The report, Academic to Entrepreneur: Unlocking the Potential of UK Spinouts asserts that Professor’s Privilege – a model that allows academics to retain full ownership of their research – would better incentivise academics to commercialise intellectual property they develop. Under the current system, universities often take substantial equity stakes in ideas developed by their academics, which can make it challenging and less attractive to raise follow-on investment.

Professor’s Privilege was the default in many European countries until around 2000 – when a push by the OECD to emulate the US model of spinout creation led to its widespread abandonment. But analysis of outcomes for spinouts in countries that removed Professor’s Privilege – including Denmark, Germany, Austria, Norway, and Finland – shows a significant decline across the board in patenting and commercialisation of academic ideas. By contrast, Sweden – a country which retained Professor’s Privilege – has in fact seen a higher rate of academic entrepreneurship than even the US in the period since other countries switched to a US-style model of university ownership of intellectual property.

Meanwhile, analysis of UK startups spun out from universities between 2010 and 2021 shows that startups’ likelihood of raising venture capital funding – crucial for their growth in the early stages before they are generating reliable revenues and able to be self-sustaining – decreases as the equity stake taken by the university in their underlying intellectual property increases. The analysis also revealed that more spinouts are created overall when universities reduce the equity stakes they take.

“The UK boasts an impressive portfolio of spinout firms, but it is generally accepted that we could be  doing even better – especially when it comes to growing them to a truly massive scale,” said Dr Anton Howes, Head of Innovation Research at The Entrepreneurs Network and one of the report’s co-authors. “While Tech Transfer Offices can play an important role in the commercialisation process, they shouldn’t be above scrutiny. A wealth of evidence suggests that giving academics more control of their intellectual property would not only better incentivise them to create spinouts, but ensure that they remain attractive to future investors later down the line too. We shouldn't be ashamed to learn from best practice abroad to make the UK the number one place to start and grow a spinout.”

Other criticisms of Tech Transfer Offices (TTOs) – the bodies within universities responsible for commercialising academic ideas – include the slow pace at which they operate and the lack of choice academics have regarding which one to work with. “Currently, academic founders are tied to engaging with the TTO attached to their ‘home’ university, irrespective of whether or not its strengths and expertise align with their idea. This puts academics on the back foot right from the off – but in addition, academic entrepreneurs told us time and again how they faced lengthy waits for TTO decisions, while their competitors in other countries were securing funding and surging ahead. If we want to become a science and technology superpower, it’s imperative we pull out all the stops to empower academic entrepreneurs in putting their ideas into practice, in the form of a spinout company,” said Eamonn Ives, Head of Research at The Entrepreneurs Network and another co-author of the report.

Rather than calling for the outright abolition of Tech Transfer Offices, however, The Entrepreneurs Network proposes a more open, competitive approach. Academics should be able to “shop around” and engage with the Tech Transfer Office of their choice to commercialise their ideas. This competitive pressure would, the reports authors argue, drive Tech Transfer Offices to develop greater expertise and specialism to attract the best – and best-matched – ideas. Ultimately, the authors believe this would increase the likelihood of useful academic research making its way out of the lab and into the real world.

The Entrepreneurs Network’s report coincides with the Treasury and the Department for Science, Innovation and Technology’s ongoing Spinouts Review, as the Government – prompted by sustained campaigning through the media by investors and founders and organisations like The Entrepreneurs Network – looks to unblock the pathway to commercialisation and global scale for spinouts.

“The Spinouts Review is a welcome opportunity to set the UK on the right course and ensure that ideas developed within our universities play their rightful role in our journey towards being the ‘science and technology superpower’ the Government wants us to be. Britain’s potential is abundant, but currently stymied by a model that simply isn’t fit for purpose. We need to put brilliant individuals who develop cutting-edge ideas in the driving seat, and empower those individuals to seek the most appropriate support for commercialising those ideas,” said Howes.