STANFORD UNIVERSITY OFFICE OF TECHNOLOGY LICENSING
CONTENTS
Stanord University is requently the place where the kernel
OVERVIEW OVERVI EW ............. ............................ ............................. ............................. .............................. ............................. .................2 ...2 TECHNOLOGY TRANSFER AT A GLANCE FOR START-UPS .....................4 GETTING THE BUSINESS TO TAKE OFF ................................................9 FREQUENTLY ASKED QUESTIONS .............. ............................. ............................. .........................16 ...........16 STANFORD POLICIES, CONFLICT OF INTEREST, AND CONFLIC CONFLICTT OF COMMITMENT................................. ............................................... ....................25 ......25 FOR FACULTY: BEST PRACTICES FOR START-UPS .............................29 FOR STUDENTS: BEST PRACTICES FOR START-UPS ..........................33 OTL AND ENTREPRENEURS ..............................................................36 RESOURCEE GUIDE..... RESOURC GUIDE................... ............................. ............................. ............................. ............................37 .............37
o an idea or a new company takes root and begins to grow. For more than hal a century, Stanord has been the source o ideas and discoveries – educating entrepreneurs and ostering breakthrough technologies. Visitors rom all over the country and the world come to Stanord to nd the secret o Stanord’s entrepreneurial success. The secret, o course, is that there is no secret. It’s a mindset. It’s an approach. It’s the Stanord culture. As many people have observed about Stanord, “it’s ok to experiment” – and to ail. It’s also ok to be successul, wildly successul.
This guide is intended or Stanord aculty, aculty, sta, and students interested in launching a start-up company based on intellectual property that is owned by the University. It is a broad over view o the start-up process and provides background on resources available or Stanord entrepreneurs. Certain sections contain inormation derived rom “An MIT Inventor’s Guide to Startups: For aculty and students.” This guide was written in December 2012. Stanord’s policies and practices may be revised rom time to time. Inventors should reer to Stanord’s Research Policy Handbook (rph.stanord.edu (rph.stanord.edu)) or current guidelines on intellectual property, conict o interest and commitment and other issues. Additional inormation may be ound on the Ofce o Technology Licensing (OTL) website: http://otl.stanord.edu or by contacting our ofce at 650-723-0651.
Overview n the last several decades, over 6,000 companies were ounded by members o the Stanord community. Most o these businesses, including Hewlett-Packard and Yahoo!, were started by Stanord aculty and students and did not use intellectual property owned by the University. Other start-up companies were ormed to commercialize inventions that are subject to the intellectual property polices o Stanord University – ounding technologies that were created with more than incidental use o Stanord resources or in the course o the inventors’ institutional responsibilities or research and education. With all o this entrepreneurial activity, some people are surprised to learn that only about 8-12 o OTL’s licenses per year (approximately 10% o its total licenses) are to start-up companies. Some examples o start-ups based on intellectual property owned by Stanord and licensed through the Ofce o Technology Licensing (OTL) include: •AmatiCommunications
(acquired by Texas Instruments) •Amprius •Anacor
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1
When Stanord intellectual property is the basis or a start-up company, Stanord’s goal is to maximize the chances o successully transerring the technology while prioritizing the University’s missions o research and education. This obligation is the shared responsibility o OTL and the startup entrepreneurs, especially i they expect to maintain connections to the University (as aculty, sta or students) during the creation o the start-up or ater it is launched. This guide summarizes some o these duties, but individuals are expected to take responsibility or knowing and ollowing Stanord’s policies about conicts o commitment and conicts o interest and related matters. These policies can be ound at http://www.stanord.edu/ group/coi/ . OTL realizes that most Stanord technologies are early stage and require a signifcant investment to bring them to the marketplace. To do this, start-up entrepreneurs must have a passion that borders on irrational optimism and aith in the technologies along with an eagerness to commit their own time and resources to develop these inventions. OTL is willing to negotiate with new companies to crat an agreement that is consistent with other licenses and can help them succeed. We do not claim to know which new ventures will be successul – that’s let to luck and hard work – but we want to work with these new companies so they can get a start.
•KaiPharmaceuticals(acquiredby
Amgen) •KosanBiosciences(acquiredby Bristol-MyersSquibb)
•ASSIA,Inc.
•LynceanTechnologies
•BrionTechnologies(acquiredby
•Lytro
ASML)
•MokaFive
•C3Nano
•Novariant
•CircuitTherapeutics
•Personalis
•Coverity
•Picarro
•Google
•Rigel
•ImmuMetrix
•StemCells,Inc.
•iRhythm
•SwitchGear
3
Overview n the last several decades, over 6,000 companies were ounded by members o the Stanord community. Most o these businesses, including Hewlett-Packard and Yahoo!, were started by Stanord aculty and students and did not use intellectual property owned by the University. Other start-up companies were ormed to commercialize inventions that are subject to the intellectual property polices o Stanord University – ounding technologies that were created with more than incidental use o Stanord resources or in the course o the inventors’ institutional responsibilities or research and education. With all o this entrepreneurial activity, some people are surprised to learn that only about 8-12 o OTL’s licenses per year (approximately 10% o its total licenses) are to start-up companies. Some examples o start-ups based on intellectual property owned by Stanord and licensed through the Ofce o Technology Licensing (OTL) include: •AmatiCommunications
(acquired by Texas Instruments)
Amgen) •KosanBiosciences(acquiredby
•Anacor
Bristol-MyersSquibb)
•ASSIA,Inc.
•LynceanTechnologies
•BrionTechnologies(acquiredby
•Lytro
ASML)
•MokaFive
•C3Nano
•Novariant
•CircuitTherapeutics
•Personalis
•Coverity
•Picarro
•Google
•Rigel
•ImmuMetrix
•StemCells,Inc.
•iRhythm
•SwitchGear
3
Technology Transer at a Glance or Start-Ups he technology transer process at Stanord can be conceptualized as a continuous cycle wherein discoveries in the laboratory are developed into licensed products in the marketplace that then help und the next generation o research and innovation. For the most part, the steps o the cycle are similar whether the company commercializing the technology is a new venture or an established one.
RESEARC H
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I N D I V SC E N L O T I O S U N
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S S
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THE CYCLE OF INNOVATION
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I P N R T O E P L E L R E
L I C E
T C Y T
N S I N G
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L I C I N E N G S E E
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OTL realizes that most Stanord technologies are early stage and require a signifcant investment to bring them to the marketplace. To do this, start-up entrepreneurs must have a passion that borders on irrational optimism and aith in the technologies along with an eagerness to commit their own time and resources to develop these inventions. OTL is willing to negotiate with new companies to crat an agreement that is consistent with other licenses and can help them succeed. We do not claim to know which new ventures will be successul – that’s let to luck and hard work – but we want to work with these new companies so they can get a start.
•KaiPharmaceuticals(acquiredby
•Amprius
2
When Stanord intellectual property is the basis or a start-up company, Stanord’s goal is to maximize the chances o successully transerring the technology while prioritizing the University’s missions o research and education. This obligation is the shared responsibility o OTL and the startup entrepreneurs, especially i they expect to maintain connections to the University (as aculty, sta or students) during the creation o the start-up or ater it is launched. This guide summarizes some o these duties, but individuals are expected to take responsibility or knowing and ollowing Stanord’s policies about conicts o commitment and conicts o interest and related matters. These policies can be ound at http://www.stanord.edu/ group/coi/ .
E N G E E T I N S MA R K I C E L A I N D F
Here we’ve highlighted some o the steps that may be particularly relevant to entrepreneurs starting a new venture based on Stanord intellectual property. OTL’s Inventor’s Guide, http://otl.stanord.edu/documents/OTLinventorsguide. pd , explains these general stages in urther detail.
1. RESEARCH Observations and experiments during research activities oten lead to discoveries and inventions or the development o sotware and other copyrighted works. An invention is any useul process, machine, composition o matter (e.g., a chemical or biological compound), or any new or useul improvement o the same. Oten, multiple researchers – including trainees and research sta – contribute to an invention and may be inventors. 2. INVENTION AND TECHNOLOGY DISCLOSURE This written notice o invention to OTL begins the ormal technology transer process. The Invention and Technology Disclosure (also known as an invention disclosure) is a confdential document, and should ully describe the new aspects o the invention, including the critical solution it provides and its advantages and benefts over current technologies. Invention disclosures can be submitted through OTL’s Researcher Portal – http:// otlportal.stanord.edu. 3. ASSESSMENT The disclosure is assigned to a Licensing Associate who will review the invention disclosure and evaluate the invention’s commercialization potential based on patent searches (i applicable), market analysis, existing competitive technologies and other actors. This assessment guides the licensing strategy. I the inventors are contemplating starting a company around the technology, it is helpul to inorm OTL about their plans during the assessment stage. The OTL Licensing Associate will take this into consideration when evaluating the technology and developing a strategy or intellectual property (IP) protection, marketing, and licensing. 5
Technology Transer at a Glance or Start-Ups he technology transer process at Stanord can be conceptualized as a continuous cycle wherein discoveries in the laboratory are developed into licensed products in the marketplace that then help und the next generation o research and innovation. For the most part, the steps o the cycle are similar whether the company commercializing the technology is a new venture or an established one.
A Y
R O
RESEARC H
E S
T I L
I N D I V SC E N L O T I O S U N
R E
N
O I
T A
Z
A
I
S S E
L
A I
C R
S S
E
M
M
E
THE CYCLE OF INNOVATION
M
O C
N
T
I P N R T O E P L E L R E
L I C E
T C Y T
N S I N G
U
A
L
T O
S E A LE C T
L I C I N E N G S E E
4
E N G E E T I N S MA R K I C E L A I N D
Here we’ve highlighted some o the steps that may be particularly relevant to entrepreneurs starting a new venture based on Stanord intellectual property. OTL’s Inventor’s Guide, http://otl.stanord.edu/documents/OTLinventorsguide. pd , explains these general stages in urther detail.
1. RESEARCH Observations and experiments during research activities oten lead to discoveries and inventions or the development o sotware and other copyrighted works. An invention is any useul process, machine, composition o matter (e.g., a chemical or biological compound), or any new or useul improvement o the same. Oten, multiple researchers – including trainees and research sta – contribute to an invention and may be inventors. 2. INVENTION AND TECHNOLOGY DISCLOSURE This written notice o invention to OTL begins the ormal technology transer process. The Invention and Technology Disclosure (also known as an invention disclosure) is a confdential document, and should ully describe the new aspects o the invention, including the critical solution it provides and its advantages and benefts over current technologies. Invention disclosures can be submitted through OTL’s Researcher Portal – http:// otlportal.stanord.edu. 3. ASSESSMENT The disclosure is assigned to a Licensing Associate who will review the invention disclosure and evaluate the invention’s commercialization potential based on patent searches (i applicable), market analysis, existing competitive technologies and other actors. This assessment guides the licensing strategy. I the inventors are contemplating starting a company around the technology, it is helpul to inorm OTL about their plans during the assessment stage. The OTL Licensing Associate will take this into consideration when evaluating the technology and developing a strategy or intellectual property (IP) protection, marketing, and licensing.
F
4. INTELLECTUAL PROPERTY PROTECTION (i appropriate, necessary, or warranted) Patent protection, a common legal protection method, begins with the fling o a patent application with the U.S. Patent and Trademark Ofce and, when appropriate, oreign patent ofces. Once a patent application has been fled, it requires several years and tens o thousands o dollars to obtain an issued patent. Other common orms o IP protection include copyright and trademark. Unique biological materials and sotware can oten be successully licensed without ormal IP protection.
5
To choose the best licensee OTL evaluates which company is in the best position to develop the technology and bring it to the marketplace. A well-established company typically has resources, business networks and product development experience but can lack commitment to the technology. A small company o ten has the singular ocus and passion o a technology champion, the drive and “re in the belly” to bring the technology orward and see that it succeeds – but insucient experience or resources to make sure it can happen. To assess the commitment o potential licensees, OTL asks companies o r
5. MARKETING Stanord is committed to broadly marketing all technologies to appropriate companies that could be interested in commercializing the particular invention. With the inventors’ input, OTL creates a marketing overview o the technology; identifes candidate companies (potential licensees) that have the expertise, resources, and business networks to bring the technology to market; and contacts those companies to generate interest and gauge commercial potential. To ensure air and open access to potential licensees, OTL markets all Stanord technologies, including those with start-up interest. Broad marketing helps the University nd companies who may be interested in developing the technology and helps to mitigate and manage conficts-ointerest i the technology is licensed to a start-up (see “Particular Conficto-Interest Issues” on OTL’s website – http://otl.stanord.edu/inventors/
a development plan with details about how they intend to develop and market the technology. This plan shou ld make the case that the co mpany and its leadership are the best choice or commercializing the invention. It is important to note that inventors may not serve a management role in the start-up company unless they plan to leave Stanord (either permanently or on a leave o absence).
