies often face issues down the road. Early support to ensure that all necessary steps are taken can prevent problems from arising at critical moments in the future. For example – you do not want to get to an investment round only to discover that you do not solely own the IP on which your company is based.

Here are some of the basics a university will support spin-out companies with:

• Standard legal templates for company formation
• Guidance on compliance and regulatory requirements
• Support in navigating complex university policies around startup creation
• Conflict of interest management.

Facilities🔗

A typical company spinning out of a university is IP rich, and even when it formally spins out, it will still need to conduct further R&D. Universities offer world-class research facilities -—advanced laboratories, specialised equipment, and cutting-edge technologies—at substantially lower access costs compared to private research centres. This dramatically reduces capital expenditure and enables more cost-effective innovation and technology development, which in turn, increases your speed to market and potential for future investment.

Ecosystems🔗

A growing theme in the start-up space, ecosystems perfectly describe what universities have been at the epicentre of for years. They bring local partners, training programmes, networks, marketing, and investment together. All in all, universities are now positioned to navigate these ecosystems as they are often the largest or one of the largest partners within their region.

So, what makes up an ecosystem?

Entrepreneurship Training and Education🔗

Firstly, universities often provide Entrepreneurship Training and Education. They recognise that the tasks they are asking academic researchers to undertake are not part of their normal job and that they may lack traditional business skills.

As a result, universities have developed targeted training programmes, such as entrepreneurship courses specifically designed for researchers. Be that from in-house programs, such as Commercially Curious at UoL or national initiatives such as Innovate UK’s ICURe (Innovation-to-Commercialisation of University Research).

These programmes can significantly upskill founding teams, ensuring they have the skills to run a company within months of attending.

Networking and Strategic Partnerships🔗

You will read time and time again that one of the factors that can make or break companies early on is their lack of network and partnerships. This includes access to strong commercial partners, customers, NEDs (non-executive directors), or investors and funders. Universities focus on developing these networks, viewing them as long-term partnerships that align with their strategic goals of knowledge transfer.

Incubators and Accelerators🔗

The next critical stage is connecting to incubator and accelerator programmes, which can support spin-outs with specific challenges. Many universities are connected to national and sector-specific programmes, often having strong ties with the programme managers who know exactly how they can help your spin-out. Many universities have established comprehensive start-up support infrastructures too, that offer:

• Dedicated physical workspace for academic entrepreneurs
• Mentorship from experienced business professionals.

Funding and Investment🔗

Often founders hear about how easy it is to raise funds through venture capital, often citing US examples. While the UK is making massive strides to close the gap, accessing funding in the UK remains more challenging for start-up companies. This has meant that several universities have now created internal funds to support spin-out companies.

Access to university proof of concept and seed funding gives companies a strong footing to develop their initial idea and progress to further funding rounds. Additionally, there’s an increase in Seed and VC funds that work with universities on more deals as the sector moves to a standardised process. This has led to universities offering:

• Seed funding programs specifically designed for faculty-led ventures
• Internal grant competitions for translational research
• Matching funds to help academics secure external venture capital
• Developing relationships with venture capital funds and angel investors
• Organising demo days and showcase events to pitch to these funds.

Equity Stakes and Support🔗

If we look at the equity stakes universities take in companies in isolation, it could be seen to be negative. However, once you factor in the substantial support now made available to academic founders, it becomes clear that universities are committed to encouraging their academics to lead successful companies with their IP as the cornerstone of these businesses.

Remember, each university is different🔗

While there are emerging norms in the sector, every university has its own strategic aims, sector expertise and networks. As such, it is essential to do your own research to understand the internal workings and resources available.

Likewise, there is a misconception that a university will always be there to help the founding company. It’s important to understand that once your spin-out is created, you and the management team / board become responsible as it is a separate legal entity. A relationship may develop where the only time you engage with your founding university is when you need something, and you might be tempted to cast them into the dark when talking to new partners. This approach can lead to major delays in negotiations down the line. Avoid the mindset of “eaten bread is quickly forgotten”. Universities have extensive networks and may be familiar with your new partner, offering valuable support in developing the relationship.

Be prepared for longer approval timelines.🔗

As much as universities strive to streamline processes, there will always be some degree of bureaucracy due to their nature as public institutions. That is why TTO’s will always encourage you to keep them informed of any major updates. If they know well in advance that you need something they can factor it into their planning.

Spin-out companies often wait until the last minute to request something urgently when, in fact, they could have informed the founder institution weeks earlier. This last-minute approach can create tension between the TTO, the company and the partner. To avoid unnecessary delays and conflicts, try to plan ahead and keep the lines of communication open.