Spin-outs originating from research institutions are usually set up when there is no existing business to approach about a significant breakthrough in a field of work or because the work has clear possibilities to generate many products and applications and so potentially could be extremely valuable. These are called “platform opportunities” or “disruptive technologies”.

Creating a spin-out company is a fundamental decision. It will have ramifications for you as a researcher which you have probably not yet considered.

There are various ways of commercialising the intellectual property (“IP”) which you have created. These include selling the IP outright and licensing it. There are various reasons however why you may want to consider a spin-out company. Some benefit is sometimes perceived through distancing the IP from the research environment of your institution. This however should not be the key driver.

To be effective a spin-out company will need to bring together various assets and resources to commercialise the IP. These resources are likely to include money, but almost certainly will include other things such as specialist management and facilities such as laboratories and/or manufacturing. Some IP based spin-out business models will seek to outsource manufacture and distribution and to license some or all of its IP.

Remember once the IP is transferred to the spin-out company it is no longer available for you to use. The company may grant a research licence back but this will not allow use of it to help commercialise any future IP.

Further reading: You can find our Guidance Note: IP and Spin-out companies here