7. LICENSING OTL negotiates and executes a license or option agreement. This agreement is a contract between the University and a company in which certain University rights to a technology are granted to a company in return or fnancial and other benefts. Most start-ups request an exclusive license because they believe it is required to raise unding or the company. Typical terms or an exclusive license with a start-up company are described on page 21. They include equity, royalties, diligence milestones and an assignment ee.
resources/inventors_pcii.html). The marketing period typically lasts 2-3 months beore the Licensing Associate selects a licensee (i there is any
When Stanord inventors are involved in a start-up company, licensing
commercial interest at all). Sometimes entrepreneurial inventors receive
to that company raises concerns about conficts o commitment and
valuable industry eedback and begin to establish relationships with
interest. The University needs to maintain an arms-length relationship
potential partners during this process.
in all its business transactions (including license negotiations). The nal license agreement must all within the normal range o terms and
6
6. SELECTING THE BEST LICENSEE(S) Typically, there is only one par ty or none at all interested in licensing. I there are several parties interested in a license, OTL may grant non-exclusive or feld-o-use licenses. I it is not possible to accommodate all interested parties, OTL will license the company most committed and able to bring the technology to the marketplace.
conditions o similar licenses to non-inventor-associated companies (taking into consideration the unique circumstances o each technology and transaction). OTL cannot conclude any agreements until the appropriate confict o interest reviews and approvals are completed. Additional inormation about negotiations and confict issues can be ound in the FAQs and Stanord Policies sections o this guide.
7
4. INTELLECTUAL PROPERTY PROTECTION (i appropriate, necessary, or warranted) Patent protection, a common legal protection method, begins with the fling o a patent application with the U.S. Patent and Trademark Ofce and, when appropriate, oreign patent ofces. Once a patent application has been fled, it requires several years and tens o thousands o dollars to obtain an issued patent. Other common orms o IP protection include copyright and trademark. Unique biological materials and sotware can oten be successully licensed without ormal IP protection.
To choose the best licensee OTL evaluates which company is in the best position to develop the technology and bring it to the marketplace. A well-established company typically has resources, business networks and product development experience but can lack commitment to the technology. A small company o ten has the singular ocus and passion o a technology champion, the drive and “re in the belly” to bring the technology orward and see that it succeeds – but insucient experience or resources to make sure it can happen. To assess the commitment o potential licensees, OTL asks companies o r
5. MARKETING Stanord is committed to broadly marketing all technologies to appropriate companies that could be interested in commercializing the particular invention. With the inventors’ input, OTL creates a marketing overview o the technology; identifes candidate companies (potential licensees) that have the expertise, resources, and business networks to bring the technology to market; and contacts those companies to generate interest and gauge commercial potential. To ensure air and open access to potential licensees, OTL markets all Stanord technologies, including those with start-up interest. Broad marketing helps the University nd companies who may be interested in developing the technology and helps to mitigate and manage conficts-ointerest i the technology is licensed to a start-up (see “Particular Conficto-Interest Issues” on OTL’s website – http://otl.stanord.edu/inventors/
a development plan with details about how they intend to develop and market the technology. This plan shou ld make the case that the co mpany and its leadership are the best choice or commercializing the invention. It is important to note that inventors may not serve a management role in the start-up company unless they plan to leave Stanord (either permanently or on a leave o absence).
7. LICENSING OTL negotiates and executes a license or option agreement. This agreement is a contract between the University and a company in which certain University rights to a technology are granted to a company in return or fnancial and other benefts. Most start-ups request an exclusive license because they believe it is required to raise unding or the company. Typical terms or an exclusive license with a start-up company are described on page 21. They include equity, royalties, diligence milestones and an assignment ee.
resources/inventors_pcii.html). The marketing period typically lasts 2-3 months beore the Licensing Associate selects a licensee (i there is any
When Stanord inventors are involved in a start-up company, licensing
commercial interest at all). Sometimes entrepreneurial inventors receive
to that company raises concerns about conficts o commitment and
valuable industry eedback and begin to establish relationships with
interest. The University needs to maintain an arms-length relationship
potential partners during this process.
in all its business transactions (including license negotiations). The nal license agreement must all within the normal range o terms and
6
6. SELECTING THE BEST LICENSEE(S) Typically, there is only one par ty or none at all interested in licensing. I there are several parties interested in a license, OTL may grant non-exclusive or feld-o-use licenses. I it is not possible to accommodate all interested parties, OTL will license the company most committed and able to bring the technology to the marketplace.
conditions o similar licenses to non-inventor-associated companies (taking
8. COMMERCIALIZATION Most University inventions are very early stage and require urther research and development eorts. The licensee typically makes signifcant business investments o time and unding to commercialize the product or service. These steps may entail regulatory approvals, sales and marketing, support, training, and other activities. The licensee will be expected to meet commercialization milestones described in the l icense.
Getting the Business to Take O
into consideration the unique circumstances o each technology and transaction). OTL cannot conclude any agreements until the appropriate confict o interest reviews and approvals are completed. Additional inormation about negotiations and confict issues can be ound in the FAQs
7
and Stanord Policies sections o this guide.
aunching a successul start-up company requires comIt is airly common or licensees, particularly early stage ventures, to evolve their strategy and development plans as the company grows, aces technical challenges, and recognizes new market opportunities. OTL can
mitment, dedication, and perseverance. Many companies ail even i the core technology is innovative and
work with licensees to amend and renegotiate license agreements in
promising. However, when the right technology is implemented
response to these changes i the request and reasons to renegotiate are
at the right time, it has the potential to signicantly benet
reasonable.
9. ROYALTIES Royalties received by the University rom licensees are distributed annually to inventors, departments, and schools according to Stanord pol icy. Royalties include both cash and equity received rom licensees in consideration or granting the license. The inventors, including those who are involved in the start-up, will receive their share under the Stanord policy (see the Research Policy Handbook). 10. REINVEST Royalties shared throughout the University collectively oster the creation o the next generation o research and innovation.
society. Components o a successul start-up include a compelling concept, a strong market opportunity, a competitive advantage, a sound business and nancial plan, and an experienced management team. Luck and timing are also important. Entrepreneurs spearheading the new company ormation will be the key champions or the technology and the start-up. In addition to navigating the standard technology transer process, they are responsible or a variety o tasks such as identiying the market opportunity, developing a business plan, andpursuingnancing.Everystart-upfollowsitsownuniquepath.Butthere
are many common steps to get the business o the ground as outlined in this section. Additional Resources are available on pages 37-42 to help guide Stanord entrepreneurs through this process. Oten an important immediate question or Stanord inventors is whether they want to be involved in these tasks directly as part o the company team or to continue in their Stanord roles as aculty, research sta or students. Guidance about these decisions and inormation about options (e.g., taking a leave o absence) is available rom School Deans and the Dean o Research. Also, aculty mentors oten share their personal experiences with other
8
inventors.ThereisadditionalinformationaboutStanford’sBestPracticesfor
Start-ups on pages 29-35 o this booklet.
9
8. COMMERCIALIZATION Most University inventions are very early stage and require urther research and development eorts. The licensee typically makes signifcant business investments o time and unding to commercialize the product or service. These steps may entail regulatory approvals, sales and marketing, support, training, and other activities. The licensee will be expected to meet commercialization milestones described in the l icense.
Getting the Business to Take O aunching a successul start-up company requires com-
It is airly common or licensees, particularly early stage ventures, to evolve their strategy and development plans as the company grows, aces technical challenges, and recognizes new market opportunities. OTL can
mitment, dedication, and perseverance. Many companies ail even i the core technology is innovative and
work with licensees to amend and renegotiate license agreements in
promising. However, when the right technology is implemented
response to these changes i the request and reasons to renegotiate are
at the right time, it has the potential to signicantly benet
reasonable.
9. ROYALTIES Royalties received by the University rom licensees are distributed annually to inventors, departments, and schools according to Stanord pol icy. Royalties include both cash and equity received rom licensees in consideration or granting the license. The inventors, including those who are involved in the start-up, will receive their share under the Stanord policy (see the Research Policy Handbook). 10. REINVEST Royalties shared throughout the University collectively oster the creation o the next generation o research and innovation.
society. Components o a successul start-up include a compelling concept, a strong market opportunity, a competitive advantage, a sound business and nancial plan, and an experienced management team. Luck and timing are also important. Entrepreneurs spearheading the new company ormation will be the key champions or the technology and the start-up. In addition to navigating the standard technology transer process, they are responsible or a variety o tasks such as identiying the market opportunity, developing a business plan, andpursuingnancing.Everystart-upfollowsitsownuniquepath.Butthere
are many common steps to get the business o the ground as outlined in this section. Additional Resources are available on pages 37-42 to help guide Stanord entrepreneurs through this process. Oten an important immediate question or Stanord inventors is whether they want to be involved in these tasks directly as part o the company team or to continue in their Stanord roles as aculty, research sta or students. Guidance about these decisions and inormation about options (e.g., taking a leave o absence) is available rom School Deans and the Dean o Research. Also, aculty mentors oten share their personal experiences with other
8
inventors.ThereisadditionalinformationaboutStanford’sBestPracticesfor
9
Start-ups on pages 29-35 o this booklet.
NETWORK AND SEEK INPUT Throughout the start-up process, advice and mentorship are invaluable in building the oundation or a successul business. Stanord cultivates a strong entrepreneurial spirit and has many resources to help with networking and provide guidance or a path to commercialization. Stanord’s ormal programs and entrepreneurship classes, combined with inormal advice rom advisors, riends, and colleagues, can help shepherd entrepreneurs through all acets o the start-up process – such as writing a business plan, building a management team, attracting board members, and meeting potential investors. Entrepreneurs should be careul to separate their outside start-up activities rom their Stanord responsibilities. For example, aculty are expected to use the time they are allowed or outside proessional activities, typically 13 days a quarter (see the Research Policy Handbook), and students need to consult with advisors overseeing their academic progress. Stanord Entrepreneurship Network (SEN)
Stanord entrepreneurs searching or advice, mentors and networking opportunitiescanstartattheStanfordEntrepreneurshipNetwork(SEN). SENservesasasinglepointofcontact,bringingtogetherabouttwo
dozen entrepreneurship-related campus programs under one umbrella organization.SENofferseducationalandnetworkingevents,hostsan
annual Entrepreneurship Week, and holds “Coaches-on-Call” ofce hours or students to gather advice rom industry proessionals. Inormation about additionalSENprogramsandresourcesisavailableatsen.stanord.edu.
Several key actors should be considered when deciding to orm a start-up company: •Technology innovation and patent/IP position – Is broad patent coverage possible? Are there background patents owned by others? Will the company have reedom-to-operate to develop the product? •Development risk – How ar along is the technology? How much time and money is required to bring a product to market? •Development costs versus investment return – Can investors obtain their required rates o return (e.g. 10X initial investment in 5 years)? •Product strategy – Does the technology lend itsel to opportunities or multiple products/platorms? •Market size, dynamics and potential – Is the market big enough? Is it controlled by a ew players? Is there a healthy growth trend? •Financial potential – What market share can be obtained? Is it worth the eort? A business plan should be clear and concise. It will be easier to “sell” the vision to investors and attract management talent with a ormal business plan. Investors are interested in investing in start-ups with high growth potential. The business plan should address what investors want to know: the compelling concept, competitive advantage (including patent/IP position), market and fnancial potential, and proven management team. The business plan is generally a confdential document and should be careully distributed. Components o a typical business plan include: •Company name
DEVELOP A BUSINESS CASE A thoughtul business case must be developed to understand the market potential, competition, and unding needs. This should include a plan or developing the technology and attaining sufcient revenue to sustain and grow the company. This plan will be useul when meeting with investors and pursuing unding.
