In her recent blog post, Kirsten Leute, an executive with Osage University Partners who formerly worked in Stanford University’s tech transfer office, discusses ways in which the licensing process between start-ups and their alma maters could be simpler and, most importantly, shorter.
“Looking back on my own negotiations, it was a rare event to finish a full start-up license in a month and a half,” Leute writes. A four- to six-month process was typical, she adds. She cites a number of factors contributing to delays — drafts being sent back and forth, payment obligations, delays at the law firm, reviews of potential conflicts-of-interest at the university, and so on. “At the end of the day, if people don’t negotiate a lot on a deal, do they end up feeling confident they got the right deal?” she poses.
Still, she believes there are steps that can be taken to streamline the licensing process. Here are her suggestions for each player in the negotiating and contracting cycle:
For tech transfer offices:
- Highlight the terms in the deal that are non-negotiable, such as those required by the Bayh-Dole Act. There should only be a few, but pointing them out directly will save time both for you and your potential industry partner.
- Train your licensing staff to be consistent amongst each other in their negotiations. “Yes, these may shift between technologies and deals.” says Leute. “But one common complaint from VCs is that the deals are radically different depending on which licensing officer is doing the negotiating.”
- Don’t employ just one licensing officer for each deal. A team of officers will learn from each other’s varying backgrounds and come up with more rounded ideas. Plus, if one officer leaves the university, the work and thought put into the deal will remain intact.
For start-ups and VCs:
- Try hiring an attorney for the deal who has gotten along with the university’s tech transfer office in the past. As Leute puts it, “Nothing stalls a deal like an attorney or firm that has limited experience negotiating licensing deals with academic institutions.”
- Don’t obsess over every detail of the agreement. As long as you are in good standing with your university partner, they will work with you if you approach them later seeking changes.
- “Don’t try to account for every possibility,” says Leute. “You are a start-up. You will pivot.”
For both sides:
- Start off by determining and exchanging your priorities. You could do this with a “Top 10” list of what you want from the deal, then trade lists with the other party. The start-up will likely prioritize financial terms and the scope of the licensing rights; the university will prioritize
non-negotiable terms concerning risk management, use of name and publication rights. Note to start-ups: don’t try to negotiate these.
- Over-communicate, whether it’s in person, through e-mail, or over the phone. “As a technology transfer professional, my best experiences were with start-ups who didn’t just provide me an annual written update, but with whom we had a running dialogue throughout the year,” writes Leute. This helps tech transfer offices to be more prepared when requests for amendments come up.
- The previous step can be applied just as equally to VC firms. According to Leuke, “very few venture capitalists and technology transfer officers interact on a regular basis. Change that, and it will likely change your interactions.”
Source: Osage Univ. Partners