This paper examines the impact of university spin-out ownership on subsequent fundraising success. The analysis is based on a formal theory and uses detailed data from UK spin-outs. Using an instrumental variable based on precedence set by prior spin-outs, we find that 10% higher university stakes reduce the likelihood of venture capital by 3% per year. The negative effect is concentrated in less science-intensive spin-outs, and in spin-outs where the founding team includes scientists transitioning to become entrepreneurs. A 10% larger university stake also decreases the rate at which spin-outs are formed by 5%. High university stakes impede spin-out success.