•Mission statement – A guiding vision or the company. •Current market situation – How big is the market? What are its critical
problems and shortcomings? How is the l andscape changing? Who is the competition? Is it a consolidated or ragmented industry? •The company’s solutions – Which products or methods will be developed? How long will it take? What are its applications? What are the company’s unique advantages and are those advantages sustainable? How will the current market change due to the company’s products, methods, etc.? •Patent/IP landscape
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11
NETWORK AND SEEK INPUT Throughout the start-up process, advice and mentorship are invaluable in building the oundation or a successul business. Stanord cultivates a strong entrepreneurial spirit and has many resources to help with networking and provide guidance or a path to commercialization. Stanord’s ormal programs and entrepreneurship classes, combined with inormal advice rom advisors, riends, and colleagues, can help shepherd entrepreneurs through all acets o the start-up process – such as writing a business plan, building a management team, attracting board members, and meeting potential investors. Entrepreneurs should be careul to separate their outside start-up activities rom their Stanord responsibilities. For example, aculty are expected to use the time they are allowed or outside proessional activities, typically 13 days a quarter (see the Research Policy Handbook), and students need to consult with advisors overseeing their academic progress. Stanord Entrepreneurship Network (SEN)
Stanord entrepreneurs searching or advice, mentors and networking opportunitiescanstartattheStanfordEntrepreneurshipNetwork(SEN). SENservesasasinglepointofcontact,bringingtogetherabouttwo
dozen entrepreneurship-related campus programs under one umbrella organization.SENofferseducationalandnetworkingevents,hostsan
annual Entrepreneurship Week, and holds “Coaches-on-Call” ofce hours or students to gather advice rom industry proessionals. Inormation about additionalSENprogramsandresourcesisavailableatsen.stanord.edu.
Several key actors should be considered when deciding to orm a start-up company: •Technology innovation and patent/IP position – Is broad patent coverage possible? Are there background patents owned by others? Will the company have reedom-to-operate to develop the product? •Development risk – How ar along is the technology? How much time and money is required to bring a product to market? •Development costs versus investment return – Can investors obtain their required rates o return (e.g. 10X initial investment in 5 years)? •Product strategy – Does the technology lend itsel to opportunities or multiple products/platorms? •Market size, dynamics and potential – Is the market big enough? Is it controlled by a ew players? Is there a healthy growth trend? •Financial potential – What market share can be obtained? Is it worth the eort? A business plan should be clear and concise. It will be easier to “sell” the vision to investors and attract management talent with a ormal business plan. Investors are interested in investing in start-ups with high growth potential. The business plan should address what investors want to know: the compelling concept, competitive advantage (including patent/IP position), market and fnancial potential, and proven management team. The business plan is generally a confdential document and should be careully distributed. Components o a typical business plan include: •Company name
DEVELOP A BUSINESS CASE A thoughtul business case must be developed to understand the market potential, competition, and unding needs. This should include a plan or developing the technology and attaining sufcient revenue to sustain and grow the company. This plan will be useul when meeting with investors and pursuing unding.
•Mission statement – A guiding vision or the company. •Current market situation – How big is the market? What are its critical
problems and shortcomings? How is the l andscape changing? Who is the competition? Is it a consolidated or ragmented industry? •The company’s solutions – Which products or methods will be developed? How long will it take? What are its applications? What are the company’s unique advantages and are those advantages sustainable? How will the current market change due to the company’s products, methods, etc.? •Patent/IP landscape
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11
•Marketing and sales strategy – Pricing, Product, Placement. How will the
START-UP FINANCING CYCLE
target market know about the product? Which sales distribution channels will be used?
Angels, FFF, Seed Capital
•5-10 year strategic/fnancial plan: •Financialprojections–Whenwillthecompanybreakeven? •Keymilestonesrequiredtomeetnancialprojections. •Keymetricstobemeasuredandtracked.
e u n e v e R
Mezzanine
K A E R B
•Management team – Members with resumes/CV and roles. •Timeline and key milestones Valley o Death
Public Market
3rd
N E V E
•Fundingrequirements.
The Resource Guide o this booklet contains a list o reerences that provide additional inormation about writing business plans.
IPO
Secondary Oerings
•Keyassumptionsandhowtheychangebasedonacompetitor’sresponse.
•Risk actors and mitigation measures
VCs, Acquisitions/Mergers, Strategic Alliances
2nd 1st
Time
This graphic is an example o a start-up fnancing cycle using traditional unding sources, through an initial public oering (IPO). There could be more or ewer rounds o unding. The 1st, 2nd, and3rdroundscanbeequivalenttoSeriesA,B,andC.(Source:“StartupCompany”Wikipedia,
PURSUE INVESTORS/FUNDING Commercializing technology is typically a capital-intensive process, with the exception o some sotware companies. Entrepreneurs need to present their opportunity to people with the unds to help them make it happen: typically these are venture capitalists, angel investors and – perhaps in the initial stages – riends and amily. Using Stanord’s network is one way to star t the personal introduction process that can help get the attention o angel and venture capital investors.
The Free Encyclopedia. Wikimedia Foundation, Inc. 11 March 2009. Web. June 2012 < http:// en.wikipedia.org/wiki/File:Startup_fnancing_cycle.svg>)
Angel Investing
Angel investors are typically high-net-worth individuals who have a personal interest in unding new companies. They are oten willing to invest in earlier stages and with smaller amounts o money than VC’s, in exchange or equity. They can take passive or active roles in the start-up and typically have a longer investment horizon than VC’s. According to the Center or Venture ResearchattheUniversityofNewHampshire,totalAngelinvestmentsin
There is a rich history o start-up investing in Silicon Valley with a broad network o investors. The most common orms o technology start-up unding are angel investing and venture capital (VC). In very early stages o start-ups, entrepreneurs raise unds on their own and through riends and amily unds (FFF). However, technology commercialization oten requires multiple rounds o unding rom multiple sources.
12
Angels and Venture Capitalists (VC’s) are private investors who take on high risk ventures with goals o high returns. Return requirements vary based on industry and stage o unding, but many investors seek 10x their initial investment over 5 years.
2011 were $22.5 billion to a total o 66,230 entrepreneurial ventures. Venture Capital
Compared to angels, venture capitalists can invest larger amounts o money (usually millions o dollars) in a company and in exchange they tend to receive more equity. VC’s also exercise control and bring experienced management talent to help guide and grow the company. Sometimes they invest in several rounds o unding and are part o a larger consortium o investors in the company. According to PriceWaterhouseCoopers (www. pwcmoneytree.com), the U.S. total o VC investments in 2011 was $29.118 billion rom 3,752 deals, with $11.931 billion and 1,183 deals in the Silicon Valley alone.
13
•Marketing and sales strategy – Pricing, Product, Placement. How will the
START-UP FINANCING CYCLE
target market know about the product? Which sales distribution channels will be used?
Angels, FFF, Seed Capital
•5-10 year strategic/fnancial plan: •Financialprojections–Whenwillthecompanybreakeven? •Keymilestonesrequiredtomeetnancialprojections. •Keymetricstobemeasuredandtracked.
e u n e v e R
Mezzanine N E V E K A E R B
•Fundingrequirements. •Management team – Members with resumes/CV and roles. •Timeline and key milestones
The Resource Guide o this booklet contains a list o reerences that provide additional inormation about writing business plans.
IPO
Secondary Oerings
•Keyassumptionsandhowtheychangebasedonacompetitor’sresponse.
•Risk actors and mitigation measures
VCs, Acquisitions/Mergers, Strategic Alliances
Valley o Death
Public Market
3rd 2nd 1st
Time
This graphic is an example o a start-up fnancing cycle using traditional unding sources, through an initial public oering (IPO). There could be more or ewer rounds o unding. The 1st, 2nd, and3rdroundscanbeequivalenttoSeriesA,B,andC.(Source:“StartupCompany”Wikipedia,
PURSUE INVESTORS/FUNDING Commercializing technology is typically a capital-intensive process, with the exception o some sotware companies. Entrepreneurs need to present their opportunity to people with the unds to help them make it happen: typically these are venture capitalists, angel investors and – perhaps in the initial stages – riends and amily. Using Stanord’s network is one way to star t the personal introduction process that can help get the attention o angel and venture capital investors.
The Free Encyclopedia. Wikimedia Foundation, Inc. 11 March 2009. Web. June 2012 < http:// en.wikipedia.org/wiki/File:Startup_fnancing_cycle.svg>)
Angel Investing
Angel investors are typically high-net-worth individuals who have a personal interest in unding new companies. They are oten willing to invest in earlier stages and with smaller amounts o money than VC’s, in exchange or equity. They can take passive or active roles in the start-up and typically have a longer investment horizon than VC’s. According to the Center or Venture ResearchattheUniversityofNewHampshire,totalAngelinvestmentsin
There is a rich history o start-up investing in Silicon Valley with a broad network o investors. The most common orms o technology start-up unding are angel investing and venture capital (VC). In very early stages o start-ups, entrepreneurs raise unds on their own and through riends and amily unds (FFF). However, technology commercialization oten requires multiple rounds o unding rom multiple sources.
12
Angels and Venture Capitalists (VC’s) are private investors who take on high risk ventures with goals o high returns. Return requirements vary based on industry and stage o unding, but many investors seek 10x their initial investment over 5 years.
Venture Capital
Compared to angels, venture capitalists can invest larger amounts o money (usually millions o dollars) in a company and in exchange they tend to receive more equity. VC’s also exercise control and bring experienced management talent to help guide and grow the company. Sometimes they invest in several rounds o unding and are part o a larger consortium o investors in the company. According to PriceWaterhouseCoopers (www. pwcmoneytree.com), the U.S. total o VC investments in 2011 was $29.118 billion rom 3,752 deals, with $11.931 billion and 1,183 deals in the Silicon Valley alone.
Non-traditional Funding
PITFALLS
Start-ups may also investigate and pursue unding rom non-traditional sources. Some examples o these are: •Government grants – Certain research grants are available through
Newcompanyformationisahighriskproposition.WhilemanyStanford
programssuchasSBIR/STTR(SmallBusinessInnovationResearch andSmallBusinessTechnologyTransfer– http://www.sbir.gov /) or the
Department o Energy (https://arpa-e-oa.energy.gov /). •Banks–Banksdonotusuallyparticipateinequityinvestmentsin
new companies, but they are a source o loans, par ticularly or capital purchases when there is some kind o collateral (such as large equipment). •Crowdunding – Various companies enable entrepreneurial und-raising by pooling small investments rom a network o individuals.
HOW INVESTORS EVALUATE A COMPANY Investors listen to pitches constantly and only a small portion o start-ups get unding. The investors will determine i the star t-up meets their strategic and fnancial goals and i the company fts into their current portolio o investments. VC unds are targeting at least an overall 20% annual return on the und which is signifcantly higher than other investment vehicles such as stocks and bonds. Investors typically perorm due diligence beore unding new opportunities, and they oten view the act that a new company is working with Stanord OTL positively in this analysis. For example, OTL’s involvement may provide an extra measure o reassurance to investors that IP rights are being properly
negativelyimpactacompany.Butevenfailureisoftenseenasoneof
evaluate the patentability and commercial potential o an invention beore embarking on the costly and l engthy process o obtaining patent protection.)
Silicon Valley’s greatest strengths.
ipmarketingadvisor.com/content/2009/10/27/ten -tips-or-start-up-valuation/.
EXIT STRATEGY Investors plan to recoup their investments via exit strategies. Typically, a VC hopes to sell its equity in a por tolio company within 3-7 years, ideally through an initial public oering (IPO). Another exit strategy could be through mergers and acquisitions (M&A) instead o an IPO.
13
start-ups are successul, others are not. Some common problems that can cause academic start-ups to ail are: •Inexperienced management – A strong, experienced, cohesive team is required or a successul start-up company. Problems can arise i ounders or other members o the team do not have enough start-up and business experience or i ounders, new management, and investors do not have the same strategic vision. •Lack o unding – A start-up needs sufcient capital to overcome technical challenges, reach critical business milestones, and progress to the next phase o development. To attract investors the company must have a solid business plan and a strong management team. •Technology does not meet commercial need – Sometimes the science is innovative and exciting but does not correlate to a critical commercial need, or current solutions are still better than the new technology. •Timing – Even when a commercial need exists, the company may miss the market. Sometimes this is because the market is not ready or a product, e.g. too early, still too expensive, unrecognized need. Sometimes it is because the product is too late to the market and the need has al ready been flled by a dierent technology or competitors have leaprogged over the company with an even better product. •Marginal Niche – I the target market is smaller than expected the company may not meet its fnancial targets. •Bad luck – Sometimes events outside o the entrepreneur’s control can
securedbythecompany.(Bearinmind,however,thatOTLwillcarefully
TheIPMarketingBlogoffersTenTipsforstart-upvaluation–http://www.
