Spin-outs

Generally in a spin-out situation, the university will own the pre-existing IP needed for the company and both the individuals involved and the university will take a stake in new company, usually in equity. The equity split will be affected by factors such as how much the spin-out will rely on university facilities, individual input and so on.

As an individual involved in a spin-out, the earlier you seek legal advice the better. This can help shape your discussions with the university and the deal you get. In addition, there may be employment issues to resolve as it is unlikely you will initially be employed by the spin-out. Instead you may be contracted out to the company by the university. Also, if the spin-out is using university facilities, a facility agreement can set out on what basis the company can use them.

As a full-service firm, we can draw on expertise from across the firm to advise you on different aspects of your spin-out set-up, including structure, possible funding and development.

It is likely that the university would be looking at a spin-out life cycle of 5 to 10 years before wanting to realise their stake. If you are involved in a spin-out as an individual, we can advise you on your potential spin-out exit and development strategies.  

As the university is likely to own the necessary pre-existing IP for the spin-out, there will need to be patent negotiation or IP licence and assignation agreements between university and spin-out on what basis the IP can be used. In addition, there may be need for a research and collaboration agreement to set out the basis of future collaboration and development.  We can advise on which agreements are needed, negotiate on your behalf and draw up the documentation.

There may be funding and grant options suitable for your spin-out business. At Thorntons, our team can advise you on potential funding and help you prepare for securing grants and investment, with business plan reviews and help with practice pitches.

Because of the innovative nature of spin-outs, you are likely to be dealing with confidential information and ‘trade secrets’. As such you may well want to put in place a confidential information agreement to protect the know-how invested in the company.  Our team, together with our specialist employment lawyers, can work with you to ensure the right protections are in place. 

Confidential information also affects how you handle personal data, especially with  data collection and sharing in technology projects. We can advise you on your data protection and GDPR requirements.