Understanding Spinouts vs. Startups

If you’re a researcher, staff member, or student thinking about turning an idea into a company, it’s important to understand how intellectual property (IP) ownership works at the University of Oxford. Whether your venture is a University spinout or a startup affects who owns the IP, how equity is split, and what support is available. This guide explains the key differences, what they mean for founders, and how Oxford University Innovation (OUI) supports the commercialisation process.

Spinouts

Spinouts are companies founded primarily to commercialise the intellectual property (including ideas, information, and knowledge) created by University staff. If the IP was created by University staff (employees) in the course of their employment, then the University normally owns that IP.

This means that if you’re a researcher (an employee or on contract) and you invent something that’s related to your research or discipline, or used University resources (lab, staff, equipment), or it was created under a University-funded research project, then the University will usually own the IP. 

Oxford University Innovation (OUI), a wholly owned company of the University, will help protect and manage the Intellectual Property if required (an idea related to your research may not need to be formally protected, but an invention will), and will also help you start the company. If a license to the IP is needed, OUI will manage the licensing of University-owned IP to the spinout company.

The founders of the Spinout company will be:

• the researchers and any management (for example, a CEO) they want to bring in; and
• the University.

The split of founding equity

• Under the University’s Spinout policy the founding team of researchers (and management they have brought in) typically get 80% of the shares in the company and the University gets 20% of the shares of company at formation. 
• In certain cases – where the spinout involves only software and no patentable inventions, or where the University has provided very little support (infrastructure, students, salary, IP) – the founding team of researchers and management may get 90% of the shares and the University 10% of the shares. 

Note that where there are other universities or funders involved, the splits may vary.

What this means for a researcher

• If you’re forming a spinout at Oxford: you and any co-founders will likely start with 80% of the shares between you (unless your case qualifies for 90%).
• The University will start with 20% (or 10% in the special case).
• After formation, as you raise external investment, your percentage share and the University’s percentage share will drop (because of dilution).
• You’ll need to work out how to allocate your founding shares (e.g. between you, co-founders, key management).
• You should get professional tax advice about shareholdings because you may have personal tax implications.

Students and Spinouts

• If you are a student and you create something entirely on your own, with no use of University facilities, no University-commissioned work, no staff supervision beyond normal teaching, then you are likely to be able to claim ownership of that IP and can commercialise it how you want. If you decide to create a company, it will be considered a startup - see below.
• However, if your work benefits significantly from University funds, specialised University facilities, is commissioned by the University (or is part of a research project), or is done in collaboration with University staff/employees, then the University may assert ownership of the IP. If this is the case, you will be treated “as a staff member” when it comes to revenue sharing and spinouts. 
• Because a spinout involves commercialising IP, it's especially important to check what rights the University has (for both IP licensing and equity), and what agreements you can sign at or before the spinout formation.

Startups

A startup is a company founded by students or staff where you create the idea yourself not using University-owned research or, if you are a staff member, it is usually not in your discipline. Usually this then means that you can build, run, and own the company like any other private founder. Oxford University Innovation (OUI) is not automatically involved but you may choose to be part of the OUI Incubator.

For researchers and staff

A startup is a company you form independently of your University research and is usually out of your discipline area. Examples:

• you are a researcher in engineering and you start a business developing toys for schools.
• you are a staff member in accountancy and you start a company based on software you wrote for providing exercise routines.

If you are not sure (i.e. it’s directly related to your discipline but is out of your research area) then it is best to discuss it with OUI.

For students (including undergraduates)

A student startup is typically something like:

• an app you built entirely yourself.
• a consulting service.
• a consumer product you designed.
• a business idea that doesn’t rely on University-owned inventions.

In these cases, you own 100% of the IP.

Contact

If you have any questions about IP contact the Team at OUI: enquiries@innovation.ox.ac.uk

Useful documents & links

• Starting a spinout company - a guide covering basic knowledge and tools to understand what a spinout company is, and the steps involved in spinout formation.
• Student guidance: Intellectual property – University of Oxford: covers how student IP is treated under the student contract.
• OUI Student-specific information: What is IP: covers what IP is, and why it is important
• OUI FAQs: Commercialisation FAQs 
• Research Services: Information on IP for Oxford Researchers - for all University staff members on IP definitions, policy and exploitation.