14
2011 were $22.5 billion to a total o 66,230 entrepreneurial ventures.
Additional inormation about why University start-ups ail can be ound at http://www.technologytransertactics.com/content/2010/07/14/surveysuggests-top-10-reasons-university-start-ups-ail/. Also, Innovation Daily oers advice about Ten Common Arrogance Traps or Star tups to Avoid – http://www.innovationamerica.us/index.php/innovation-daily/19683 -tencommon-arrogance-traps-or-startups-to-avoid. 15
Non-traditional Funding
PITFALLS
Start-ups may also investigate and pursue unding rom non-traditional sources. Some examples o these are: •Government grants – Certain research grants are available through
Newcompanyformationisahighriskproposition.WhilemanyStanford
programssuchasSBIR/STTR(SmallBusinessInnovationResearch andSmallBusinessTechnologyTransfer– http://www.sbir.gov /) or the
Department o Energy (https://arpa-e-oa.energy.gov /). •Banks–Banksdonotusuallyparticipateinequityinvestmentsin
new companies, but they are a source o loans, par ticularly or capital purchases when there is some kind o collateral (such as large equipment). •Crowdunding – Various companies enable entrepreneurial und-raising by pooling small investments rom a network o individuals.
HOW INVESTORS EVALUATE A COMPANY Investors listen to pitches constantly and only a small portion o start-ups get unding. The investors will determine i the star t-up meets their strategic and fnancial goals and i the company fts into their current portolio o investments. VC unds are targeting at least an overall 20% annual return on the und which is signifcantly higher than other investment vehicles such as stocks and bonds. Investors typically perorm due diligence beore unding new opportunities, and they oten view the act that a new company is working with Stanord OTL positively in this analysis. For example, OTL’s involvement may provide an extra measure o reassurance to investors that IP rights are being properly securedbythecompany.(Bearinmind,however,thatOTLwillcarefully
negativelyimpactacompany.Butevenfailureisoftenseenasoneof
evaluate the patentability and commercial potential o an invention beore embarking on the costly and l engthy process o obtaining patent protection.)
Silicon Valley’s greatest strengths.
TheIPMarketingBlogoffersTenTipsforstart-upvaluation–http://www.
ipmarketingadvisor.com/content/2009/10/27/ten -tips-or-start-up-valuation/.
14
EXIT STRATEGY Investors plan to recoup their investments via exit strategies. Typically, a VC hopes to sell its equity in a por tolio company within 3-7 years, ideally through an initial public oering (IPO). Another exit strategy could be through mergers and acquisitions (M&A) instead o an IPO.
Frequently Asked Questions HOW ARE ENTREPRENEURIAL INVENTORS INVOLVED IN THE LICENSING PROCESS? OTL’s relationship with inventors becomes more complex when inventors want to start a company. Inventors are the source o Stanord’s inventions and copyrighted works. In a sense, they produce the “product” OTL is trying to “sell.” OTL works closely with our inventors because we rely on their participation in the patenting and marketing process. OTL encourages inventor input: or leads on potential licensees; or inormed assessments o the technical and market easibility o the invention; and or suggestions on which licensing strategy would best commercialize the technology. However, inventors do not par ticipate in the actual negotiation o license agreements with potential licensees. OTL gives careul consideration to inventors’ input and strives to keep them inormed throughout the process.
Additional inormation about why University start-ups ail can be ound at http://www.technologytransertactics.com/content/2010/07/14/surveysuggests-top-10-reasons-university-start-ups-ail/. Also, Innovation Daily oers advice about Ten Common Arrogance Traps or Star tups to Avoid – http://www.innovationamerica.us/index.php/innovation-daily/19683 -tencommon-arrogance-traps-or-startups-to-avoid. 15
is one way o being a good steward o the technology and managing institutional conicts o interest. Also, because o its non-proft status, the University must avoid privileged access to its intellectual proper ty (IP). Marketing mitigates allegations o no bid contracts and allows all interested parties to have an oppor tunity to learn about new technologies rom Stanord and to negotiate a license. In a air and open process, the best licensee can be chosen. Inventors should cooperate in good aith with OTL’s marketing eorts. Inventors should share inormation with potential licensees to help them determine i they are interested in investing resources to develop the technology. Inventors oten beneft rom such interaction by learning more about the commercialization processes and the type o inormation that a company needs to evaluate a technology. Even i Stanord ultimately grants a license to the inventor start-up, inventors oten get a better sense o the marketplace, or even fnd potential partners, rom Stanord marketing the technology. With a transparent process, the University can be confdent that, in the
But,theconictsthatmayarisefromaninventor’smultiplepotential
unbiasedprofessionaljudgmentofOTL,thebestlicenseeisdevelopingthe
roles and relationships – University researcher, royalty recipient, company consultant, company board member – make such participation unwise. Direct involvement in negotiation places a aculty inventor in a management role or the new company, which is not permitted by Stanord policy.
technology.
DOES OTL GIVE ANY SPECIAL CONSIDERATION TO INVENTOR START-UPS WHEN SELECTING A LICENSEE? Stanord does not give preerential treatment to its inventors and their startups. However, OTL and the University do recognize the importance o the inventor’s role in helping to transer technology and in evaluating the ability o a potential licensee to develop licensed products.
16
start-ups are successul, others are not. Some common problems that can cause academic start-ups to ail are: •Inexperienced management – A strong, experienced, cohesive team is required or a successul start-up company. Problems can arise i ounders or other members o the team do not have enough start-up and business experience or i ounders, new management, and investors do not have the same strategic vision. •Lack o unding – A start-up needs sufcient capital to overcome technical challenges, reach critical business milestones, and progress to the next phase o development. To attract investors the company must have a solid business plan and a strong management team. •Technology does not meet commercial need – Sometimes the science is innovative and exciting but does not correlate to a critical commercial need, or current solutions are still better than the new technology. •Timing – Even when a commercial need exists, the company may miss the market. Sometimes this is because the market is not ready or a product, e.g. too early, still too expensive, unrecognized need. Sometimes it is because the product is too late to the market and the need has al ready been flled by a dierent technology or competitors have leaprogged over the company with an even better product. •Marginal Niche – I the target market is smaller than expected the company may not meet its fnancial targets. •Bad luck – Sometimes events outside o the entrepreneur’s control can
Inventors who are interested in starting a company or who have a strong preerence or a particular company can be wary o Stanord’s policy to market all inventions. Sometimes inventors worry that their “baby” will be given away to a stranger. However, Stanord eels strongly that marketing
HOW MUCH CAN I TELL POTENTIAL INVESTORS ABOUT THE INVENTION? First and oremost, research at Stanord must comply with Stanord’s Openness in Research Policy (see the Research Policy Handbook). In particular, research results – the underlying data, the processes, and fnal results o research – must not be secret and must also be accessible by al l interested persons. For the purposes o investment discussions that occur prior to public dissemination o their work under Stanord’s research policies, entrepreneurs will need to describe the general aspects o the invention to potential investors in order to generate any interest. Inormation can be shared with investors, but entrepreneurs are not permitted to delay disclosure o their research results by postponing presentations or slowing down the process o manuscript submissions. 17
Frequently Asked Questions HOW ARE ENTREPRENEURIAL INVENTORS INVOLVED IN THE LICENSING PROCESS? OTL’s relationship with inventors becomes more complex when inventors want to start a company. Inventors are the source o Stanord’s inventions and copyrighted works. In a sense, they produce the “product” OTL is trying to “sell.” OTL works closely with our inventors because we rely on their participation in the patenting and marketing process. OTL encourages inventor input: or leads on potential licensees; or inormed assessments o the technical and market easibility o the invention; and or suggestions on which licensing strategy would best commercialize the technology. However, inventors do not par ticipate in the actual negotiation o license agreements with potential licensees. OTL gives careul consideration to inventors’ input and strives to keep them inormed throughout the process.
Inventors should cooperate in good aith with OTL’s marketing eorts. Inventors should share inormation with potential licensees to help them determine i they are interested in investing resources to develop the technology. Inventors oten beneft rom such interaction by learning more about the commercialization processes and the type o inormation that a company needs to evaluate a technology. Even i Stanord ultimately grants a license to the inventor start-up, inventors oten get a better sense o the marketplace, or even fnd potential partners, rom Stanord marketing the technology. With a transparent process, the University can be confdent that, in the
But,theconictsthatmayarisefromaninventor’smultiplepotential
unbiasedprofessionaljudgmentofOTL,thebestlicenseeisdevelopingthe
roles and relationships – University researcher, royalty recipient, company consultant, company board member – make such participation unwise. Direct involvement in negotiation places a aculty inventor in a management role or the new company, which is not permitted by Stanord policy.
technology.
DOES OTL GIVE ANY SPECIAL CONSIDERATION TO INVENTOR START-UPS WHEN SELECTING A LICENSEE? Stanord does not give preerential treatment to its inventors and their startups. However, OTL and the University do recognize the importance o the inventor’s role in helping to transer technology and in evaluating the ability o a potential licensee to develop licensed products.
16
is one way o being a good steward o the technology and managing institutional conicts o interest. Also, because o its non-proft status, the University must avoid privileged access to its intellectual proper ty (IP). Marketing mitigates allegations o no bid contracts and allows all interested parties to have an oppor tunity to learn about new technologies rom Stanord and to negotiate a license. In a air and open process, the best licensee can be chosen.
Inventors who are interested in starting a company or who have a strong preerence or a particular company can be wary o Stanord’s policy to market all inventions. Sometimes inventors worry that their “baby” will be given away to a stranger. However, Stanord eels strongly that marketing
HOW MUCH CAN I TELL POTENTIAL INVESTORS ABOUT THE INVENTION? First and oremost, research at Stanord must comply with Stanord’s Openness in Research Policy (see the Research Policy Handbook). In particular, research results – the underlying data, the processes, and fnal results o research – must not be secret and must also be accessible by al l interested persons. For the purposes o investment discussions that occur prior to public dissemination o their work under Stanord’s research policies, entrepreneurs will need to describe the general aspects o the invention to potential investors in order to generate any interest. Inormation can be shared with investors, but entrepreneurs are not permitted to delay disclosure o their research results by postponing presentations or slowing down the process o manuscript submissions. 17
Some entrepreneurs are more comortable sharing details o an invention ater a patent application is fled. A patent fling allows the inventor to cl aim and prove a fling date or his/her idea as described in the application, which can be useul. However, a patent application does not provide the rights o an issued patent to prevent others rom practicing the invention.
the company but the entrepreneur oten does not know what kind o license (feld o use, fnancials, etc.) the investor requires. One solution is or an entrepreneur to take an option to a license, with the terms o the license to be negotiated later. The negotiations or an option/license and investment unding agreement will oten occur in parallel.
Understanding that delays must be avoided, i an inventor or entrepreneur wants to discuss the details o a technology while the work is being prepared or publication and prior to fling a patent application or other IP protection, a
WHAT IS AN OPTION AND CAN A START-UP TAKE THAT INSTEAD OF A FULL LICENSE? An option agreement is oten used to reserve rights in an invention while a company evaluates the technology, explores unding oppor tunities and raises the capital needed to ully license the rights in question. Option agreements include fnancial consideration to Stanord in order to reserve those rights. Start-up companies sometimes preer this route and OTL may grant options or any time period up to one year in duration, most oten in 6-month increments.
Non-DisclosureAgreement(NDA)isoftenusedtofacilitateopendiscussions
and to prevent the loss o patent rights rom inadvertent disclosure. OTL can provideNDAsforcompaniesthatareevaluatingthetechnologyforpotential
licensing. The start-up management or its legal counsel typically handles NDAsfordiscussionsofthetechnologyonbehalfofthecompany(e.g.with potentialinvestorsorcorporatepartners).KeepinmindthatmanyVC’sand strategiccorporateinvestorsdonotsignNDAsbecausetheyfearitwould
constrain their existing portolio technologies or uture opportunities.
