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Old Dominion pulls in $41 million with risky IPO strategy

By Jesse Schwartz
Published: November 8th, 2017

What’s the secret behind a university not necessarily known as a research powerhouse coming away with $41.6 million from a start-up going public? Being gutsy enough to take the money up front and risk a long dry spell in the future. The $41.6 million total represents the value of shares of stock transferred from Pulse Biosciences, a publicly traded company formed last year in California to pursue the discoveries made at Old Dominion’s Frank Reidy Research Center for Bioelectrics. It is the largest commercialization success in the university’s history and the largest total for a Virginia university in the past year.

The payout is the result of the university taking a different tack on commercialization than most — one that requires a leap of faith and a different way of looking at TTO funding.

Old Dominion’s approach to commercialization is unique, says Khaled Abul-Hassan, PhD, MBA, CLP, director of innovations commercialization. For starters, the university offers a 50/50 royalty split to researchers, which Abul-Hassan notes is quite generous. A more typical split is around 35/65.

“That is to encourage entrepreneurship and disclosure,” he says. “We also have a faculty expedited license agreement, which is used when faculty or staff want to license their technology developed at ODU. We take 5% dilutable equity and 2% nondilutable upon exit. The 5% could drop all the way to less than 0.5%, so what we keep in the end is 2% of the total exit value, and we end up sharing it 50/50 with the inventor.”

For students, the university also has a significant use IP ownership policy that only kicks in at the $10,000 mark, much higher than most universities, Abul-Hassan says. If the student research surpasses $10,000 of significant use of university resources, Old Dominion has a student licensing agreement that says the university will take 1% royalty on sales when sales exceed $1 million.

“The combination of all of this makes us the only university in Virginia that does this, and probably the only one nationwide that has this combined approach to technology transfer,” Abul-Hassan says.

Old Dominion’s approach to commercialization was instrumental in reaching the $41.6 million result from the IPO, Abul-Hassan says. A detailed article on Old Dominion’s IPO strategy appears in the October issue of Technology Transfer Tactics. To subscribe and access the full article, as well as the publication’s 10-year online archive of best practices and success strategies for TTOs, CLICK HERE.

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