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Equity stakes taken by universities increase despite spinout review

universities stakes
Image credit: 4kclips / Shutterstock

The average stake taken by UK universities in spinout companies increased over the last year, despite government-backed recommendations.

According to the 2024 Spotlight on Spinouts report from Beauhurst and the Royal Academy of Engineering, the average equity stake taken by universities in companies formed by students and staff grew from 19.1% to 22% over the last year.

This is in spite of the spinout review, commissioned last year by the Treasury, which urged universities to reduce equity taken in spinouts.

The review recommended universities take 10% stakes in less “IP-intensive” spinouts and recommended taking between 10% and 25% for more IP-intensive companies.

According to Beauhurst’s research, equity taken by universities has, however, been fairly consistent across different company types.

The median stake in hardware companies is 21.7%, for software it’s 20% and for life science companies it’s 21.2%.

The highest mean stake taken by a university in its spinouts came from the University of Leeds, which averages at 43.3%.

Of the 22 universities listed in the Beauhurst and Royal Academy of Engineering report, half had average equity stakes at or higher than the upper limit recommended by the spinout review.

The report did, however, note that the mean stake taken by UK universities in spinouts had fallen 17.5% from 2014 to 2023.

Yesterday, the Royal Academy of Engineering announced the launch of Enterprise Hub Scotland, a Glasgow-based programme to support local tech entrepreneurs and encourage founders to spinout from universities.