When a technology is either optioned or licensed to an inventor’s start-up company, the inventors are required to stop initiating new work on that
SampleNDAagreementsareavailableonOTL’swebsite: http://otl.stanord.
technologyatStanford(thatis,usingUniversityresources).Subjecttoconict
edu/industry/resources/industry_res.html.
o interest (COI) review, the fnal separation between a company and Stanord is determined on a case by case basis, but it must be completed within 12 months. It is important that inventors plan accordingly and begin to wind down Stanord activities beore either the licensing or optioning takes place.
WHEN CAN THE START-UP MANAGEMENT NEGOTIATE A LICENSE? Ater broadly marketing the invention, i the start-up is the best choice or commercializing the technology, OTL will negotiate with a representative o the company to grant a license to the new company. Stanord markets its inventions because it is committed to looking or the best licensees to transer technology rom Stanord to the marketplace or the public beneft. Also,undertheBayh-DoleAct,theUniversityhasanimplicitobligationto
ensure that inventions unded by the Federal government are eectively commercialized. Under Stanord policy, aculty, sta and students cannot represent the company in negotiations due to conicts o interest.
18
WHICH COMES FIRST, THE LICENSE AGREEMENT OR THE FUNDING AGREEMENT? This is a chicken and egg scenario. Investors usually want to be sure the entrepreneur has an option or license to the technology beore investing in
HOW LONG DOES IT TAKE TO LICENSE TECHNOLOGY FROM OTL? The time it takes to license an invention varies. Ater the technology is disclosed to OTL it could take several weeks to a ew months to review the invention and then apply or a patent application (i OTL eels fling an application is appropriate). OTL will also need about 2-3 months to market the invention to other potential licensees and assess licensing interest rom the broader community. I other companies express interest, the marketing period may be longer. During this time, the entrepreneur(s) could begin to develop other aspects o the new venture to better position the start-up as a potential licensee (e.g. develop a business plan, research entrepreneur resources, begin seeking
19
Some entrepreneurs are more comortable sharing details o an invention ater a patent application is fled. A patent fling allows the inventor to cl aim and prove a fling date or his/her idea as described in the application, which can be useul. However, a patent application does not provide the rights o an issued patent to prevent others rom practicing the invention.
the company but the entrepreneur oten does not know what kind o license (feld o use, fnancials, etc.) the investor requires. One solution is or an entrepreneur to take an option to a license, with the terms o the license to be negotiated later. The negotiations or an option/license and investment unding agreement will oten occur in parallel.
Understanding that delays must be avoided, i an inventor or entrepreneur wants to discuss the details o a technology while the work is being prepared or publication and prior to fling a patent application or other IP protection, a
WHAT IS AN OPTION AND CAN A START-UP TAKE THAT INSTEAD OF A FULL LICENSE? An option agreement is oten used to reserve rights in an invention while a company evaluates the technology, explores unding oppor tunities and raises the capital needed to ully license the rights in question. Option agreements include fnancial consideration to Stanord in order to reserve those rights. Start-up companies sometimes preer this route and OTL may grant options or any time period up to one year in duration, most oten in 6-month increments.
Non-DisclosureAgreement(NDA)isoftenusedtofacilitateopendiscussions
and to prevent the loss o patent rights rom inadvertent disclosure. OTL can provideNDAsforcompaniesthatareevaluatingthetechnologyforpotential
licensing. The start-up management or its legal counsel typically handles NDAsfordiscussionsofthetechnologyonbehalfofthecompany(e.g.with potentialinvestorsorcorporatepartners).KeepinmindthatmanyVC’sand strategiccorporateinvestorsdonotsignNDAsbecausetheyfearitwould
constrain their existing portolio technologies or uture opportunities.
When a technology is either optioned or licensed to an inventor’s start-up company, the inventors are required to stop initiating new work on that
SampleNDAagreementsareavailableonOTL’swebsite: http://otl.stanord.
technologyatStanford(thatis,usingUniversityresources).Subjecttoconict
edu/industry/resources/industry_res.html.
o interest (COI) review, the fnal separation between a company and Stanord is determined on a case by case basis, but it must be completed within 12 months. It is important that inventors plan accordingly and begin to wind down Stanord activities beore either the licensing or optioning takes place.
WHEN CAN THE START-UP MANAGEMENT NEGOTIATE A LICENSE? Ater broadly marketing the invention, i the start-up is the best choice or commercializing the technology, OTL will negotiate with a representative o the company to grant a license to the new company. Stanord markets its inventions because it is committed to looking or the best licensees to transer technology rom Stanord to the marketplace or the public beneft. Also,undertheBayh-DoleAct,theUniversityhasanimplicitobligationto
ensure that inventions unded by the Federal government are eectively commercialized. Under Stanord policy, aculty, sta and students cannot represent the company in negotiations due to conicts o interest.
18
WHICH COMES FIRST, THE LICENSE AGREEMENT OR THE FUNDING AGREEMENT? This is a chicken and egg scenario. Investors usually want to be sure the entrepreneur has an option or license to the technology beore investing in
investors) but there is no guarantee that the new venture will get the exact license they want. I OTL decides that the start-up company is the best possible licensee, negotiations with OTL or a license could take several weeks to many months. However, some negotiations may only take a ew days i both par ties can agree to terms easily. Inormation about streamlining these negotiations can be ound at http://otl.stanord.edu/documents/ streamlining_negotiations_with_otl.pd . In addition, licensing to start-up companies usually presents conict o commitment (COC) and conict o interest (COI) issues that must be disclosed by inventors and managed by the University (see the Research Policy Handbook). Conict o commitment and interest policies are determined by the Faculty Senate. The School Deans, the Dean o Research and the Provost have responsibility or their implementation. I aculty, sta or students propose to have a management role in the start-up company, approvals or leaves o absence must be obtained. OTL cannot conclude any agreements until the appropriate COC and COI reviews and approvals have been completed. This review can take place in parallel to l icense negotiations and can begin once the basic parameters o the license are decided and the aculty member submits the required ad hoc COI disclosure to the appropriate Deans. More inormation about COC and COI can be ound on pages 25-27.
HOW LONG DOES IT TAKE TO LICENSE TECHNOLOGY FROM OTL? The time it takes to license an invention varies. Ater the technology is disclosed to OTL it could take several weeks to a ew months to review the invention and then apply or a patent application (i OTL eels fling an application is appropriate). OTL will also need about 2-3 months to market the invention to other potential licensees and assess licensing interest rom the broader community. I other companies express interest, the marketing period may be longer. During this time, the entrepreneur(s) could begin to develop other aspects o the new venture to better position the start-up as a potential licensee (e.g. develop a business plan, research entrepreneur resources, begin seeking
19
WHAT ARE TYPICAL LICENSING TERMS FOR STANFORD’S AGREEMENTS WITH START-UP COMPANIES? License agreements have both fnancial and non-fnancial terms. These var y based on the particular set o acts or each agreement – or example, the stage o development, the feld o use, and the commercialization risks are all taken into consideration. Typical terms consist o: •Negotiatednancialtermsincludingissueandannualfees,payments
when technical milestones are achieved, royalties on product sales, and an assignment ee. Exclusive licensees are generally expected to pay patent expenses. Financial terms may also include a small, minority share o equity in the company. •Fieldofuserestrictions,sinceastart-upcompanyoftendoesnothavethe
resources to develop all the applications o an invention. •Diligencetermstoensurereasonableprogressinthegrowingthecompany
and commercializing the invention. Many entrepreneurs are concerned that the fnancial terms are overly onerous and unreasonable. OTL has completed hundreds o agreements with startups and understands the constraints they have. OTL’s goal is to negotiate an agreement that is air and reasonable based on our experience, on the industry and on how the Stanord technology fts into the ultimate product. BecausetheUniversityneedstomaintainanarms-lengthrelationshipinall
its business transactions, license negotiations and the fnal license agreement or Stanord-associated companies must all within the normal range o terms and conditions o similar licenses to any other company (taking into consideration the unique circumstances o each technology and transaction).
20
There are several documents on OTL’s website that provide urther inormation about valuations and provisions ound in standard license agreements: •HowOTLThinksabouttheValueofaLicense–http://otl.stanord.edu/ documents/termslicensevalue.pd •SampleOptionAgreement–http://otl.stanord.edu/documents/ shorteroption1.pd •SampleExclusivelicensethatincludesequity–http://otl.stanord.edu/ documents/equityexcl.pd
21
investors) but there is no guarantee that the new venture will get the exact license they want. I OTL decides that the start-up company is the best possible licensee, negotiations with OTL or a license could take several weeks to many months. However, some negotiations may only take a ew days i both par ties can agree to terms easily. Inormation about streamlining these negotiations can be ound at http://otl.stanord.edu/documents/ streamlining_negotiations_with_otl.pd . In addition, licensing to start-up companies usually presents conict o commitment (COC) and conict o interest (COI) issues that must be disclosed by inventors and managed by the University (see the Research Policy Handbook). Conict o commitment and interest policies are determined by the Faculty Senate. The School Deans, the Dean o Research and the Provost have responsibility or their implementation. I aculty, sta or students propose to have a management role in the start-up company, approvals or leaves o absence must be obtained. OTL cannot conclude any agreements until the appropriate COC and COI reviews and approvals have been completed. This review can take place in parallel to l icense negotiations and can begin once the basic parameters o the license are decided and the aculty member submits the required ad hoc COI disclosure to the appropriate Deans. More inormation about COC and COI can be ound on pages 25-27.
WHAT ARE TYPICAL LICENSING TERMS FOR STANFORD’S AGREEMENTS WITH START-UP COMPANIES? License agreements have both fnancial and non-fnancial terms. These var y based on the particular set o acts or each agreement – or example, the stage o development, the feld o use, and the commercialization risks are all taken into consideration. Typical terms consist o: •Negotiatednancialtermsincludingissueandannualfees,payments
when technical milestones are achieved, royalties on product sales, and an assignment ee. Exclusive licensees are generally expected to pay patent expenses. Financial terms may also include a small, minority share o equity in the company. •Fieldofuserestrictions,sinceastart-upcompanyoftendoesnothavethe
resources to develop all the applications o an invention. •Diligencetermstoensurereasonableprogressinthegrowingthecompany
and commercializing the invention. Many entrepreneurs are concerned that the fnancial terms are overly onerous and unreasonable. OTL has completed hundreds o agreements with startups and understands the constraints they have. OTL’s goal is to negotiate an agreement that is air and reasonable based on our experience, on the industry and on how the Stanord technology fts into the ultimate product. BecausetheUniversityneedstomaintainanarms-lengthrelationshipinall
its business transactions, license negotiations and the fnal license agreement or Stanord-associated companies must all within the normal range o terms and conditions o similar licenses to any other company (taking into consideration the unique circumstances o each technology and transaction). There are several documents on OTL’s website that provide urther inormation about valuations and provisions ound in standard license agreements: •HowOTLThinksabouttheValueofaLicense–http://otl.stanord.edu/ documents/termslicensevalue.pd •SampleOptionAgreement–http://otl.stanord.edu/documents/ shorteroption1.pd •SampleExclusivelicensethatincludesequity–http://otl.stanord.edu/ documents/equityexcl.pd
20
DOES THE UNIVERSITY TAKE EQUITY IN START-UPS? Stanord can accept equity (typically no more than 5% ownership) as part
21
DOES STANFORD TAKE A SEAT ON THE COMPANY BOARD? No,nordoesStanfordtakeanactiveroleinmanagingthecompany.
ofthenancialtermsofthelicense.Becausemoststart-upcompanieshave
limited cash, equity is oten substituted or some o the cash consideration. Equity is also a way or the University to share some o the risk associated with the start-ups. A decision to take equity must make sense or both the University and the company. In addition, when OTL enters into an exclusive license agreement with a privately-held company (such as a start-up), the standard contract allows Stanord to participate as a co-investor to purchase additional equity in the company’s private fnancing rounds prior to initial public oering (IPO). This decision is made by the Chie Financial Ofcer o the University according to established criteria and is independent o OTL. As a co -investor, Stanord does not negotiate the terms o uture private investments; it takes the same terms that the lead investor negotiates.
