16 Guaranteed Ways to Avoid the Hassle of Commercializing University Technology Through Equity Licensing Deals

Technology Commercialization

16 Guaranteed Ways to Avoid the Hassle of Commercializing University Technology Through Equity Licensing Deals

1. In dealing with their own problems, faculty members are the most extreme conservatives

2. In dealing with other people's problems, they are the most extreme liberals

1. Have no defined policy or procedure at all on commercializing university technology.

Defining the groundrules, requirements, and procedures could cause a lot of debate and disagreement. Allow faculty members to be creative. (The university’s rights and responsibilities can always be figured out later if you need to.)

2. If you have a technology policy and a procedure, make sure nobody in the university community actually understands what it is. Complexity is good.

3. If you have a technology policy and a procedure, allow word to get around campus that the department heads, academic senate, and/or administration view the commercialization of university-generated technology as not quite in keeping with the university's academic mission.

Nobody's going to notice if certain researchers or other participants seem to get a "good deal" while others seem to have a far tougher time of it. If you are the Licensing Officer, amuse yourself with your ability to influence what happens. Be arbitrary. Or sometimes you can have fun simply by dragging your feet. Most people will get fatigued and turn their attention to less arduous tasks. (Besides, this "window of opportunity" stuff probably doesn't mean too much anyway.)

5. If you have a technology policy and a procedure, they should not be equitable.

An equitable commercialization policy typically will allocate equal shares from successful technology commercialization (1) to the faculty researcher(s), (2) to the department of the researcher(s), and (3) to the university. Cutting out one or two of these entities entirely — or, alternatively, severely restricting any benefit that might go to the faculty researcher(s) — is usually enough to prevent any type of ongoing program at your university.

Although young entrepreneurial companies are generally more flexible, more innovative in their thinking, have vastly lower costs of operation, and far greater incentives to make a novel technology work in the marketplace, young companies are fragile entities that will almost surely require greater attention if they are to survive long enough to stand any chance of succeeding. The fact that the potential pay-off from a start-up can be enormous should not influence your university's thinking. Stick with licensing to large established companies because the record demonstrates that large companies always succeed.

The process for licensing medical technology or biotech is familiar enough to most university licensing offices. Why not simply apply this same approach to commercializing technology from your engineering schools (all of them), to university generated software, and to your business school (just kidding, of course; nothing coming out of your business school could possibly be the basis for launching a new company because it isn't technology, right?).

8. Don't bother with understanding "market-based" royalty rates, third-party working relationships, or generally observed business Terms and Conditions.

You are the University. If you deign to mess around with commercialization at all, then you will damn well call the tune. If your potential collaborators don't want to collaborate as you dictate, you probably wouldn't have wanted to get involved with them anyway.

9. Do not allocate university resources to pay for stuff like intellectual property protection, market analysis, writing a business plan, or getting knowledgeable individuals involved either as advisors or as paid professional consultants. Especially don't do this up front. It won't add value to your deal.

10. Never allow researchers from other schools who have made it big as founders of successful young companies to visit your campus. Or, if they do visit, make sure that they don't actually talk to your faculty members.

11. Keep those folks in your business school away from the researchers in your science faculty, the staff of your engineering schools, and anybody in your university's hospital. Gosh, imagine what a mess it could be if they each had part of a powerful commercialization idea?

12. Never, never develop relationships between your university and private investors, venture capitalists, consultants, or lawyers and accountants who are involved in real-world deal-flow. Speaking engagements are a no-no.

13. If an entrepreneur-wannabe from your faculty somehow gets through the previous 12 barriers, make sure that he or she cannot get time freed up to work as an employee, a consultant, or a founder involved with a start-up.

Keep 'em in the classroom where they belong. After all, what could possibly be learned in a start-up technology company? (And that goes double for students.)

14. OK, if somehow all your planning fails and someone somehow creates a company, makes it wildly successful and either sells it for a big pay-off or takes it through an astronomical IPO, do everything in your power not to allow them back on campus to talk about it.

If the word ever got around, somebody else might actually try to do it with their promising new technology. And then, you'd just never be able to stop it.

15. Some time after the university accepts equity in return for licensing technology into a promising young company, make sure that the local paper writes an article questioning the propriety of licensing technology in exchange for equity rather than for a royalty (after all, it's simply not traditional, is it?!).

16. Establish an unofficial (but inviolate) rule that any equity-based licensing of university technology must go through an intermediary who will control the terms of the deal (and who just happens to be an alumnus and long-term donor and who, magically, will always seem to end up with an equity piece of each such company).