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Independent review offers recommendations to improve university start-up ecosystem in UK

An independent review of university start-ups commissioned by the UK government has put forward a set of recommendations to accelerate the country’s university start-up ecosystem.

According to the authors, the recommendations aim to help guide the UK towards a “desired end state” in which universities partner with their local start-up ecosystems to prioritize the rapid creation of new ventures, and researchers are encouraged and better equipped to bring their innovations to market largely as a result of their university’s entrepreneurship culture and resources.

The review examines some of the most successful university start-up ecosystems in the world to identify best practices and discover opportunities for the UK to improve its own ecosystem.

Among the most controversial issues address by the authors are the spin-out deal terms between founders, investors and universities, which has been a topic of hot debate in the UK where university equity stakes are generally larger than in the U.S. According to the review, while spinouts can occasionally provide a revenue source for universities, it is generally a modest and unpredictable amount, and therefore start-ups should not be treated as a central revenue source—essentially implying that universities should keep less of the revenue generated by start-ups, as many UK entrepreneurs have argued.

“It is important that some of the licensing revenue from a spin-out is returned to academic IP inventors and departments to incentivize academics to commercialize their research, and to help the university support the next generation of spin-outs,” the review states.

Here are the key recommendations put forth by the authors to help advance the UK’s start-up ecosystem:

  1. Accelerate towards innovation-friendly university policies that all parties, including investors, should adhere to where they are underpinned by guidance co-developed between investors, founders, and universities.
  2. More data and transparency on spin-outs through a national register of spin-outs, and universities publishing more information about their typical deal terms.
  3. HEIF [the UK’s Higher Education Innovation Fund] should be used to reduce the need for universities to cover the costs of technology transfer offices (TTOs) from spin-out income.
  4. Create shared TTOs to help build scale and critical mass in the spin-out space for smaller research universities.
  5. Government should increase funding for proof-of-concept funds to develop confidence in the concept prior to spinning-out.
  6.  In developing the ‘engagement & impact’ and ‘people & culture’ elements of REF 2028, the four Higher Education Funding Bodies should ensure that the guidance and criteria strongly emphasize the importance of research commercialization, spin-outs, and social ventures as a form of research impact
  7. Founders need access to support from individuals and organizations with experience of operating successful high-tech start-ups, regardless of the region founders are based in or sector they operate in.
  8. UK Research and Innovation (UKRI) should ensure that all PhD students they fund have a voluntary option of attending high-quality entrepreneurship training and increase the opportunities for them to undertake internships in local spinouts, venture capital firms or TTOs.
  9. Recognizing the important role that university-affiliated funds have played in helping spin-outs from some regions access financing, universities considering working with new affiliated investment funds should continue to ensure they are still able to attract a wider set of investors and encourage competition when agreeing such deals.
  10. Promote ongoing reforms to support scale-up capital, such as changes to pension regulations, and encourage the government to accelerate these efforts.
  11. Government should improve the provision of funds to enable movement or porosity between academia and industry.

Source: GOV UK

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