HOW DOES OTL MANAGE THE EQUITY GRANTED AS PART OF A LICENSE AGREEMENT? The distribution o equity diers slightly rom distribution o cash r oyalties. Ater 15% is deducted or OTL’s administrative ee, inventors ordinarily receive their proportional share (1/3) o equity directly rom the licensee. The remainder is earmarked to split between the OTL Research and Fellowship Fund (administered by the Vice Provost and Dean o Research) and the Vice Provost or Graduate Education/OTL Graduate Education Fund (administered by the Vice Provost or Graduate Education). The University share is managed by the Stanord Management Company which generally liquidates equity as soon as a public market exists. I Stanord holds equity in a company that conducts a clinical trial at Stanord, the University may divest itsel o the equity and earned royalties or institutional conict o interest reasons. The license will include language providing or this divestiture o equity.
22
WILL STANFORD ASSIGN THE PATENT TO A START-UP (OR EXISTING COMPANY)? No,StanforddoesnotassignortransferIPrights.Whenappropriate,Stanford
can grant an exclusive license ater marketing and deciding that the star t-up is the best candidate to commercialize the invention.
WHAT HAPPENS IF THERE ARE FOLLOW-ON PATENTS TO THE ORIGINAL PATENT? It depends on who owns the ollow-on patents. Typically, Stanord will have fled the initial patent application that is exclusively licensed; the exclusive licensee provides input or the prosecution o this original patent. Follow-on inventions conceived by the licensee without Stanord involvement usually belong to the licensee. These patents must be fled by a dierent law frm than the original patent (to avoid the conict o interest caused by the attorney representing both Stanord and the licensee). Follow-on inventions based on work at Stanord will be owned by Stanord and the licensing o the new invention will be handled by OTL as i it were a new disclosure. In other words, the existing licensee will not be automatically granted a license to the ollow-on invention. CAN A START-UP GET A LICENSE WITHOUT BEING INCORPORATED? Thecompanyisnotrequiredtobeofciallyincorporated.But,itshouldhave
a name and place o business. OTL must sign an agreement with an entity, not individual inventors. Stanord employees may not sign an agreement on behal o the company nor have positions/titles at the company that imply a management role.
IF THE START-UP IS BASED ON AN INVENTION JOINTLY OWNED BY STANFORD AND ANOTHER INSTITUTION, WHAT HAPPENS TO THE INVENTION? Typically, OTL enters into an Inter-Institutional Agreement whereby one o the institutions will take the lead. This way a company can negotiate a single agreement with an exclusive license to both par ties’ IP rights.
23
DOES THE UNIVERSITY TAKE EQUITY IN START-UPS? Stanord can accept equity (typically no more than 5% ownership) as part
DOES STANFORD TAKE A SEAT ON THE COMPANY BOARD? No,nordoesStanfordtakeanactiveroleinmanagingthecompany.
ofthenancialtermsofthelicense.Becausemoststart-upcompanieshave
limited cash, equity is oten substituted or some o the cash consideration. Equity is also a way or the University to share some o the risk associated with the start-ups. A decision to take equity must make sense or both the University and the company. In addition, when OTL enters into an exclusive license agreement with a privately-held company (such as a start-up), the standard contract allows Stanord to participate as a co-investor to purchase additional equity in the company’s private fnancing rounds prior to initial public oering (IPO). This decision is made by the Chie Financial Ofcer o the University according to established criteria and is independent o OTL. As a co -investor, Stanord does not negotiate the terms o uture private investments; it takes the same terms that the lead investor negotiates.
HOW DOES OTL MANAGE THE EQUITY GRANTED AS PART OF A LICENSE AGREEMENT? The distribution o equity diers slightly rom distribution o cash r oyalties. Ater 15% is deducted or OTL’s administrative ee, inventors ordinarily receive their proportional share (1/3) o equity directly rom the licensee. The remainder is earmarked to split between the OTL Research and Fellowship Fund (administered by the Vice Provost and Dean o Research) and the Vice Provost or Graduate Education/OTL Graduate Education Fund (administered by the Vice Provost or Graduate Education). The University share is managed by the Stanord Management Company which generally liquidates equity as soon as a public market exists. I Stanord holds equity in a company that conducts a clinical trial at Stanord, the University may divest itsel o the equity and earned royalties or institutional conict o interest reasons. The license will include language providing or this divestiture o equity.
22
IF A START-UP NEEDS TECHNOLOGY FROM ANOTHER INSTITUTION BESIDES STANFORD, BUT THE TECHNOLOGY IS NOT JOINTLY-OWNED WITH STANFORD, WILL THE COMPANY NEED A SEPARATE LICENSE? Under most circumstances the company will need to negotiate separately with the other institution or a license. However, schools do sometimes package their technologies together in a single license agreement. For complicated technologies, the company will need to conduct a reedom to operate (FTO) analysis and confrm that the company has a path to acquire all the necessary IP components the start-up will need to make its proposed products. IF THE INVENTION IS UNPATENTED SOFTWARE, WILL THE START-UP STILL NEED A LICENSE? Yes, a copyright license is required i the sotware alls under Stanord’s ownership policy (see the Research Policy Handbook). CAN I CONTINUE TO DO RESEARCH AT STANFORD ON THE TECHNOLOGY THAT IS THE BASIS OF A START-UP? Stanord always reserves the right to practice its own inventions or research purposes. However, researchers are not permitted to continue to develop technology at Stanord or the beneft o a start-up in which the researcher has a fnancial interest. See the next section (Stanord Policies and Conict o Interest) or urther details.
WILL STANFORD ASSIGN THE PATENT TO A START-UP (OR EXISTING COMPANY)? No,StanforddoesnotassignortransferIPrights.Whenappropriate,Stanford
can grant an exclusive license ater marketing and deciding that the star t-up is the best candidate to commercialize the invention.
WHAT HAPPENS IF THERE ARE FOLLOW-ON PATENTS TO THE ORIGINAL PATENT? It depends on who owns the ollow-on patents. Typically, Stanord will have fled the initial patent application that is exclusively licensed; the exclusive licensee provides input or the prosecution o this original patent. Follow-on inventions conceived by the licensee without Stanord involvement usually belong to the licensee. These patents must be fled by a dierent law frm than the original patent (to avoid the conict o interest caused by the attorney representing both Stanord and the licensee). Follow-on inventions based on work at Stanord will be owned by Stanord and the licensing o the new invention will be handled by OTL as i it were a new disclosure. In other words, the existing licensee will not be automatically granted a license to the ollow-on invention. CAN A START-UP GET A LICENSE WITHOUT BEING INCORPORATED? Thecompanyisnotrequiredtobeofciallyincorporated.But,itshouldhave
a name and place o business. OTL must sign an agreement with an entity, not individual inventors. Stanord employees may not sign an agreement on behal o the company nor have positions/titles at the company that imply a management role.
IF THE START-UP IS BASED ON AN INVENTION JOINTLY OWNED BY STANFORD AND ANOTHER INSTITUTION, WHAT HAPPENS TO THE INVENTION? Typically, OTL enters into an Inter-Institutional Agreement whereby one o the institutions will take the lead. This way a company can negotiate a single agreement with an exclusive license to both par ties’ IP rights.
23
Stanord Policies, Confict o Interest, and Confict o Commitment INTELLECTUAL PROPERTY POLICY AND OWNERSHIP Stanord’s intellectual property policies are outlined in the Research Policy Handbook: http://rph.stanord.edu /. For new companies started by Stanord aculty, sta, or students with technology created at Stanord and alling under Stanord policy, ownership o IP Rights (IPR) will be with the University. This ownership policy applies to any sort o intellectual property, including: patents, copyrights on sotware, semiconductor maskworks, tangible research property and trademarks. MANAGING CONFLICT OF INTEREST AT STANFORD OTL works with Stanord inventors both to acilitate technology transer and to manage the licensing process. In the case o Stanord-afliated start-ups, this process oten raises issues regarding conicts o interest (COI). A ull explanation o Stanord’s policies and procedures or managing COI can be ound at http://www.stanord.edu/group/coi /. OTL must be particularly sensitive to public perception when a potential licensee is a Stanord-afliated start-up or a aculty-associated company. Marketing inventions and negotiating rom an arms-length relationship are two ways that OTL manages potential COI (see Particular Conict o Interest Issues at http://otl.stanord.edu/inventors/resources/inventors_pcii.html and theBestPracticesofFacultyandStudentStart-upsfoundinthisguide).
In addition, ad hoc disclosures are required whenever a current or prospective relationship creates the potential or COI (e.g., when there are additional fnancial relationships proposed between a aculty member and a prospective licensee or research sponsor). A COI occurs when there 24
25
IF A START-UP NEEDS TECHNOLOGY FROM ANOTHER INSTITUTION BESIDES STANFORD, BUT THE TECHNOLOGY IS NOT JOINTLY-OWNED WITH STANFORD, WILL THE COMPANY NEED A SEPARATE LICENSE? Under most circumstances the company will need to negotiate separately with the other institution or a license. However, schools do sometimes package their technologies together in a single license agreement. For complicated technologies, the company will need to conduct a reedom to operate (FTO) analysis and confrm that the company has a path to acquire all the necessary IP components the start-up will need to make its proposed products. IF THE INVENTION IS UNPATENTED SOFTWARE, WILL THE START-UP STILL NEED A LICENSE? Yes, a copyright license is required i the sotware alls under Stanord’s ownership policy (see the Research Policy Handbook). CAN I CONTINUE TO DO RESEARCH AT STANFORD ON THE TECHNOLOGY THAT IS THE BASIS OF A START-UP? Stanord always reserves the right to practice its own inventions or research purposes. However, researchers are not permitted to continue to develop technology at Stanord or the beneft o a start-up in which the researcher has a fnancial interest. See the next section (Stanord Policies and Conict o Interest) or urther details.
Stanord Policies, Confict o Interest, and Confict o Commitment INTELLECTUAL PROPERTY POLICY AND OWNERSHIP Stanord’s intellectual property policies are outlined in the Research Policy Handbook: http://rph.stanord.edu /. For new companies started by Stanord aculty, sta, or students with technology created at Stanord and alling under Stanord policy, ownership o IP Rights (IPR) will be with the University. This ownership policy applies to any sort o intellectual property, including: patents, copyrights on sotware, semiconductor maskworks, tangible research property and trademarks. MANAGING CONFLICT OF INTEREST AT STANFORD OTL works with Stanord inventors both to acilitate technology transer and to manage the licensing process. In the case o Stanord-afliated start-ups, this process oten raises issues regarding conicts o interest (COI). A ull explanation o Stanord’s policies and procedures or managing COI can be ound at http://www.stanord.edu/group/coi /. OTL must be particularly sensitive to public perception when a potential licensee is a Stanord-afliated start-up or a aculty-associated company. Marketing inventions and negotiating rom an arms-length relationship are two ways that OTL manages potential COI (see Particular Conict o Interest Issues at http://otl.stanord.edu/inventors/resources/inventors_pcii.html and theBestPracticesofFacultyandStudentStart-upsfoundinthisguide).
In addition, ad hoc disclosures are required whenever a current or prospective relationship creates the potential or COI (e.g., when there are additional fnancial relationships proposed between a aculty member and a prospective licensee or research sponsor). A COI occurs when there 24
25
is a divergence between an individual’s private interests and his or her proessional obligations to the University such that an independent observer might reasonably question whether the individual’s proessional actions or decisions are determined by personal fnancial considerations. A COI depends on the situation and not on the character or actions o the individual. A resource page or COI is available at http://www.stanord.edu/group/coi/ and a guide to ad hoc COI disclosures can be ound at http://www.stanord. edu/dept/DoR/ad_hoc.html. COI reviewers are concerned with whether or not a researcher/aculty member can separate University research rom company research, provide unbiased and appropriate guidance and support to students, maintain academic integrity in research and education, and adhere to government mandated policies. OTL cannot conclude any agreements until the appropriate COI reviews and approvals have been completed.
CONFLICT OF COMMITMENT Stanord aculty members owe their primary proessional allegiance to the University. Their primar y commitment o time and intellectual energies should be to the education, research, and scholarship programs o the institution. Conicts o commitment usually involve issues o time allocation. I a situation raising questions o conict o commitment arises, aculty should discuss the situation with their department chair or school dean, or the Dean o Research. More inormation about University policies concerning conicts o interest and commitment can be ound at http://www.stanord.edu/group/ coi/ andintheBestPracticessectionsofthisguide.
