Research Professional News compiles advice from new Royal Academy of Engineering handbook for university spinouts
A new handbook from the Royal Academy of Engineering aims to support founders of university spinout companies on their journey to success.
The handbook offers guidance on a range of issues, from forming a business idea to growing the company once launched.
It comes at the time when investments in such spinouts are on the rise, the academy says, with a record £2.54 billion raised in 2021.
“The process you are about to embark on is complex and takes time,” David Cleevely, chair of the academy’s Enterprise Committee told prospective entrepreneurs. “Don’t assume it is obvious or common sense. The better you understand the map, the more straightforward your journey will be.”
Research Professional News has gathered a list of some of the top tips for academic entrepreneurs from the handbook:
1. Find a market first
Will people pay? The list of essential ingredients for a successful spinout is long, but first and foremost is the innovation itself or the intellectual property. It is important to consider whether the market wants it.
2. Approach a technology transfer office
You need to check what support your university can provide through their technology transfer office (TTO). Remember the university owns the intellectual property rights, so their approval is essential.
3. Learn the spinout process
There are two aspects to understanding the spinout process. First, you need to understand what the standard process is when there is no university involved. Next, you need to understand your university’s specific process. When asked about barriers to spinning out, 32 per cent of TTO employees and 16 per cent of investors referred to a lack of understanding or fear of the spinout process as being an issue.
4. Be aware that you can always spinout later
If the TTO suggests it is too early, don’t take this as a never. Ask for their advice on what might indicate it’s the right time in your specific case and build towards that. It is better to stay within the relative safety net of university employment for a little longer than to quit your day job too early.
5. Learn about business and the industry
You need to learn as much as you can about business in general, and the industry you will operate in. Investors will expect to see a demonstrated understanding and desire for you to keep learning.
6. Complete an intellectual property rights audit
It is important to assess whether the idea is novel. According to a TTO employee, a lot of PhD students come to them with inventions, and they discover that someone invented the technology 20, 30 or 50 years earlier. In one case, one of the first patents filed was in the 17th century, which covered similar work to that of the PhD student.
7. Assemble a quality team
While it is inevitable that you start off recruiting colleagues to assist in early stages, this rarely looks good to investors when they see a team of four academics with identical skillsets and backgrounds. Build a team from individuals with a broad range of complementary skillsets, backgrounds and experiences. Look outside your immediate network to identify sector experts, who can open doors to contacts and markets you will need access to in the future.
8. Negotiate on your terms
According to an academic entrepreneur, it is important to learn negotiation skills to handle investors, employees and the TTO offices and to ensure you understand the terms presented. It is a steep learning curve and feeling comfortable with the terms of engagement is crucial.
9. Build a rapport with investors
One investor the academy spoke to said that some academics “are in a dreamland or live in the belief that their academic excellence should allow them the same standing in the commercial world as they have in the academic world”. You need to understand that you are asking people to give you hundreds of thousands of pounds, if not millions. People do not give that kind of money to strangers, so you need to engage with investors early.
10. Don’t be seduced by a big cheque
According to a TTO employee, the best investments are not ‘dumb money’ or ‘best valuation.’ They are the ones where investors can truly bring their network, advice and high-quality management to the company.