Royal Academy of Engineering launches new Entrepreneur’s Handbook for spinouts
The Royal Academy of Engineering’s Enterprise Hub has published a new Entrepreneur’s Handbook to support founders of spinout companies.
Spinout companies represent just three per cent of high-growth businesses in the UK, with only 1,628 spinouts formed since 2011, according to Spotlight on spinouts: UK academic spinout trends, a report published by the Royal Academy of Engineering Enterprise Hub and Beauhurst. While half of all startups only last five years, the average age of a spinout is almost nine years. Spinouts attract higher-than-average equity investment and grant funding and contribute to local economic growth and employment opportunities.
The new Entrepreneur’s Handbook is designed to help aspiring academic entrepreneurs to understand and navigate the challenges to spinning out. The new Handbook offers practical guidance on several topics relevant to academic entrepreneurs, from forming a business idea to securing investment, including:
- Guidance on the length of the spinout process
- Approaching and negotiating with universities and investors
- Market research, business plans and financial assessments
- Growing the company
The Handbook also shares insights from surveys with Enterprise Hub Members, academic entrepreneurs, Technology Transfer Officers and investors to provide greater clarity on the process for spinning out a company, including:
- Technology Transfer Offices receive an average of 17 approaches from aspiring entrepreneurs a year and only 15% successfully spin out.
- Aspects of academic life were the barriers to spinning out most frequently cited by academics – such as lack of time and balancing workloads between spinout activities, teaching and research.
- Nearly half of surveyed spinout founders left academia to work solely on their spinout. Of these, 89 per cent subsequently returned to academia.
The Entrepreneur’s Handbook follows the second annual Spotlight on spinouts report published in April 2022, which found that investment in spinout companies almost doubled in 2021 with a record £2.54 billion equity investment raised. These figures for spinout investment marked a return to expected investment cycles following the macroeconomic challenges resulting from Covid-19 and Brexit.
Both the Entrepreneur’s Handbook and Spotlight on spinouts report aid the Academy’s objectives to inform wider debate about the UK spinouts landscape and build upon the Enterprise Hub’s work to support spinouts and entrepreneurs. The Academy aims to support innovation further by hosting a series of workshops to encourage further conversation among the spinout community.
Dr David Cleevely, CBE FREng, Chair of the Royal Academy of Engineering Enterprise Committee, said “Investments in spinout companies are at record levels. Academic entrepreneurs add immense value to UK engineering, enterprise and local economies, and we need to invest in them as well. We are doing this by helping them to understand what is involved. We hope that this new resource demystifies the spinout process, helps founders to navigate the challenges of starting a new business, encourages the creation of more spinout companies, and will make them even more successful.”
Florence Gschwend, Enterprise Hub Member and co-founder and CTO of spinout company, Lixea, said “It’s great to see the Royal Academy of Engineering’s Enterprise Hub expanding its resources and support for academic entrepreneurs wishing to commercialise their ideas. After receiving amazing support from the Enterprise Hub to develop my own business, which provided me with mentoring and other opportunities that I needed to start my venture, I know that the Entrepreneur’s Handbook will prove an invaluable reference for those looking to spinout.”
The Enterprise Hub was formally launched in April 2013. Since then it has supported more than 290 researchers, recent graduates and SME leaders to start up and scale up businesses that can give practical application to their inventions. It has awarded over £11 million in grant funding, and Hub Members have gone on to raise over £800 million in additional funding.