26
CONSULTING AND OWNERSHIP OF INTELLECTUAL PROPERTY Start-up companies may hire Stanord inventors as consultants. Since the University does not ordinarily review consulting arrangements, inventors should be clear about the delineation between University work and private consulting. Stanord inventors cannot enter into any agreement that creates copyright or patent obligations that conict with their SU-18 agreement to assign their rights to Stanord. Faculty members must separate and clearly distinguish on-going University research rom work being conducted at the companyasoutlinedintheBestPracticesforFacultyStart-upsinthisguide.
Stanord will ordinarily presume that intellectual property developed 1) while a aculty is consulting at the company and 2) on an on-going company program (e.g., drug development, medical device, chip development, sotware issue, or any other specifc company research or design activity) belongs to the company as long as there has not been more than incidental use o Stanord resources. Stanord resources are considered to include acilities, equipment, the time and expertise o students and post-doctoral ellows and research sta, but do not include use o personal computers, telephones, or libraries. When a aculty member is consulting or a start-up company with which he or she has another fnancial relationship, it is par ticularly important to make certain that the separation between consulting activities and the aculty member’s academic program, including research and teaching activities, is clear to all parties. These policies also apply during sabbatical leave. Inormation on requirements or aculty consulting activities and agreements can be ound at http://rph.stanord.edu /docs/consulting_requirements. pd . When a question arises as to the appropriate delineation between a researcher’s University responsibilities and a researcher’s consulting obligation, the researcher should discuss the situation with his or her cognizant dean. I there is a question o IP ownership, the IP should be disclosed to the University.
27
is a divergence between an individual’s private interests and his or her proessional obligations to the University such that an independent observer might reasonably question whether the individual’s proessional actions or decisions are determined by personal fnancial considerations. A COI depends on the situation and not on the character or actions o the individual. A resource page or COI is available at http://www.stanord.edu/group/coi/ and a guide to ad hoc COI disclosures can be ound at http://www.stanord. edu/dept/DoR/ad_hoc.html. COI reviewers are concerned with whether or not a researcher/aculty member can separate University research rom company research, provide unbiased and appropriate guidance and support to students, maintain academic integrity in research and education, and adhere to government mandated policies. OTL cannot conclude any agreements until the appropriate COI reviews and approvals have been completed.
CONFLICT OF COMMITMENT Stanord aculty members owe their primary proessional allegiance to the University. Their primar y commitment o time and intellectual energies should be to the education, research, and scholarship programs o the institution. Conicts o commitment usually involve issues o time allocation. I a situation raising questions o conict o commitment arises, aculty should discuss the situation with their department chair or school dean, or the Dean o Research. More inormation about University policies concerning conicts o interest and commitment can be ound at http://www.stanord.edu/group/ coi/ andintheBestPracticessectionsofthisguide.
CONSULTING AND OWNERSHIP OF INTELLECTUAL PROPERTY Start-up companies may hire Stanord inventors as consultants. Since the University does not ordinarily review consulting arrangements, inventors should be clear about the delineation between University work and private consulting. Stanord inventors cannot enter into any agreement that creates copyright or patent obligations that conict with their SU-18 agreement to assign their rights to Stanord. Faculty members must separate and clearly distinguish on-going University research rom work being conducted at the companyasoutlinedintheBestPracticesforFacultyStart-upsinthisguide.
Stanord will ordinarily presume that intellectual property developed 1) while a aculty is consulting at the company and 2) on an on-going company program (e.g., drug development, medical device, chip development, sotware issue, or any other specifc company research or design activity) belongs to the company as long as there has not been more than incidental use o Stanord resources. Stanord resources are considered to include acilities, equipment, the time and expertise o students and post-doctoral ellows and research sta, but do not include use o personal computers, telephones, or libraries. When a aculty member is consulting or a start-up company with which he or she has another fnancial relationship, it is par ticularly important to make certain that the separation between consulting activities and the aculty member’s academic program, including research and teaching activities, is clear to all parties. These policies also apply during sabbatical leave. Inormation on requirements or aculty consulting activities and agreements can be ound at http://rph.stanord.edu /docs/consulting_requirements. pd . When a question arises as to the appropriate delineation between a researcher’s University responsibilities and a researcher’s consulting obligation, the researcher should discuss the situation with his or her cognizant dean. I there is a question o IP ownership, the IP should be disclosed to the University.
26
27
OBLIGATION TO SPONSORS Inventors should take particular care in disclosing all sponsors, including companies whose unding or materials led to the invention. Sponsored research agreements speciy what rights a sponsor has in any IP developed as a result o the sponsored research. Under most circumstances, Federal unding o research leading to an invention will not impose signifcant impediments on commercializing the invention via a start-up. Funding or materials provided by other entities (such as companies) may result in license rights to those entities, limiting the license rights available or a start-up. Corporate sponsors are typically granted rights to negotiate a license or any IP arising rom sponsored research, but sponsorship agreements vary widely. The Licensing Associate responsible or the invention reviews the research agreements listed on the invention disclosure to identiy any licensing restrictions on the invention.
For Faculty: Best Practices or Start-ups aculty-associated start-up companies 1 (“Start-ups”) are both opportunities and challenges or Stanord. Stanord has had a long history o entrepreneurial activity by aculty, sta, students and alumni and the University is, in general, supportive o its entrepreneurs. On the other hand, Stanord is an institution o public trust, with education and research as its mission, and a requirement to maintain openness in research. Thereore, entrepreneurial activity must be balanced by careul review o the proposed relationships, which may or may not be allowed, and which may require active management to assure openness in research, academic reedom or trainees and clear understanding about how conicts o interest are to be managed. Stanord is committed to avoiding either perceived or actual conict o interestissueswithrespecttofacultyStart-ups.BothStanfordandfaculty
have responsibilities to optimize technology transer and mitigate COI when licensing Stanord IP to a Start-up is considered.
UNIVERSITY/OTL RESPONSIBILITIES OTLmakeslicensingdecisionsbasedonitsprofessionaljudgmentabout
technology transer to achieve the best possible beneft to the public, without undue inuence rom internal or external parties.
28
1 Faculty-Associated Start-up is defned as a company where the original intellectual property originates with the aculty, where the aculty is a ounder and has a signifcant equity position in the company, and oten has an inuential role in determining the direction o the company.
29
OBLIGATION TO SPONSORS Inventors should take particular care in disclosing all sponsors, including companies whose unding or materials led to the invention. Sponsored research agreements speciy what rights a sponsor has in any IP developed as a result o the sponsored research. Under most circumstances, Federal unding o research leading to an invention will not impose signifcant impediments on commercializing the invention via a start-up. Funding or materials provided by other entities (such as companies) may result in license rights to those entities, limiting the license rights available or a start-up. Corporate sponsors are typically granted rights to negotiate a license or any IP arising rom sponsored research, but sponsorship agreements vary widely. The Licensing Associate responsible or the invention reviews the research agreements listed on the invention disclosure to identiy any licensing restrictions on the invention.
For Faculty: Best Practices or Start-ups aculty-associated start-up companies 1 (“Start-ups”) are both opportunities and challenges or Stanord. Stanord has had a long history o entrepreneurial activity by aculty, sta, students and alumni and the University is, in general, supportive o its entrepreneurs. On the other hand, Stanord is an institution o public trust, with education and research as its mission, and a requirement to maintain openness in research. Thereore, entrepreneurial activity must be balanced by careul review o the proposed relationships, which may or may not be allowed, and which may require active management to assure openness in research, academic reedom or trainees and clear understanding about how conicts o interest are to be managed. Stanord is committed to avoiding either perceived or actual conict o interestissueswithrespecttofacultyStart-ups.BothStanfordandfaculty
have responsibilities to optimize technology transer and mitigate COI when licensing Stanord IP to a Start-up is considered.
UNIVERSITY/OTL RESPONSIBILITIES OTLmakeslicensingdecisionsbasedonitsprofessionaljudgmentabout
technology transer to achieve the best possible beneft to the public, without undue inuence rom internal or external parties.
1 Faculty-Associated Start-up is defned as a company where the original intellectual property originates with the aculty, where the aculty is a ounder and has a signifcant equity position in the company, and oten has an inuential role in determining the direction o the company.
28
OTL takes several steps to eectively transer the technology while managing conict o interest. First, OTL markets all Stanord technology to ensure air and open access to potential licensees – aculty Start-ups should not receive or be perceived as receiving preerential treatment. Second, Stanord aculty/ employees are not allowed to represent the potential licensee and must not negotiate directly with OTL. Third, OTL licensing agreements may be exclusive or non-exclusive depending on what is most suitable or a given technology. Finally, the aculty member’s School Dean and the Dean o Research must review any actions that present a potential conict o interest, specifcally:
Faculty must not
•If,afterthoroughmarketing,OTLdeterminesthatafaculty-afliated
•Involvejuniorfacultythattheysuperviseincompanyactivities.Evenifthe
company is the appropriate licensee, then it documents its marketing results and summarizes the rationale or its licensing decision or the Deans. •Thefacultymembermustdiscloseanyinterest(consultingfeesand/or
stock options) in the Start-up to the Deans. •ThefacultymembermustagreetoseparateUniversityresponsibilities
rom company responsibilities according to the criteria l isted under Faculty Responsibilities. •OTLmayproceedwithlicensingonlyiftheconictisdeemedmanageable
by the Deans (based on the aculty member’s plan or separating responsibilities).
FACULTY RESPONSIBILITIES Faculty members are responsible or separating University duties or research and education rom personal fnancial interests in the company. Faculty must •Separateandclearlydistinguishon-goingUniversityresearchfromwork
being conducted at the company. •Limitconsultingforthecompanytoamaximumof13daysaquarter,per
University policy. •Serveonlyinadvisoryorconsultativerolesatthecompany[asopposed
to managerial roles or titles (e.g., CTO) suggesting management responsibility]. •Takealeaveofabsenceifengaginginamanagementrole. 30
29
•NegotiatewiththeUniversityonbehalfofthecompany. •Receivegiftsorsponsoredresearchfromthecompany. •InvolveresearchstafforotherUniversitystaffinactivitiesatthecompany.
Company personnel cannot be afliated with the University. •InvolvecompanypersonnelinStanfordresearch. •Involvecurrentstudentsincompanyactivities.Ifastudentaskstotake
a leave o absence to participate in the company, the student should be reerred to the School Dean who will review the request and oer independent advice. aculty member does not have a supervisory role, he or she should avoid situationsinwhichjuniorfacultymightfeelexpectedtobeinvolvedinthe
company. •UseUniversityfacilitiesforcompanypurposes. •UndertakehumansubjectsresearchattheUniversityasPI/protocol
director. •SupervisefacultywhoarePI/protocoldirectorsforhumansubjectsresearch
related to the company. ‘Pipelining’. Many times, the aculty member wishes to continue to do
research at Stanord in the area o interest to their Star t-up. Stanord is particularly concerned that University resources will be used to beneft the company, especially new companies that do not have their own acilities or many employees (i.e., the “virtual” company). Stanord should not be the research or development arm o a Start-up. I a new ollow-on or improvement invention is developed ater the original dominating technology has been licensed to the Start-up, OTL will still market it to all potentially interested parties. Exclusive licenses will not always be granted to the Startup, even i there is no other interest. In cases where the original technology dominates the subsequent developments, sometimes a nonexclusive license will sufce. I, in the interest o eective technology transer, it is reasonable to grant an exclusive license to the ollow-on technology, the exclusivity may be mitigated by a shor ter term o exclusivity, limited feld o use, increased diligence,etc.,subjecttoconictofinterestreviewandapproval.
31
OTL takes several steps to eectively transer the technology while managing conict o interest. First, OTL markets all Stanord technology to ensure air and open access to potential licensees – aculty Start-ups should not receive or be perceived as receiving preerential treatment. Second, Stanord aculty/ employees are not allowed to represent the potential licensee and must not negotiate directly with OTL. Third, OTL licensing agreements may be exclusive or non-exclusive depending on what is most suitable or a given technology. Finally, the aculty member’s School Dean and the Dean o Research must review any actions that present a potential conict o interest, specifcally:
Faculty must not
•If,afterthoroughmarketing,OTLdeterminesthatafaculty-afliated
•Involvejuniorfacultythattheysuperviseincompanyactivities.Evenifthe
company is the appropriate licensee, then it documents its marketing results and summarizes the rationale or its licensing decision or the Deans. •Thefacultymembermustdiscloseanyinterest(consultingfeesand/or
stock options) in the Start-up to the Deans. •ThefacultymembermustagreetoseparateUniversityresponsibilities
rom company responsibilities according to the criteria l isted under Faculty Responsibilities. •OTLmayproceedwithlicensingonlyiftheconictisdeemedmanageable
by the Deans (based on the aculty member’s plan or separating responsibilities).
