Your source for expert commentary on IP management issues.
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Editor-in-Chief, Anatole Krattiger
Why This Topic Is Important
The creation of new firms, and even new industries, is, in the long run, one of the most powerful impacts
that public sector research and technology transfer can have on an economy. In some cases it is the only
hope for a new technology to be developed. This section describes competing approaches to managing
the process of venture creation, examines the roles of the different players involved, and details
institutional policies that can enhance the rate and the success rate of start-up companies.
Key Implications and Best Practices: Section 13
Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.
- Experts are divided as to what approach should be taken by public institutions with regard to creating companies. Some advocate a “hands-on” approach in which the institution actively and directly manages the creation of companies and invests in the resources needed for their success. Others argue that the university should channel its resources into activities that may result in marketable technologies, but not engage directly in marketing activities.
- The creation of business incubators as a tool for stimulating local economic development should not be underestimated. Incubated companies have a dramatically higher rate of survival than the average spinouts.
- Spinouts often create enhanced opportunities for its faculty. If spinouts remain in the region, faculty inventors can remain active as consultants. Also, a university’s success with spinouts can attract new talent.
- Much of the success of a spinout or start-up will depend on the entrepreneurial spirit at the institution. The more entrepreneurial, the more likely it will be that someone wants to set up a new company.
- The formation of new companies creates an environment that increases the probability of success for other companies. Thus, the public sector should (1) plant the seed, encouraging skilled people with new ideas to develop those ideas and (2) create an environment that favors entrepreneurship and success. Universities and research institutes can plant the seeds, while government policies can shape the environment.
- When engaging in entrepreneurial activities, risks to the university include potential impact on tax-exempt status, liabilities for the actions of the company, conflicts of interest and/or commitment, and conflicts with the university’s mission.
- To be an effective entrepreneurial university, representatives of senior administration should routinely review company-founding and business-maintenance activities.
- Clear policies are needed for disposing of equity in spinout companies, both for the sake of the university’s integrity—to prevent conflicts of interest—and for the sake of the company—to prevent the university’s divestment from sending a damaging signal to the market about the value of the company or its technology.
- To demonstrate the importance of technology transfer, the tto should generally report directly to upper-level administration.
- In order to attract venture capital in agriculture, public sector institutions need to take steps to reduce the risk of investing in agricultural projects.
- Rather than venture capital driving the creation of new companies, it is usually the creation of new companies that attracts venture capital.
Creating and Developing Spinouts: Experiences from Yale University and Beyond
by Alfred (Buz) Brown, Jon Soderstrom
Dealing with Spinout Companies
by Jon C. Sandelin
Formation of a Business Incubator
by Edward M. Zablocki
New Companies to Commercialize IP: Should You Spinout or Start-up?
by Cathy Garner, Philip Ternouth
The Role of Technology Transfer Intermediaries in Commercializing Intellectual Property through Spinouts and Start-ups
by Tim Cook
What the Public Sector Should Know about Venture Capital
by Roger Wyse