The University Spin-out Investment Terms Guide (the USIT Guide) is a set of best-practice investment and licensing terms for spinout company formation. The guide has been developed and agreed upon by leading global VC investors and universities. The Guide has been designed to create a landing zone for a fair deal and to share best practise in a transparent manner for all stakeholders in order to speed up the process to form university spin-outs. The aim is to enable investors to make financial returns and universities to deliver positive impact from their research.
How it works
The Guide builds familiarity with the operating environment, providing clarity on what is fair and normal in spin-out investments. It helps to demystify each term, explaining the various constraints and success factors required to make it work in a contract. Many can benefit from this guidance.
The USIT Guide is intended as a frame of reference to guide all UK universities that are forming venture-backed spin-outs, all academics and researchers embarking on a spin-out journey, and all investors who wish to invest in UK university spin-outs. By utilising the USIT Guide for the first stage of negotiations, it is hoped that many rounds of back-and-forth negotiation can be avoided – saving time, energy and money, whilst also preventing deal-scuppering disagreements. Instead, that energy and time can be devoted to the development of the spin-out and the technology.
The USIT Guide may also be useful for new practitioners in universities, spin-outs and investors, as they seek to improve their detailed understanding of commercial and legal terms. University administrators may consider the Guide as a basis for refinement of their policies, as they seek to maximise the generation of impact from academic research.
First time investors or spin-out founders may find it a valuable point of reference when doing deals. Universities and institutional investors will find it helpful as a basis for setting their technology commercialisation policy.