Best practice in equity stakes for UK university spin-outs


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Research England (RE) has commissioned a desk-based study to inform policy making which will influence the continued evolution of practices within the university environment that ensure that exciting new business ideas are exploited and entrepreneurial researchers supported to make their journey from the lab to the market. The aim of the study is to identify good practice which could be beneficial across the sector, and to understand whether different approaches may be better suited to different situations.

This report (PDF) summarises existing practices used by selected UK Higher Education Institutions (HEIs) towards the division of equity stakes in spin-out companies, particularly the handling of share ownership between universities and academics. It also considers a wider analysis of how these policies on equity stakes relate to other aspects of commercialisation.

Recommendation from the report:

  • Universities should identify and plainly communicate their objectives for spin-out activities, as part of a clear and easily accessible IP policy, or in dedicated guidance on spin-out procedures.
  • Clarity is essential to set expectations and allow rational negotiations to take place between a university and the spin-out founders. This will also allow transparent and valid comparisons to be made between different universities. A minimum set of criteria to address is defined.
  • No single approach should be adopted across the sector. Every university and every spin-out will have different needs and aims; there are too many variables for a rigid standard approach to ever be effective.
  • Some approaches are simpler to understand and implement than others; universities should adopt the simplest practicable approach for their circumstances. In particular, it is essential that the university is explicit about whether it chooses to use an arms-length commercial licence alongside the university equity stake, or to take additional equity for a royalty-free licence or assignment of the university IP required by the spin-out.
  • Schemes which allow flexibility for more experienced founders may encourage spin-out activity; however, this type of scheme is likely to work best in environments with higher levels of spin-outs and high quality internal and external support for entrepreneurs.
  • Guidance for equity sharing between the university and founders should not be confused with the equity share to be allocated for incoming investment into the spin-out. Universities should avoid setting any expectations on equity shares for incoming investors.


  • Approaches to equity sharing (chapter 4)
  • Best practice and good exemplars (chapter 5)
  • Key terms of the equity sharing approaches taken by 23 universities (appendix 3)

Download the report (PDF)