University spinout equity stakes reach decade-low   – UKTN

The average stake held by British universities in their spinouts fell sharply in 2024 after encouragement from a government-sponsored review. 

Figures from the Royal Academy of Engineering and Beauhurst revealed that in 2024, the average university equity stake was 16%, down from 22% the previous year. 

Universities have been encouraged to take smaller ownership shares of startups formed by their staff and students to incentive commercial success from their pools of promising entrepreneurs. 

In 2023, a review of spinout businesses ordered by the Treasury was released. It recommended a lower limit of equity taken by universities of 10%, with an upper limit of 25% only for IP-intensive firms. 

That same year saw the average stake held by education institutions rise to 22% from 19.1% the year before. 

Now a full calendar year has passed since the review, it appears the bulk of universities have taken the reviews recommendations to heart, with a more equitable distribution of equity considered a key contributor for the future success of a spinout. 

The 16% figure represents a decade low for the metric, though it is still considerably greater than the spinout stake held by many of the most prolific spinout generators in the US, with institutions like MIT and Stanford typically taking around 5%. 

Paul Taylor, enterprise committee chair of the Royal Academy of Engineering said the drop was “encouraging” and “aligned with much of what we have long calle for as an independent advisory body”. 

“Tracking this progress will help us to understand how it will impact the founders we support, as well as how we will continue our independent contribution to the policy landscape.” 

Last year also saw investments in UK spinouts grow by 38%, reaching £2.6bn, while the wider equity market for British firms saw an investment decline of around 19%. 

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