Founder-friendly blueprint for boosting UK software spinouts

TenU - a partnership of world-leading technology transfer offices in the U.K., U.S., and Europe - has joined forces with a group of investors and professional services firms to launch a new expert University Spinout Investment Terms (USIT) guide for the speedy and efficient formation of software spinouts from cutting-edge university research.

A UK government commissioned Independent Review of the spinout sector last autumn found that UK university spin-out investment increased five-fold from £1.06 billion in 2014 to £5.3 billion in 2021. Successful technology firms include Oxford Nanopore, a spinout, successfully floated on the stock market, and Onfido, a startup, which achieved a recent buyout.

University spinouts transform world class research into companies that solve complex technology challenges that benefit society and our economies.

Professor Irene Tracey, Vice-Chancellor of the University of Oxford, said: 'Cultivating innovation from Oxford’s research provides an engine for growth, partnership and societal impact. With the launch of USIT Guide for Software, we are proud to have contributed to the advancement of the UK’s technology transfer sector, not only accelerating software spin-out processes, but also strengthening partnerships with our burgeoning investment community.

'USIT for Software underscores the University of Oxford’s commitment to provide our researchers and students with the tools and guidelines needed to compete globally and contribute to our local and national innovation ecosystem.'

The USIT Guide for Software recommends faster deals with less friction, built for rapid scaling.

It sets clear guidelines and terms to optimise the software spin-out process and includes a recommendation for universities to take between 5-10% equity in software spinouts, with no antidilution provisions, before any investment is raised.

The guide reflects the unique characteristics of software spinouts if compared with those in the life sciences and deep tech, including shorter development times, relatively low initial funding, and the need for rapid growth in a highly competitive, rapidly evolving market.

Mairi Gibbs, Interim CEO of Oxford University Innovation (OUI), said: 'At Oxford University Innovation we are committed to fostering innovation and streamlining processes that drive rapid and effective company creation. The launch of USIT for Software marks a further milestone in our efforts to expedite software spinout processes, as well as our dedication to providing clear and transparent recommendations to founders, investors, and universities.'

Adam Workman, Head of Investments & New Ventures at Oxford University Innovation, and contributor to the USIT for Software added: 'We want to grow our investment partnerships and this guide will help us to co-create new software companies using sector specific investment deal terms.'

The USIT for Software Guide is being launched at Mansion House during the TenU Innovation Summit attended by Andrew Griffith, Minister of State at the Department for Science, Innovation and Technology and Lord Peter Mandelson.

Discover Oxford University Innovation’s spinout companies here.

Read the USIT for Software Guide.

Read the USIT for Lifesciences Guide. (released April 2023)