“Should universities have a monopoly on spinouts?” This was the question posed in the headline of an article covering Academic to Entrepreneur, a paper we released this week, in which we call for university researchers to be given control over their own inventions.

This system, known as “Professor’s Privilege” gives academics ownership of the intellectual property they create, rather than assigning it to universities. This grants them the freedom to decide how best to use it – whether to release it to the world free of charge, attempt to commercialise it independently, commercialise it using pre-existing business contacts, or commercialise it through a university Tech Transfer Office (TTO). Not just their own university’s TTO, but potentially that of another university, which may be better suited to their specialisation, or have more resources at its disposal.

It’s a punchy proposal, but it doesn’t come from the ether. We’ve been following the academic literature for years.

Sadly the evidence comes from many countries having scrapped Professor’s Privilege in the past. As the paper details, in Finland the abolition of Professor’s Privilege led to a 46% drop in patenting by academics, despite an increase in government funding for university R&D. While in Germany, there was a 29% decrease in the quantity (and a decrease in quality) of academics’ research that is commercialised. In Norway, its abolition resulted in a 50% decline in both academic startup creation and patenting, and a decline in the number of citations per patent, the number of patents with an international scope, and the success of university spinouts.

Only Sweden has maintained Professor’s Privilege, and in the process has managed to maintain a higher rate of academic entrepreneurship than even the US. Evidence suggests that Swedish academic entrepreneurs also have lower rates of commercial failure.

If you have two minutes to spare, read Eamonn Ives’ Twitter thread on it. Another two minutes? Air Street Capital’s Nathan Benaich supports it. Another five minutes? Anton Howes has an article detailing the failings of the current system, while UKTN also covered it, as did Times Higher Education.

In the short-term, this paper has been fed into the Government’s spinout review. As Anton writes for CapX: “There are many ways these problems might be solved, from increasing funding for TTOs to forcing them to take less onerous equity stakes. But at root, many of the problems stem from a monolithic, one-size-fits-all approach to spreading the innovations of university researchers – one that those researchers generally have no option but to use, because it is the universities that own their intellectual property.”

To their credit, recent governments have been open to rethinking this sort of thing. ARIA has the freedom to make big bold bets on the scientific trajectories, while Focused Research Organisations (FROs) – which we called for, and the Government was receptive to – will bring entrepreneurial processes and thinking to bear on solving the world’s biggest problems.

We think there’s strong evidence for a similar shakeup in the way universities support spinouts. We should not assume our current system, though functional, is optimal. And in the case of university spinouts, the current evidence points in only one direction.

Credit Where it's Due
We’ve been recently contacted by entrepreneurs and advisers sharing their experience that HMRC is turning down perfectly reasonable R&D tax credit claims, and investigating previously approved R&D claims from genuine tech startups.

I’m not qualified to judge individual claims, but the number of people who have contacted us suggests that it’s something worth looking into.

If this is something impacting your business or your clients, we would be keen to know. It’s something we’ve raised with our Advisers of the All-Party Parliamentary Group for Entrepreneurship, and may take forward.