At Newcastle University, our company creation team works to transform research discoveries and innovative ideas into new companies.
Why might a university get involved in creating companies? It doesn’t seem like a natural thing for a university to do.
But the fact that universities don’t behave like businesses is exactly why we sometimes need to create companies to take research discoveries forward.
To understand why, we need to take a step back.
When undertaking research, universities often work with a mix of business, other researchers, community groups and policymakers.
When a discovery is made that could be useful in the wider world, there are a number of different routes that our teams can take. This is often referred to as 'pathways to impact'.
It's not always a neat, linear process. Sometimes we need to work with policymakers. Sometimes we need to license our discoveries into existing companies. And sometimes the best pathway is to create a new company.
This is called a spin-out company. Its product or service is based on intellectual property developed from university research.
Academic research + professional support =
new company + growth potential
While spinning out and growing a business can be hugely rewarding, it requires skills that are not typically part of academic training.
The company creation team that I lead bridges the gap, offering expertise in governance, investment, and leadership development to ensure these companies thrive.
Establishing governance, attracting investment and building a leadership team are all fundamental to spin-out creation and survival.
This is why our team exists, identifying potential spin-outs, supporting their creation, and helping them onto a trajectory of growth and achieving sales.
There are three key components to the team’s work:
- Creating a value proposition:
To succeed, spin-out companies need to be really clear about what it is they offer, why it is good, and who the customers are. Without a critical, commercial outlook, the company will most likely fail. - Leadership:
Academic founders of spin-out companies are unlikely to have the experience needed to lead business planning, investment and contract management. Supporting the appointment of experienced executives into the spin-out is an important role for the company creation team. - Fundraising:
The company creation team prepares spin-outs to pitch to angel investors, seed investors, and venture capitalists.
Collaborating for success
Another important role that my team and I have is helping researchers, investors, and experienced executives to work together. A spin-out will normally need all three skillsets, but each comes with its own motivations, ambitions, and expectations. Developing understanding and empathy takes time but creates a strong foundation upon which the spin-out can build.
Our approach has resulted in having 37 active spin out companies. They've attracted £35million of investment in the last two years. Their combined turnover is £20million and they've created more than 300 jobs.
Our company creation team also works with peers in other universities.
We’re a founding member of the Northern Accelerator programme – a collaboration between Durham, Newcastle, Northumbria, Sunderland, Teesside, and York Universities. The programme has accelerated the commercialisation of innovation, and greatly boosted our region’s economy through creating high-quality jobs and attracting significant investment here in the North East of England.
Building an innovation ecosystem
Where spin-outs are created, change happens.
At the heart of every spin-out company are talented individuals—researchers, innovators, and entrepreneurs—driving transformative change. By fostering these connections, we’re not just building businesses; we’re building a vibrant innovation community.
That community helps to attract and retain talent such as researchers, scientists, innovators, and business leaders. With the growth of local talent comes an exciting culture of dynamism in the region, sparking interconnected clusters of innovation around the university and the region.
These clusters attract attention from media and industry, and frequently lead to other regional organisations benefiting from knowledge spillover, too. Knowledge spillovers – the unintentional transfer or technical knowledge between companies – are helpful contributors to economic growth. They can occur between firms in the same or different industries. As their impact ripples out, innovation and development occurs in unexpected ways.
Many universities are part of the development of innovation districts and science parks. These are important developments for the spin-out ecosystem. They often provide facilities and/or support programmes that can help fledgling knowledge-intensive businesses. They also have a clustering effect for spin-outs and other research-rich enterprises.
The Newcastle Helix innovation district is a key part of the Newcastle spin-out ecosystem.
Science and technology superpower
The UK Government identifies universities as a pivotal part of its ‘science and technology superpower’ goal. Spin-out companies have an important role to play in achieving that goal, contributing to economic growth and productivity.
In March 2023, it launched a review to explore how the UK can better utilise the work of university spin-outs to boost economic growth, and ensure spinouts go on to become global business titans.
The review reported a year ago, making a wide range of recommendations. These ranged from moving towards innovation-friendly university policies that all parties – including investors – should adhere to, to the Government increasing funding at the proof-of-concept stage and developing confidence in the concept prior to spinning out.
We have adopted all of the spin-out review's recommendations, joining 48 other universities as early adopters.
A founder-friendly, investor-friendly policy at Newcastle University
At Newcastle, prior to the review’s recommendations, our approach to spin-outs had been to take a relatively high initial ownership stake, expecting to dilute as the company grows.
We’ve now adjusted our approach to fall in line with the review’s recommendations. Most notably, we have reduced our initial ownership stake – from 40% to 25% - stake in spin-outs to align with investor expectations. This allows us to increase the equity available to management teams.
We’re continuing our support of up to £15,000 of patent costs and affording academics working with the spin-out 0.2FTE at no consultancy cost for the first 12 months.
These changes will, we hope, further develop our spin-outs as investable propositions whilst also providing the support that’s needed to get the company going.
Could you be next?
Are you interested in investing or partnering with one of our companies? Or might you like to join us as an experienced executive who can support a company’s growth?
Our company creation team has extensive, hands-on experience of creating and successfully managing new businesses.
We’re always on the lookout for investors, advisors, business experts, and academics who can work with us and our exciting portfolio of world-changing companies.
Email our Head of Company Creation, Rick McCordall for more information.
You might also like
- explore our list of current spin-outs and the work done by our company creation teams
- find out more about the Northern Accelerator programme
- read the UK Government’s independent review of university spin-out companies
Header image: a tiny, manufactured component produced by one of our spin-out companies. Microbritt uses a patented technology to micromachine brittle materials for electronic circuitry and microfluidic devices. (Image credit: Microbritt)