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University Software Spinout Credibility Guidelines

June 21, 2024

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A global collaboration has recently unveiled guidelines aimed at increasing the number of software spinouts originating from universities. The TenU collaboration, in partnership with investors and professional services firms, has introduced an expert guide designed to facilitate the swift and efficient establishment of software spinouts based on cutting-edge university research.

The guidelines, outlined in the USIT for Software Guide, propose that university technology transfer offices (TTOs) should consider taking a modest equity stake of 5-10% in software spinouts, with royalty levels varying between 0-2% depending on factors such as intellectual property and resource costs. This standardized approach to negotiations is intended to streamline the process, particularly for those who may be less experienced in such matters.

TenU, representing the technology transfer offices of prestigious institutions like MIT, Stanford, Imperial College London, and others, acknowledges the distinct characteristics of software spinouts. These ventures often involve design tools and exhibit shorter development cycles, lower initial funding requirements, and a demand for rapid growth in a competitive market.

Software businesses thrive on customer engagement, understanding market needs, and leveraging technical advantages to deliver superior performance. The distribution of value between intellectual property and customer interactions influences the equity stake held by founders, underscoring the unique nature of software spinouts.

According to Ana Avaliani from the Royal Academy of Engineering, maximizing the impact of university research is vital for bolstering the UK's reputation as an innovation hub. The USIT for Software Guide exemplifies the commitment to fostering collaboration between universities, investors, and founders to drive the success of spinouts and benefit the economy and society.

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