For many entrepreneurs, licensing from a university may be a new experience. This series of webinars provides information that will be helpful for academic entrepreneurs contemplating their first (or perhaps subsequent) license from an academic institution. Presented by an attorney who represents many academic startups, including their investors, along with two academic technology transfer veterans, these webinars bring views from both sides of the table and best practices for a fruitful and efficient negotiation.
Over the past year, tech transfer directors from Columbia, Duke, JHU, Penn, MIT, Stanford, and Yale worked with life science VCs from 5AM, Atlas, Polaris, OUP, RA Capital, and Venrock to create a common set of principles for university startup deal negotiations. These principles were captured in two documents: “Recommendations for Term Sheet Structuring”, covering equity, royalties, milestones, sublicensing, know-how royalties, diligence, and other recommendations for creating win-win outcomes; and “Recommendations for Process Improvements”, with recommendations for structuring the negotiation process itself to avoid unnecessary friction, gain buy-in early, and avoid overly long and painful negotiations.
A common practice across universities that hold equity in a company that IPOs is to sell all of its shares as soon as the lock up expires. But do the best returns necessarily come from selling all your stock immediately? When is the right time to sell stock in a therapeutics company?
When a university licenses technology to a startup, a grant of equity is a likely consideration offered by the licensee. To receive the equity, the university will review and negotiate a Stock Purchase Agreement – a legal agreement made between the corporation (startup) and the university that governs the transfer and sale of the corporation’s stock to the university and often related financial terms, which can impact the university’s potential returns.
Columbia Technology Ventures (CTV) and venture investors Osage University Partners (OUP) invite you to join a seminar on the following topic: “Understanding the real economics of university startup formation.”
OUP principal John Lee will take you step-by-step through the life of a company, illustrating the different types equity, the pros and cons of each equity type depending on different company outcomes, and the economic effect this has on founders’ shares. Data will be presented to support the conversation around founders’ equity, the right allocation between faculty vs. post docs vs. grad students, and how much equity one needs to give away to attract and keep your top talent.