Spin-Out Process In The Financial Technology Sector

Goals

To understand what is the best practice that will ensure a professional/technology product spin-out process in the banking sector.

Early Findings

Spin-outs or spin-offs are divisions of companies or organizations that become independent businesses with assets, employees, intellectual property, technology, or existing products that are taken from the parent company. The shareholders of the parent company receive equivalent shares in the new company in order to compensate for the loss of equity in the original stocks. The Cork Institute of Technology and the National Innovation Corps state the following steps for a successful spin-out.
  • Step 1: Contacting an Industry Liaison Office (ILO) to understand how to protect the intellectual property (IP).
  • Step 2: Engaging with a patent attorney through the ILO and filing a patent application before making any public disclosure or communication of it.
  • Step 3: Seeking training and network from a wealth of resources about inventors looking for help to start a company.
  • Step 4: Planning the business. Developing an understanding of market potential, proposed business model, competition, funding, the team and how to develop the product and attain revenues sufficient to sustain and grow the company.
  • Step 5: Applying for approval to spin-out. A commercialization specialist in the ILO is leading the process and provides with the necessary application form and templates.
  • Step 6: Negotiating the license or option agreement. The ILO will negotiate with a representative of the spin-out company to grant a license to the company. In some cases, a short-term option agreement may precede a license to demonstrate to potential investors that a company has secured the rights to negotiate for a license to the technology.
  • Step 7: Negotiating the shareholders' agreement.
  • Step 8: Registering the business and signing the license and shareholders' agreement. In addition, this step includes registering the business with the Companies Registration Office (CRO) as a Designated Activity Company (DAC).
  • Step 9: Pursuing funding by presenting the opportunity to people with funds such as a local enterprise office, venture capitalists or angel investors.

Proposed next steps:

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