8. Spin-Out Companies

Question 1

What is a Small or Medium-sized Enterprise (SME)?

Answer 1

A company with less than 250 employees and a turnover of less than 50M Euros. It has limited resources but is agile.

Question 2

In ____ UK University’s became owners of IP from Government Funded Research and began to form ______ ________.

Answer 2

1987
Limited Companies

Question 3

What is the core reason for forming a company?

Answer 3

To make money (as businesses are otherwise a drain on resources and time).

Question 4

What are the three aims of a University spin-out company?

Answer 4

• To prove new technologies/products/business models
• To build value
• To generate financial return for the University upon sale of business

Question 5

What are the three requirements for a University spin-out company?

Answer 5

• A founder with the credibility, drive, and commitment to succeed
• A commercial champion (CEO)
• Opportunity for step-change in “High Growth Markets”

Question 6

What is the process of creating a spin-out company?

Answer 6

1. Generate concept
2. Evaluate the concept
3. Prepare a business plan and assemble a team
4. Raise funds
5. Incorporate (legal requirements)
6. Develop/trade
7. Exit (trade sale or flotation)

Question 7

What is the purpose of a business case/plan?

Answer 7

• To sell the concept to managers/investors
• To act as a planning tool/checklist

Question 8

What are the aims of a business case/plan?

Answer 8

• To articulate strategy and requirements
• To demonstrate credibility/expertise/knowledge
• To educate the reader and enable a decision

Question 9

What 4 things does a business plan contain?

Answer 9

1. Statements about Need (market), Capability (technology), and reward (financial return).
2. Current status and future plans (strategy).
3. Executive summary.
4. Statements and justification of required/requested resources.

Question 10

What would a Need statement in a business plan contain?

Answer 10

• The product
• The applications
• Market sizes
• Trends
• Competition
• Competitive advantage

Question 11

What would a Capability statement in a business plan contain?

Answer 11

• Background
• Current status
• Future development
• IPR (intellectual property resources)
• Time to market

Question 12

What does a financial model contain?

Answer 12

Expenditure and income

Question 13

Give three examples of expenditure

Answer 13

• Equipment/buildings/services
• Patents/legal/insurance
• Staff/consumables

Question 14

Give two examples of income

Answer 14

• Revenue from sales of products/services
• Invested funds

Question 15

Give 8 examples of how investment can be raised for a business

Answer 15

• Employer
• University
• Third-party
• Founders
• Family and friends
• Bank loans
• Government schemes
• Venture capitalists

Question 16

Most investors will require a _____ in the company (equity) in return for their cash investment and/or management support.

Answer 16

Stake

Question 17

What do investors look for in a business before they invest?

Answer 17

• Team
• Product
• Market
• Growth potential
• Cash generation
• Exit strategy

Question 18

__________ are the legal owners of the business (equity and shares).

Answer 18

Shareholders

Question 19

________ run the business so have a duty to maximise return for shareholders by law.

Answer 19

Directors

Question 20

Can directors also be shareholders?

Answer 20

Yes

Question 21

What is incorporation?

Answer 21

The legal process of becoming a limited company.

Question 22

What are the rewards of successfully launching a company?

Answer 22

• Dividends
• Profits of sale
• Consultancy
• Salary
• Excitement, hard work, satisfaction