A Short Guide to University Spin-outs

This short guide to university spin-outs will let you understand the process of spinning off a new company from a university.

University spin-outs are a great way for universities to commercialise their research and bring new products and services to market.

They involve spinning off a new company from a university, typically with a specific focus or technology.

In this guide, our focus is on university spin-outs, We will take a look at when's the best time to spin out, what to pay attention to, how tech transfer works, and what steps are needed to spin out.

First things first, let's see what is a spin-out.

Generally, a spin-out is a type of corporate structure in which a new company is formed and spun off from an existing company or university.

Spin-outs - are also known as spinoffs or starburst - typically focus on a specific technology, product or service that was previously developed within the university or parent company.

Such companies usually have their own management, employees, and owners (shareholders).

In the case of a university spinout, the university transfers ownership of the technology or product to the new spinout.

Spin-outs are useful tools for universities for three reasons.

First, it's a way for a university to commercialize a technology or product that is not aligned with its core mission.

Also, it is a way for the university to focus on a specific area and pursue separate strategy and business model.

Finally, the newly created company is usually independent and operates as a separate entity from the university. This allows the university to focus on its core missions while making additional profit.

It's worth noting that spin-outs differ from startups.

The university or company creates, manages and funds spinouts to develop new technologies or products. Startups are externally owned and managed, while technologies are licenced by universities to startups.

When considering spinning out a new company, it is important to consider the technology readiness level (TRL) of the technology or product being developed.

TRL is a measure of the maturity of a technology, from basic research to commercial application.

A new company spins out when the technology or product reach a high TRL.

Usually, this means TRL 7 or above, indicating that it has been validated in a relevant environment and is ready for commercialization.

At lower TRLs project teams consume most of their resources on experimentation and research and development.

Spinning out at a high TRL allows the new company to focus on revenue generation and scaling up the technology or product.

A high TRL makes it easier to attract investors and partners, as there is less risk associated with the technology or product.

It is worth noting that spinning out at a lower TRL can be also a good idea.

This is mostly the case if the university can't continue to develop the technology or product.

In this case, spinning out the company allows others to continue with the commercialization.