Founders Choice
Founders Choice® is the name Imperial gives to its spinout formation process and the associated entrepreneurial education and support offered to founders.
Founders Choice
Update - 1 August 2023
Read the College News announcement about the changes.
Following a detailed consultation with academic staff, spinout founders, investors and other key stakeholders in spinout success, Imperial made improvements to Founders Choice which were rolled out from 1 August 2023.
The changes aim to improve the experience of spinout founders, incentivise academics to take part in spinout activity, and improve terms for spinout founders to maximise their companies’ chances of success.
The information on this page was most recently updated on: 11 December 2023
The Founders Choice offer
- Dedicated support and strong incentives
- Favourable terms that enable spinouts to start well and thrive
- A low-friction formation process optimised for deal speed
Dedicated support and strong incentives
Founders will be guided through the spinout process by a dedicated Spinout Project Manager (SPM). The SPM role will be taken up by an individual in the founders' Faculty Industry Partnerships and Commercialisation team.
The SPM will drive the formation process, identify support needs, and work closely with the founders throughout their spinout journey. A wide range of founder support will be offered, from monthly ‘how-to’ masterclasses to access to Experts in Residence, to fundraising strategy coaching.
Founders benefit from the Rewards to Inventors scheme for IP licensed to the spinouts.
Favourable terms
The Founders Choice update introduces several fixed terms that aim to accelerate deal speed while enabling spinouts to thrive. These include the choice of dilutable or non-dilutable Imperial equity holding and low standard royalty rates on technology licences.
A range of improvements have been made to existing terms, including an update to payments and simpler requirements for annual development planning.
Low-friction formation
Dedicated support and fixed terms that respond to the commercial realities faced by spinout companies combine to reduce friction in the formation process. The SPM will drive the technology licensing and company formation process, working directly with the founders. Legal template documents will be made available to founders.
A spinout set up for success
Spinouts formed through Founders Choice are set up to start well and thrive.
- Competitive equity terms
- Imperial as a shareholder
- Equitable technology licensing terms
- Cash-preserving repayment terms to support the spinout in its early operations
Key details
Equity
Imperial will receive founding equity in spinouts in exchange for its innovation ecosystem, exemplary research facilities and project funding. The table below shows the options for Imperial's founding equity holding:
| Company type | Pharmaceuticals* | Non-pharmaceuticals |
|---|---|---|
| Non-dilutable equity option | 5% with non-dilute to £20 million cumulative investment | 5% with non-dilute to £5 million cumulative investment |
| Dilutable equity option | 20% | 10% |
Founders can choose between the non-dilute and dilutable equity options.
*Pharmaceuticals here refers to companies involved in therapeutics development
Royalties and other payments
There are four types of payment to be made by the spinout under the licence agreement (excluding milestone payments which are optional and required only on a case-by-case basis).
- A flat licensing fee of £50,000 payable in five annual instalments
- A ten per cent (10%) royalty on net receipts for sub-licensing royalties
- For licensed patents only:
- The reimbursement of historical patent costs payable in five annual instalments; and
- A royalty on the sale of products or services based on the licensed patent due on aggregate net sales exceeding £50 million as stated in the table below.
Table 1 - royalty rates
| Low margin businesses | Medium margin businesses | High margin businesses |
|---|---|---|
| 0.5% | 1.0% | 2.0% |
Examples of low margin businesses include: bulk supply of commodity chemicals or materials; mass manufacture of chemicals or materials
Examples of high margin businesses include: medtech, biotech, pharmaceuticals.
Spinout Project Manager
A member of the founders' Faculty IPC Team will be assigned as Spinout Project Manager to each new spinout opportunity. They will work closely with the founders to identify and fulfil support needs, and take responsibility for the technology licence and spinout formation process.
Tailored support for all founders
The Founders Choice update removes the need for founders to choose between the Jointly Driven and Founder Driven routes. Instead, all founders will receive tailored, high quality support drawn from across Imperial.
5-year repayment period
Payments due from the spinout to Imperial in respect of the technology licence fee (£50,000) and historical patent cost reimbursement will be due in equal instalments over a five-year period.
Updated licence terms
Reservation of rights: The technology licensing agreement will reserve rights for teaching and research for Imperial College London, although founders and their lab groups will require approval from their spinout company for industry sponsored research on the licensed IP. Imperial will support founders and lab groups in obtaining this approval.
Restrictions on sub-licensing: processes to eliminate potential restrictions on sublicensing have been updated to be aligned to those covered in Imperial’s Research Codes of Practice and current UK legislative requirements
Technology pipeline agreements: pipeline option agreements for non-severable improvements to licensed technology will be put in place alongside the technology licences as standard.
Annual development plan: when IP is licensed to a spinout, Imperial will require the company to submit an annual development plan and agree to undertake commercially reasonable endeavours to develop, exploit and market the licensed technology.
Founders Choice documents
The documents linked below are provided for guidance. These documents are subject to regular review and may therefore be updated from time to time. Please download them from this page in order to to ensure you are viewing the most recent version.
Template licence agreement
Founders Choice Template Licence Agreement
Template documents - with non-dilute
Non-dilutable equity Founders Choice Memorandum of Understanding template
Founders Choice Articles of Association template (non-dilute)
Founders Choice Shareholders Agreement template (non-dilute)
Template documents - dilutable
Dilutable equity Founders Choice Memorandum of Understanding template
Founders Choice Article of Associations template (dilutable)
The information on this page was most recently updated on: 19 January 2024
Contact
Academic and research staff with questions about Founders Choice are encouraged to contact their faculty IPC team.
Faculty of Engineering
Dr Marika Reay – m.reay@imperial.ac.uk
Faculty of Medicine
Dr Vjera Magdalenic-Moussavi –v.magdalenic@imperial.ac.uk
Faculty of Natural Sciences
Dr Viraj Perera – v.perera@imperial.ac.uk
Imperial College Business School
Julian Sikondari –j.sikondari@imperial.ac.uk
Communications lead
For any further questions, requests for support materials, or feedback, please contact:
Gavin Reed, Enterprise Marketing and Communications Manager - g.reed@imperial.ac.uk
FOUNDERS CHOICE is a registered trademark of Imperial College Innovations Limited