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.
 Abstract
Creating and Developing Spinouts: Experiences from Yale University and Beyond
by Alfred (Buz) Brown, Jon Soderstrom
Abstract:
This chapter is about university spinouts: why they are created, who founds them, and how they are developed. It also considers many of the issues that a university and its faculty have to address to successfully launch and develop new for-profit ventures. Spinouts carry risks, but they may also be the best vehicle for developing early-stage university technologies and providing a host of other benefits. The chapter offers examples from the past five years at Yale University, as well as from the private sector, that suggest ways to minimize the risks and maximize benefits.
Abstract
Dealing with Spinout Companies
by Jon C. Sandelin
Abstract:
This chapter provides a practical guide for organizations seeking to transfer their intellectual property (IP) rights to a spinout company (normally through a licensing agreement) so that the company can convert the IP into products or services that benefit the public. Based on experiences at Stanford University over the past three decades, key issues have been identified for negotiating transfer to a spinout, and guidance on best practices for reaching a successful agreement is provided. The chapter briefly reviews potential conflict-of-interest and conflict-of-commitment issues that inevitability arise when employees of public research organizations become involved in spinout companies.
Abstract
Formation of a Business Incubator
by Edward M. Zablocki
Abstract:
Business incubators, as economic tools, have become increasingly common in the last decade and a half for stimulating local development. Incubators provide facilities and services (for example, business planning and legal, accounting, and marketing support) to catalyze small-business growth. In fact, incubated companies have a dramatically higher rate of survival than an average spinout does. This chapter explains what steps to take to set up an incubator, including the basic structure and the kinds of services generally offered. Successful incubator programs are discussed, and a helpful bibliography focused on case studies is provided.
Abstract
New Companies to Commercialize IP: Should You Spinout or Start-up?
by Cathy Garner, Philip Ternouth
Abstract:
Universities are eagerly seeking ways to commercialize their innovations. The recent success of spinout companies has made that commercialization option more popular, but commercialization may not be the most efficient approach for research institutions. The risks must be weighed, as well as the benefits, and this chapter offers an overview of the hidden costs of setting up a spinout. Exploring the necessary supporting conditions that can improve the potential for success, the chapter also considers start-ups and incubation centers as potentially better options.
Abstract
The Role of Technology Transfer Intermediaries in Commercializing Intellectual Property through Spinouts and Start-ups
by Tim Cook
Abstract:
Intellectual Property (IP) can be commercialized via free distribution or licensing, or through new companies that develop and exploit it. These new companies are called spinouts, or start-ups. Establishing successful spinouts and start-ups requires a solid business plan, coordinated teams of professionals who share a common vision, a respected managing director, and technology transfer intermediaries. Intermediaries help bridge the cultural divide that often exists between the generators of intellectual property and the new companies.
Abstract
What the Public Sector Should Know about Venture Capital
by Roger Wyse
Abstract:
Ready access to venture capital investments is vital to the success of start-up companies in the capital intensive high-technology sectors such as biotechnology. But there is a common misconception that an abundance of venture capital will spawn the formation of new companies. In fact, the opposite is true: new companies actually attract venture capital. This chapter provides an overview of the venture capital system, explains its importance, and identifies what qualities of a company make it attractive to venture capital investors. Some of the factors can be influenced by government action, so the chapter offers several ways that governments can encourage venture capital investment.
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