In a spin
The journal Times Higher Education has published an interesting piece on university spin-out companies. According to research done by an organisation called Spinouts UK, over the past 10 years UK universities were able to form well over 1,000 companies, mainly in order to commercialise the institutions’ intellectual property. The top performer in the list is the University of Edinburgh, with 244 companies, followed by the University of Cambridge with 139. On the other hand many universities did not produce any spin-outs at all, and a more typical number for those that did would be in the region of 5-10. My own university, RGU in Aberdeen, was able to spin out 12.
But what should we make of this? How important is it for universities to establish companies in order to develop their IP, and how successful is this likely to be? The answer is just a little ambivalent. For a start, in my experience universities often over-estimate the benefits of spin-outs. Companies are formed as part of a commercialisation drive, but most end up doing little or no business while still running up costs and complex corporate governance. Where universities want to commercialise intellectual property, the route of licensing the IP is normally the better option. But in any case, universities should not register and commercialise IP unless they are willing to defend it. In the early stages this can be an expensive business, so some funds need to be available.
On the other hand, injecting some commercial discipline into the exercise is good, and companies can serve a useful purpose – indeed not only in commercialising IP. But it is important that proper thought goes into these decisions, with an awareness of the implications. At the end of it all, the number of companies formed is not a useful performance indicator. Income generated is, but that must be measured over a longer timeframe. Universities also need to have a good sense of what risks are worth taking (and some risks are inevitable, and need not be a deterrent), and how to arrange for good management and governance of the entities formed.
I am a strong believer in commercialisation as a university strategic aim in appropriate settings. Spin-outs can be an important component of such strategies. But setting up dozens of companies on the back of vague business plans is not a particularly good way to go, and institutions should not see this particular league table as one where they must try to hit the top numbers.