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European Biopharmaceutical Review

A Spinning Streak: A Four-Dimensional Perspective on University Spinouts

Nicos Nicolaou at the Tanaka Business School, Imperial College London, provides a novel approach to the creation of university spinouts


University spinouts involve the transfer of a core technology from an academic institution into a new company (1); as such they are an increasingly important part of the economic arena. For example, in 2004 and 2005, 20 spinouts from UK universities were floated with a combined value of over £1 billion (2). According to Philip Beresford who compiles the Sunday Times Rich List, the UK now boasts at least 120 millionaire dons (3). Examples include Professor Madan Singh at UMIST who became £116 million richer when his spinout, Knowledge Support Systems, was floated on the stock exchange (4); Brian Bellhouse, Professor of Engineering at Oxford University and one of the founders of Powderject Pharmaceuticals, who has an estimated stake of $22.5 million in the company that aims to replace needle injections (3); and Professor Colin Bessant at Imperial College, whose spinout Turbo Genset was floated on the Alberta Exchange for £540 million in 2000. Four factors influence the creation of university spinouts:
  • The characteristics of the entrepreneurial academic

  • The nature of the technology

  • The effect of legal factors, processes and institutions associated with national innovation systems

  • The effect of regional influences (for a discussion of how university structures and policies affect the creation of spinouts, see reference 5)

The involvement of universities in commercialisation activities has changed significantly over the past hundred years. A historical overview would probably start with the case of Professor Frederick Cottrell who in 1907 set up a company to exploit his invention of an electrostatic precipitator that reduced air pollution (6). Cottrell decided not to involve the institution because he believed it was not appropriate for the university to become involved in the process, and was also apprehensive of industry involvement in university research (6). He founded an organisation, the Research Corporation, to oversee patenting and licensing activities, which by the 1930s began to manage these activities for many US universities (7).

In fact the Research Corporation very much shaped the post-1980 expansion in university/industry technology transfer (7). For example, Mowery and Sampat (8) argue that although the Bayh- Dole Act (1980) accelerated university involvement in patenting and technology transfer, “the ‘transformation’ wrought by the 1980 Act in fact followed trends that were already well established by the end of the 1970s” – the act allowed US universities to retain the rights to any patents arising from federally funded projects. Nevertheless, as a result of the Bayh- Dole Act, the number of technology transfer offices in the US increased from 25 in 1980 to over 200 by 1995 (7). A historical overview would be incomplete without mentioning the importance of biotechnology, which significantly altered the character of university/industry interaction in the late 1970s, and led to academics leaving the university when founding companies (9).

For example, David Jackson, tenured Associate Professor at the University of Michigan, left academia to found Genex in 1977 (9). The growth in biomedical research also contributed to the universities’ increased involvement in commercialisation and spinout activities, as university patents became particularly concentrated in biomedical areas (10,11). Moreover, the growth in spinouts has also been consistent with contagion and rolemodelling effects, as well as with the increase in the availability of venture capital and business angel financing (11). The characteristics of the entrepreneurial academic, the nature of the technology, legal factors and processes and institutions associated with national innovation systems and regional influences all significantly affect the creation of university spinouts.


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Nicos Nicolaou is a Lecturer in Entrepreneurship at the Tanaka Business School, Imperial College London. He has a PhD from Imperial College London, a Master’s from the University of Cambridge, and a BSc with First Class Honours from the University of Bristol. Nicos has been awarded the Principal’s Outstanding Teaching Award (2006), the Psion Prize for the best doctoral thesis completed in 2004, the Cambridge Chevening Scholarship, the AG Leventis Scholarship, a University of Bristol Undergraduate Scholarship and is a Fellow of the Cambridge Commonwealth Society. His research has featured on CNN, BBC, Reuters, Washington Post, The Times and ABC amongst others.
Nicos Nicolaou
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