King’s increases equity stakes for academic founders

King’s College London has announced an overhaul of its equity system for spinout companies, with the intention of establishing a “more transparent and founder-friendly approach.”

The university will take a stake of between zero and 15 per cent of spinouts, with a standardised process depending on the type of technology being commercialised, in a more granular and precise way than is generally the case in many university equity policies, despite the recent overhauls these have seen since the 2023 independent review.

The new IP-sensitive approach will see the university’s equity position vary as follows:

• Social ventures, including not-for-profits: Zero per cent
• Non-patentable software and digital ventures: Five per cent
• Patentable non-pharmaceutical technologies (such as engineering innovations, medical technologies, robotics and advanced materials): Ten per cent
• Pharmaceutical technologies: Fifteen per cent

The change is said to reflect the “growing sector consensus” around the importance of giving founders a larger stake. King’s assistant principal for innovation Sebastien Ourselin argues that this will help attract entrepreneurial talent and strengthen the incentives for long-term company growth.

The announcement references the USIT Guide for Software, which recommended that universities take between five and ten per cent of equity in software-based spinouts, as well as the recommendations in the government-sponsored Independent Review of University Spin-out Companies, which called for stakes of between 10 per cent and 25 per cent in life sciences spinouts.

Research England previously maintained a (UK-wide) list of those higher education institutions which had adopted the voluntary commitments in the independent review, though it is no longer proactively kept up-to-date. There remains some variation around the sector: for example, the University of Oxford’s spinout equity policy mandates an 80:20 split in most cases, with a 90:10 split in cases involving software, or students commercialising university-owned IP, while the University of Southampton’s latest guidance provides for the university to take ten per cent equity in knowledge-intensive spinouts and five per cent equity in software spinouts.