Two years ago, founding a UK spinout company could mean handing over a third of it to your university before a single investor showed up. Today, that figure has nearly halved.
A Decade-Low Number, Two Years in the Making
According to the Royal Academy of Engineering's latest Spotlight on Spinouts report, built on Dealroom data, the average equity stake a university takes in a UK spinout company fell to 16% in 2025 - down from 25% just two years earlier, and the lowest figure on record.
This shift actually traces back to the 2023 Independent Review of University Spin-out Companies, led by Oxford Vice-Chancellor Irene Tracey and Cambridge Innovation Capital's Andrew Williamson, which recommended capping university stakes at 25% for IP-heavy life sciences spinouts and 10% or less for software. Both reviewers had skin in the game on opposite sides of the table, with Tracey overseeing one of the university systems that produces the most Oxford spinouts in the country and Williamson investing in them.
The government accepted all 11 recommendations.
TenU's USIT Guide gave universities a template to work from, and by 2024–25 the numbers had genuinely moved, the universities were then averaging 20% in life sciences and 14% in hardware, both inside the recommended range.
We should really pause on what that headline number hides, though.
Same Guidelines, Very Different Deals
Break the 16% average down by institution, and the spread is wide enough to matter. Cambridge spinouts are the most numerous in the country with, 144 VC-backed companies since 2010, ahead of Oxford's 129 and Cambridge's own average stake sits at 13% over the past five years.
Now that’s a pattern worth sitting with: the university producing the most spinouts in the UK is also one of the least demanding on equity, which undercuts any kind of assumption that more spinouts and higher university stakes go hand in hand.
Since a UK spinout company doesn't move from a lab bench to a cap table on its own, someone at the university has to agree to let it go on reasonable terms, and that's where Southampton is a useful case study in what actually moved the needle.
In May 2024, its technology transfer office cut its standard stake in IP-heavy spinouts from around a third to 10%, ending a decade-long policy.
“It's as much about incentivising founders as it is about satisfying investors, who tend to balk once a university's stake climbs past 20%.”— David Woolley, Head of Technology Transfer and IP, University of Southampton
That sort of instinct shows up in the outcomes. A UK spinout company now converts from seed to Series A at a much higher rate than the rest of the UK tech sector- 28.3% against 27.1% and pulls further ahead at later stages.
Some of that is down to the Higher Education Innovation Fund, which the 2023 review also flagged for reform, on the logic that universities shouldn't need to lean on spinout income just to keep their tech transfer offices running.
Beyond Oxbridge: Where the Value Is Actually Coming From
Deep tech is now doing most of the heavy lifting on the value side, as deep tech spinouts now make up over a third of VC-backed deep tech startups founded since 2019, up from around a quarter the decade before, and account for the overwhelming majority of spinout value created since 2010.
Oxford spinouts still dominate the exit numbers, but they don't really dominate everywhere.
Two 2025 exits make the case concrete, as Oxford Ionics, spun out of Oxford in 2019, and was then acquired by US quantum firm IonQ for $840 million. OrganOx, another Oxford-founded company, was bought by Terumo Corporation for $1.5 billion. Between the two of them, Oxford accounted for two of Europe's six billion-dollar-plus spinout exits last year, a sign that the reforms behind the review are starting to build a stronger innovation ecosystem, not just better paperwork
But the value isn't confined to the Golden Triangle, so Cardiff University claimed the UK's largest spinout financing of 2025 when Draig Therapeutics, a life-sciences spinout, raised a £107m Series A, making Cardiff the top-ranked Welsh university on the strength of one deal. Bristol, meanwhile, is the highest-ranked institution outside Oxford, Cambridge, and London, helped by quantum computing firm PsiQuantum, which raised $2.6bn at a $7bn valuation in June 2025, and in Scotland, Dundee ranks as the top university nationally largely on the back of Exscientia, the AI drug-discovery spinout that listed on Nasdaq in 2021 at a $2.9bn valuation.
None of these are Oxbridge stories, they're all evidence that the innovation ecosystem the review was aiming for is showing up in places the old spinout league tables rarely mentioned.
What 69 Universities Adopting the Guidance Actually Means
Paul Taylor, enterprise committee chair at the Royal Academy of Engineering, called the equity decline “encouraging.” Sixty-nine universities have formally adopted the USIT Guide, according to Research England - a list that, given how many Cambridge spinouts and Oxford spinouts anchor the UK's total spinout value, will only mean as much as the largest producers' own follow-through.
But adoption on paper and adoption in practice aren't the same claim, and this is where the story stops being clean, Research England has stopped actively tracking which universities follow through, so the 69-university figure is essentially self-reported. The Royal Academy's own Enterprise Fellowships data found that as recently as March 2025, around 11% of applicants were still facing a university proposal above the recommended 25% cap - down to roughly 3% by September and to zero by March 2026, though that's one programme's small sample, not the whole innovation ecosystem. Software spinouts remain the clearest laggard, still averaging 17% against a recommended 10%.
The Equity Question Nobody's Asking Yet
There's a second, quieter equity question the sector has barely touched: not what universities take, but what founders split among themselves once the university's share is gone. Of the UK's most successful spinouts since 2010, 63% divided founder equity unequally at the cap table, and founders consistently say they have almost nowhere to turn for guidance on doing it fairly.
“I have never been motivated by shares… I love what I do.”— Founder of a UK spinout company, on their own equity split, 2020
Not every founder negotiating a four-way split feels that settled about it.
So has the UK actually sorted out what a fair deal looks like for a UK spinout company? On the university side, broadly and quickly, yes, but on everything downstream - whether all 69 universities are really holding the line, whether software catches up, and how founders divide what's left - the evidence is thinner and mostly self-reported.
It is definitely worth watching and waiting for where the next Spotlight on Spinouts report lands.
Also read: What Is a Catapult and Why It Matters for UK Startup R&D
Sources: Royal Academy of Engineering; Dealroom; UK Government (Independent Review of University Spin-out Companies, 2023); TenU; UK Research and Innovation; UKTN.
