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.
- Spinouts carry a number of risks, but with certain factors in place they can represent the best opportunity for developing early-stage technology. This is particularly true because the inventor, and other university participants, will have a vested interest in, and commitment to, the success of that technology.
- Potential investors in a spinout will ask two major IP questions. Could previously existing intellectual property block the technology? Could your intellectual property dominate the market and prevent entry by others? Other key questions involve the characteristics of the market opportunity and the financial bottom line of revenue and expense projections over the life of the technology.
- Solid, long-term support from your institution will be required to: (1) operate the technology transfer office efficiently, so that it can evaluate invention disclosures, obtain IP protection when appropriate, coordinate the search for people or companies that will develop the invention into products and services, and negotiate and prepare the necessary legal agreements (for example, license agreements for IP rights); (2) cover the costs of obtaining IP rights; and (3) provide funding to convert good ideas into working prototypes. (A good idea not put into use is wasted.)
- Your job is complex and challenging because you have to balance the needs and expectations of many parties with divergent interests: Remain responsive to such needs and interests; keep people informed of progress and developments; effectively utilize available resources.
- When licensing to or creating new ventures, several key attributes are essential for attracting venture capital investment: a strong management team, a viable technology, a strong IP position, a large potential market, and location in an environment favorable for entrepreneurship.
- New ventures in developing countries have much to gain by attracting and building on international investor networks. They have the potential to open new markets and bring in new alliances.
- 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.
- It is necessary to strike a balance between reliance on licensing-out to existing companies and investing time and resources in creating new companies.
- Rather than venture capital driving the creation of new companies, it is usually the creation of new companies that attracts venture capital.
- When creating spinout companies, always remain focused on your institution’s primary mission, such that the spinout will be consistent with, and even serve, that public sector mission.
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