Policy paper

Independent review of university spin-outs: Terms of Reference

Published 9 March 2023

The UK university sector is a world-leader with four of its institutions ranked in the world’s top ten universities. UK universities are also globally competitive on research commercialisation with Cambridge, Oxford, and Imperial College the second, third and fourth respectively in the world in terms of the number of deals in their spin-outs between 2013 and 2017. There has been a five-fold increase in UK university spin-out investment from £960 million in 2014 to £5 billion in 2021. There is, however, room for improvement, including the number of deals reached and value of investments raised to close the gap with the US.

University spin-outs are critical to the UK innovation ecosystem and have an important role to play in delivering the government’s ambitions for the UK to become a science superpower capable of nurturing the world’s next Silicon Valley. The Chancellor of the Exchequer and Secretary of State for Science, Innovation and Technology have therefore asked Professor Irene Tracey and Dr Andrew Williamson to lead an independent review of how UK universities spin-out companies to ensure that the right incentives are in place for the UK to lead the world in turning university research into commercial success.

This independent review will look at the distribution of performance across universities to identify best practice in university spin-outs and licencing deals. This will include comparing approaches in the UK to those of other world leaders such as the US, as well as looking at how approaches vary across the UK. The review will inform policy making to ensure that the UK continues to seed and grow innovative companies of the future and will build on existing evidence from previous studies of UK spin-outs.

• The review will begin on 9 March and will end in the summer. It will:

a) Compare the role universities play in the establishment and subsequent development of spin-outs across the UK and other leading jurisdictions such as the US, acknowledging that institutions that operate in different environments may vary their approach to commercialisation.

b) Consider differences in the process involved and the time it takes to spin-out companies and agree licensing deals with institutions.

c) Examine approaches to intellectual property and equity, assessing the relationship between equity retained by universities and on-going support provided by institutions to companies that are spun-out.

d) Evaluate the role of angel and venture investment in supporting early stage growth of spin-outs.

e) Assess any barriers academics experience in pursuing commercial interests alongside their academic work.

• Based on the evidence gathered, the review will provide recommendations for government policy and for institutions aimed at ensuring the incentives are in place to maximise the gains from university spin-outs, and increasing the economic contribution of spin-out companies to local areas and the UK as a whole.
• A report will be delivered to the Chancellor of the Exchequer and Secretary of State for Science, Innovation and Technology.

Collaboration and consultation will form an essential part of the review. The reviewers and supporting team will partner with relevant stakeholders, including through informal advisory group(s), to understand the views of a wide range of investors and founders in producing the review.