Ask how much of a spinout the university keeps and the short answer is: less than it used to. The average UK university stake at the point a spinout is formed is now around 18%, down from roughly 25% a decade ago, according to figures the Russell Group published in 2024. For software companies, the USIT guidance from the TenU group of research universities goes further and recommends a university stake of just 5-10%.
Those numbers are guidance and observed practice, not rules. But the direction is unmistakable, and it matters to anyone who reads a spinout cap table, whether as founder, employee or investor. Here is how the equity bargain works, where the numbers come from, and why they keep moving down.
The university's stake has fallen by about a quarter in a decade. That was policy, not accident.
What a university spinout is, and the bargain at its heart
A university spinout is a company formed to commercialise research done inside the university: a drug candidate, a new material, an algorithm, a device. The intellectual property usually belongs to the university, because the work happened on its payroll and in its labs. To get that IP out into a company, the founders strike a deal with the university's technology transfer office (TTO), the in-house team that handles commercialisation.
The standard bargain is IP for equity. The university assigns or licenses the patents and know-how to the new company, and in exchange takes a slice of the founding share capital, sometimes with a small royalty on future sales as well. The academics who did the research take founder equity alongside it, and outside investors buy in later at whatever valuation the company can command.
So the university's percentage is set before any money arrives. It isn't bought with cash; it's the price of the IP, the labs and the institutional support. That is exactly why the number is argued about so fiercely. Every point the university keeps comes out of the founders' side of the table on day one, and shapes what investors find when they arrive.
The number: around 18% on average, and falling
The most-cited benchmark comes from the Russell Group, which reported in 2024 that the average university stake in a UK spinout had fallen to about 18%, from roughly 25% ten years earlier, with many of the leading research universities now doing deals in the 5-15% range.
Sitting behind that shift is the USIT guide: University Spin-out Investment Terms, produced by TenU, a collaboration of ten research-intensive universities from the UK, US and Ireland, working with venture investors. The original guide, published in 2023, set out a starting range of 10-25% university equity for life-sciences spinouts. A follow-up, USIT for Software, published in May 2024, recommends that universities take only 5-10% in software spinouts, leave founders with 90-95%, keep any royalty between 0% and 2%, and drop anti-dilution protections before the first investment round.
Treat all of these as what they are: dated guidance and observed practice, not statute. No law fixes a university's stake. Each institution publishes its own policy, the numbers above shift as new data lands, and a capital-intensive deep-tech deal still tends to sit at the higher end while software sits at the lower one.
Why stakes are falling
The fall is the result of a deliberate, traceable reform push rather than market drift. In November 2023 the government published the Independent Review of University Spin-out Companies, led by Professor Irene Tracey, Vice-Chancellor of Oxford, and the venture investor Dr Andrew Williamson. The review heard, repeatedly, that large university stakes were slowing deals down and putting off both founders and the investors they needed. The government accepted its recommendations in full, including a push towards founder-friendlier terms and more transparency about what each university actually takes.
Competitive pressure was working in the same direction. UK spinouts raise from the same investors as everyone else, and US universities have long taken smaller positions; a founding team carrying a heavy institutional shareholder can simply look less fundable next to a clean cap table. TenU's USIT work gave universities a shared, public reference point for cutting their asks without each TTO having to renegotiate its policy alone.
The result is the trend in the table above. Universities still take meaningful equity for genuinely IP-heavy ventures, but the default has moved from a quarter of the company towards a tenth or less of it, fastest of all in software.
The capital following spinouts
Falling stakes are one half of the spinout story. The other is that dedicated capital has been forming around universities, much of it outside London, which is part of the regional rebalancing The Carry has written about.
Midlands Mindforge is the clearest example: a patient-capital investment company co-founded by eight research universities in the Midlands (Aston, Birmingham, Cranfield, Keele, Leicester, Loughborough, Nottingham and Warwick), set up to raise as much as £250m for spinouts and IP-rich companies from the region. It moved into its investment phase in 2026, with its first cheques going to spinouts in antenna technology, drug delivery and water sensing.
At the earlier end sits Creator Fund, a pre-seed investor that places venture fellows inside roughly 30 universities across Europe to find scientific founders before they have a pitch deck. It has raised around £42m for its latest fund, with backing that includes German and Danish state investors.
Both are illustrations of where the market is heading, not endorsements of either firm. The point for a reader is structural: more institutional money is now organised specifically around getting research out of universities, and that money negotiates over the same equity terms this piece describes.
Reading a spinout deal, and a note on what this isn't
For a founder, the practical use of all this is ordinary, well-documented negotiating power: the USIT ranges and the review's findings are public, so a TTO asking for a third of the company in 2026 can fairly be asked why. For an investor looking at a spinout round, the university line on the cap table is one input among many: how big the stake is, whether a royalty sits on top of it, whether any anti-dilution rights survive, and how the whole package squares with the valuation being asked. None of those facts decides a deal on its own; they tell you how much room the founders and future rounds have left.
And the usual caveat carries extra weight here. This piece is general information, not financial advice and not a steer towards or away from spinout investing. Spinouts are early-stage companies and can fail completely; university terms differ by institution and by deal, and the guidance keeps being revised. Check the current USIT documents and the university's own published policy, confirm any figures at GOV.UK, and take FCA-regulated advice before committing capital.
Frequently asked questions
What is a university spinout?
A company formed to commercialise research done inside a university, such as a drug candidate, a new material or an algorithm. The university usually owns the underlying intellectual property and licenses or assigns it to the new company through its technology transfer office, taking equity (and sometimes a small royalty) in exchange. The researchers take founder equity alongside, and outside investors come in later.
How much equity does a UK university take in a spinout?
On average, around 18% at formation, down from roughly 25% a decade ago, according to Russell Group figures published in 2024. Many leading universities now agree stakes in the 5-15% range. There is no fixed rule: each university sets its own policy, and IP-heavy deep-tech deals tend to sit higher than software.
What does the USIT guidance recommend?
The USIT guide, produced by the TenU group of research universities with venture investors, set out a starting range of 10-25% university equity for life-sciences spinouts. Its 2024 software supplement, USIT for Software, recommends a university stake of 5-10%, founders keeping 90-95%, royalties between 0% and 2%, and no anti-dilution provisions before the first investment. It is guidance, not law, so check the current documents.
Why are university spinout stakes falling?
Mainly because of a deliberate reform effort. The government's 2023 Independent Review of University Spin-out Companies found that large university stakes deterred founders and investors, and its recommendations were accepted in full. The TenU USIT guides gave universities a shared benchmark for lower stakes, and competition for venture investment, including comparison with US universities that take smaller positions, pushed the same way.
Are university spinouts a good investment?
That is not a question this article can answer for you, and The Carry does not give financial advice. Spinouts are early-stage companies that can fail completely, and terms vary widely by university, sector and deal. If you are considering one, read the cap table and licence terms carefully, confirm the current guidance and figures at GOV.UK and the university's own policy, and take FCA-regulated advice first.