Imperial announces improved Founders Choice programme for spinout companies

Imperial has made important improvements to Founders Choice, its spinout formation and support approach.

Following a detailed consultation with academic staff, founders, mentors, and investors, Imperial has today announced a series of improvements to Founders Choice’, its approach to forming and supporting spinout companies.

These changes are designed to benefit new companies created by Imperial staff using College intellectual property (IP) by increasing the speed of spinout formation, removing barriers to success, and improving the experience of founders.

The role of spinouts

The improvements to Founders Choice will help spinouts get started quicker, accelerating their journey to impact. I am grateful to the academics, founders and investors who have contributed to our review. Dr Simon Hepworth Director of Enterprise
Spinout companies are an effective way to translate discoveries or inventions developed in university labs into real-world impact. Many of the UK’s leading technology firms began life as university spinouts - Ceres Power and Nexeon are two examples from Imperial.

They also contribute to the strength of innovation ecosystems around universities such as Imperial, helping create links between industry and academia, and providing new career-development opportunities for academic and research staff. They can boost innovation, bring new technologies to market, create jobs or deliver new medical treatments.

Spinning out new companies is an essential part of the toolkit Imperial uses to deliver impact from scientific research.

Supporting spinout success

To incentivise Imperial staff to found spinouts, and provide appropriate support when they do, the College regularly reviews its approach to forming and supporting spinout companies.

The changes to Founders Choice are in effect from 1 August 2023. Academic or research staff wishing to form a spinout under the new terms can do so immediately.

The changes Imperial is making are intended to help Imperial spinouts start well and thrive. They will:
  • Increase the rate and speed of spinout formations
  • Improve the experience of spinout founders
  • Remove barriers to the success of new companies
  • Enrich Imperial’s enterprise ecosystem through the creation of a higher number of high-quality spinout companies

Dr Simon Hepworth, Director of Enterprise, said: "The package of improvements to Founders Choice will help ensure our spinouts get started quicker, accelerating their journey to impact. We have paid close attention to terms that have caused issues in the past and made changes to remove barriers. I am grateful to the large number of academics, founders and investors who have contributed to our review, and I look forward to continuing our work with this community to maintain Imperial’s position as a great place to start a company based on research."

Key improvements to Founders Choice

  • Dedicated project support and guidance for all founders
    Spinout founders will no longer need to choose between different support levels. Instead, all founders will receive guidance and support tailored to their needs. Working with a Spinout Project Manager - a specialist from Imperial Enterprise assigned to the role - founders will be able to access entrepreneurial education and targeted commercial support drawn from across Imperial’s enterprise ecosystem.

    The Spinout Project Manager will also take responsibility for the technology licensing and spinout formation process, guiding the founding team throughout.
  • Strong incentives for academic founders
    Founders at Imperial can keep up to 95% of the founding equity in new spinouts. They can also benefit from technology licensed to spinout companies through the Rewards to Inventors scheme.
  • Favourable terms that enable spinouts to start well and thrive
    To accelerate the formation process, several terms in the technology licensing agreement and spinout formation process have been fixed at levels which favour the spinout. These include low fixed royalty rates, low sub-licensing royalties, a limited Imperial equity holding, simplified IP development planning and cash-preserving payment terms that allow new spinouts to retain more money in their early stages.
  • Low-friction formation process optimised for deal speed
    We have further simplified the formation process by optimising some elements. This includes removing the requirement for founders to appoint an independent negotiator, including technology pipeline agreements as standard, and amending rules that restrict which companies spinouts can sub-licence technology to.

Important details


Imperial will receive limited founding equity in spinouts in exchange for its innovation ecosystem, exemplary research facilities, and project funding.

Founders can choose between the non-dilute and dilutable equity options.

Imperial founding equity stake:

Pharmaceuticals companies
  • Non-dilutable equity option: 5% with non-dilute to £20 million cumulative investment.
  • Dilutable equity option: 20%

Software, devices, physical sciences, and other companies
  • Non-dilutable equity option: 5% with non-dilute to £5 million cumulative investment.
  • Dilutable equity option: 10%


Royalties on the sale of products or services based on Imperial IP licensed to the spinout company will only become due on aggregate net sales exceeding £50 million. Royalty rates are fixed:
  • Low-margin businesses: 0.5%
  • Medium-margin businesses: 1.0%
  • High-margin businesses: 2.0%

Sub-licensing royalties will be fixed at 10% of all net proceeds.

Spinout Project Manager

A commercialisation specialist from Imperial Enterprise will be assigned as Spinout Project Manager to each new spinout opportunity. They will work closely with the founders to identify support needs, and take responsibility for the technology licence and spinout formation process.


Improvements have been made to the way in which spinouts make payments to Imperial in respect of technology licensing, royalty, and patent costs.

Technology licence fee and historical patent costs will be repaid by the spinout in equal instalments over a period of five years. Royalty payments will become due 30 days after the spinout receives the monies the payment relates to.

Communications lead: Gavin Reed, Marketing and Communications Manager, Imperial Enterprise - Image at top shows Dr Agi Brandt-Talbot , Professor Jason Hallett, and Dr Florence Gschwend, the co-founders of Lixea , an Imperial spinout that creates sustainable materials and fuels from green waste. Photo: Jody Kingzett