Starting a business? : Funding

If successful, a spin out will make money for the academics involved and their university (with the university sharing its returns between central funds, the academic departments involved and the exploitation company or department).

You should always remember that whilst you might have had the idea, you will have had it as a member of staff and often as a result of a University research project or the use of University facilities. By law, it is the University that owns the intellectual property and the White Rose Universities seek to ensure that their members of staff benefit in successful exploitations. The sharing ratios are among the most generous within the UK University sector and seriously generous compared with industrial norms.

In the early stages of protecting intellectual property and evaluating the idea, funding comes from the University or its exploitation company. You will be required to give time but it will be the University or the exploitation that selects the patent agent and pays their fees.

At incorporation it is likely that you will need to provide some funding to purchase the shares. For low cost start-ups, this plus the matching money from the University is sufficient to begin with.

As a company progresses, so further funding is needed. Early stage money is available from the White Rose Technology Seed Corn Fund and typically they will inject up to a quarter of a million and take up to a third of the company - diluting your and the University holdings.

Second stage funding comes from a variety of sources, (venture capitalists, big companies for example) and again there will be dilution of your and the University's share.