FACULTY RESPONSIBILITIES Faculty members are responsible or separating University duties or research and education rom personal fnancial interests in the company. Faculty must •Separateandclearlydistinguishon-goingUniversityresearchfromwork
being conducted at the company. •Limitconsultingforthecompanytoamaximumof13daysaquarter,per
University policy. •Serveonlyinadvisoryorconsultativerolesatthecompany[asopposed
to managerial roles or titles (e.g., CTO) suggesting management responsibility]. •Takealeaveofabsenceifengaginginamanagementrole. 30
OPTION AND LICENSE AGREEMENTS TO FACULTY START-UPS Faculty-inventors are expected to wind down on-going research in the particular area that is going to be commercialized by the aculty-inventor’s Start-up. COI ofces will also review this with inventors, and it will become part o the record. An option agreement is oten used to reserve rights in a technology so that the company can begin exploring unding opportunities in or der to actually acquire the rights in question. A start-up company sometimes preers to take an option to a license, rather than an outright license itsel. OTL may grant options or any time period up to one year in duration, most oten in 6-month increments. Inventors are required to stop initiating new work on the technology at Stanord (that is, using University resources) when the technology is either licensed to a company or has been optioned to a company.Subjecttoconictofinterestreview,thenalseparationbetween
a company and Stanord may take up to 12 months, the period to be determined on a case by case basis. Since it may take several months to wind down ongoing research, it is important that inventors plan accordingly and begin the wind-down o the Stanord activities beore either the licensing or optioning takes place.
•NegotiatewiththeUniversityonbehalfofthecompany. •Receivegiftsorsponsoredresearchfromthecompany. •InvolveresearchstafforotherUniversitystaffinactivitiesatthecompany.
Company personnel cannot be afliated with the University. •InvolvecompanypersonnelinStanfordresearch. •Involvecurrentstudentsincompanyactivities.Ifastudentaskstotake
a leave o absence to participate in the company, the student should be reerred to the School Dean who will review the request and oer independent advice. aculty member does not have a supervisory role, he or she should avoid situationsinwhichjuniorfacultymightfeelexpectedtobeinvolvedinthe
company. •UseUniversityfacilitiesforcompanypurposes. •UndertakehumansubjectsresearchattheUniversityasPI/protocol
director. •SupervisefacultywhoarePI/protocoldirectorsforhumansubjectsresearch
related to the company. ‘Pipelining’. Many times, the aculty member wishes to continue to do
research at Stanord in the area o interest to their Star t-up. Stanord is particularly concerned that University resources will be used to beneft the company, especially new companies that do not have their own acilities or many employees (i.e., the “virtual” company). Stanord should not be the research or development arm o a Start-up. I a new ollow-on or improvement invention is developed ater the original dominating technology has been licensed to the Start-up, OTL will still market it to all potentially interested parties. Exclusive licenses will not always be granted to the Startup, even i there is no other interest. In cases where the original technology dominates the subsequent developments, sometimes a nonexclusive license will sufce. I, in the interest o eective technology transer, it is reasonable to grant an exclusive license to the ollow-on technology, the exclusivity may be mitigated by a shor ter term o exclusivity, limited feld o use, increased diligence,etc.,subjecttoconictofinterestreviewandapproval.
31
For Students: Best Practices or Start-ups nnovation and the translation o inventions into products that serve the public are deeply ingrained in Stanord’s culture and we have beneted greatly rom it. Stanord is supportive o aculty and students becoming inventors and starting companies – whether or not these companies are based on Stanord technology. In addition, Stanord is committed to avoiding either perceived or actual confict o interest issues with respect to start-ups. When licensing Stanord intellectual property to a start-up, both Stanord and its entrepreneurs have responsibilities to optimize technology transer and mitigate confict o interest (COI).
It’s important or inventors to understand that this policy covering options and licenses is intended to enable inventors to succeed in translating their technologiesintousewithoutjeopardizingthemissionorfundingstatusof
Stanord University. Stanord has a rich history o translating inventions, and these practices are designed to build on that strong base.
OTLmakeslicensingdecisionsbasedonitsprofessionaljudgmentabout
how to achieve the best possible beneft to the public, without inappropriate inuence rom internal or external parties. To eectively transer the technology in an unbiased way: •OTLmarketsallStanfordtechnologytoensurefairandopenaccessto
potential licensees •Start-upsshouldnotreceiveorbeperceivedasreceivingpreferential
treatment. •Studentinventors(orfaculty)involvedinastart-upmaynotnegotiate
with the University on behal o the company unless they are on leave rom Stanord. 32
33
OPTION AND LICENSE AGREEMENTS TO FACULTY START-UPS Faculty-inventors are expected to wind down on-going research in the particular area that is going to be commercialized by the aculty-inventor’s Start-up. COI ofces will also review this with inventors, and it will become part o the record. An option agreement is oten used to reserve rights in a technology so that the company can begin exploring unding opportunities in or der to actually acquire the rights in question. A start-up company sometimes preers to take an option to a license, rather than an outright license itsel. OTL may grant options or any time period up to one year in duration, most oten in 6-month increments. Inventors are required to stop initiating new work on the technology at Stanord (that is, using University resources) when the technology is either licensed to a company or has been optioned to a company.Subjecttoconictofinterestreview,thenalseparationbetween
a company and Stanord may take up to 12 months, the period to be determined on a case by case basis. Since it may take several months to wind down ongoing research, it is important that inventors plan accordingly and begin the wind-down o the Stanord activities beore either the licensing or optioning takes place.
For Students: Best Practices or Start-ups nnovation and the translation o inventions into products that serve the public are deeply ingrained in Stanord’s culture and we have beneted greatly rom it. Stanord is supportive o aculty and students becoming inventors and starting companies – whether or not these companies are based on Stanord technology. In addition, Stanord is committed to avoiding either perceived or actual confict o interest issues with respect to start-ups. When licensing Stanord intellectual property to a start-up, both Stanord and its entrepreneurs have responsibilities to optimize technology transer and mitigate confict o interest (COI).
It’s important or inventors to understand that this policy covering options and licenses is intended to enable inventors to succeed in translating their technologiesintousewithoutjeopardizingthemissionorfundingstatusof
Stanord University. Stanord has a rich history o translating inventions, and these practices are designed to build on that strong base.
OTLmakeslicensingdecisionsbasedonitsprofessionaljudgmentabout
how to achieve the best possible beneft to the public, without inappropriate inuence rom internal or external parties. To eectively transer the technology in an unbiased way: •OTLmarketsallStanfordtechnologytoensurefairandopenaccessto
potential licensees •Start-upsshouldnotreceiveorbeperceivedasreceivingpreferential
treatment. •Studentinventors(orfaculty)involvedinastart-upmaynotnegotiate
with the University on behal o the company unless they are on leave rom Stanord. 32
33
•If,afterthoroughmarketing,OTLdeterminesthataninventor-afliated
company is the appropriate licensee, OTL documents its marketing eorts and summarizes the rationale or its licensing decision. •IftheinventorisatStanford,theinventor’sSchoolDeanandtheDeanof
Research will review any actions that present a potential conict o interest
a company and Stanord may take up to 12 months, the period to be determined on a case-by-case basis. Since it may take several months to wind-down ongoing research, it is important that inventors plan accordingly and begin the wind-down o the Stanord activities beore either the licensing or optioning takes place.
•Theinventormustdiscloseanynancialinterest(consultingfeesand/or
stock options) in the start-up to the Deans. •Studentinventorsmustdescribe
1) how they will separate and clearly distinguish their on-going activities as students (e.g. thesis research) rom work being conducted at the company and 2) measures that will allow them to avoid all use o Stanord acilities and personnel or company purposes, e.g. availability o o-campus ofce or R&D space and support personnel. Ideally, the separation between Stanord and the company will occur contemporaneously to any ormal option or license agreement. However, in some cases, a transition period o up to 1 year might be acceptable.
It’s important or inventors to understand that this policy covering options and licenses is intended to enable inventors to succeed in translating their technologiesintousewithoutjeopardizingthemissionorfundingstatusof
Stanord University. Stanord has a rich history o translating inventions, and these practices are designed to build on that strong base.
•TheSchoolDeanandDeanofResearchmustalsoreviewandapproveany
conict o interest under policies that apply to aculty i Stanord aculty are involved with and have a fnancial interest in the start-up company. •OTLmayproceedwiththelicensingonlyifallconictsaredeemed
manageable by the cognizant Dean and the Dean o Research. OTL options and licensing agreements may be exclusive or non-exclusive depending on what is most suitable or achieving technology transer and the best possible beneft to the public.
34
OPTIONS AND LICENSES An option agreement is oten used to reserve rights in a technology so that the company can begin exploring unding opportunities in order to actually acquire the rights in question. A start-up company sometimes preers to take an option to a license, rather than an outright license itsel. OTL may grant options or any time period up to one year in duration, most oten in 6-month increments. Inventors are required to stop initiating new work on the technology at Stanord (that is, using University resources) when the technology is either licensed to a company or has been optioned to a company.Subjecttoconictofinterestreview,thenalseparationbetween
35
•If,afterthoroughmarketing,OTLdeterminesthataninventor-afliated
company is the appropriate licensee, OTL documents its marketing eorts and summarizes the rationale or its licensing decision. •IftheinventorisatStanford,theinventor’sSchoolDeanandtheDeanof
Research will review any actions that present a potential conict o interest
a company and Stanord may take up to 12 months, the period to be determined on a case-by-case basis. Since it may take several months to wind-down ongoing research, it is important that inventors plan accordingly and begin the wind-down o the Stanord activities beore either the licensing or optioning takes place.
•Theinventormustdiscloseanynancialinterest(consultingfeesand/or
stock options) in the start-up to the Deans. •Studentinventorsmustdescribe
1) how they will separate and clearly distinguish their on-going activities as students (e.g. thesis research) rom work being conducted at the company and 2) measures that will allow them to avoid all use o Stanord acilities and personnel or company purposes, e.g. availability o o-campus ofce or R&D space and support personnel. Ideally, the separation between Stanord and the company will occur contemporaneously to any ormal option or license agreement. However, in some cases, a transition period o up to 1 year might be acceptable.
It’s important or inventors to understand that this policy covering options and licenses is intended to enable inventors to succeed in translating their technologiesintousewithoutjeopardizingthemissionorfundingstatusof
Stanord University. Stanord has a rich history o translating inventions, and these practices are designed to build on that strong base.
•TheSchoolDeanandDeanofResearchmustalsoreviewandapproveany
conict o interest under policies that apply to aculty i Stanord aculty are involved with and have a fnancial interest in the start-up company. •OTLmayproceedwiththelicensingonlyifallconictsaredeemed
manageable by the cognizant Dean and the Dean o Research. OTL options and licensing agreements may be exclusive or non-exclusive depending on what is most suitable or achieving technology transer and the best possible beneft to the public.
34
OPTIONS AND LICENSES An option agreement is oten used to reserve rights in a technology so that the company can begin exploring unding opportunities in order to actually acquire the rights in question. A start-up company sometimes preers to take an option to a license, rather than an outright license itsel. OTL may grant options or any time period up to one year in duration, most oten in 6-month increments. Inventors are required to stop initiating new work on the technology at Stanord (that is, using University resources) when the technology is either licensed to a company or has been optioned to a
35
company.Subjecttoconictofinterestreview,thenalseparationbetween
OTL and Entrepreneurs tanord’s approach to educating entrepreneurs is to provide an environment that encourages networking and collaboration across disciplines and industries; to oer opportunities or testing ideas; to be open and welcoming to new and experienced entrepreneurs and investors; and to
RESOURCE GUIDE
Stanord has a wealth o entrepreneurial history and knowledge. Some entrepreneurs are already aware o the various organizations, classes and websites that are available to them. Below is a list o resources, both on- and o-campus that can educate and guide Stanord entrepreneurs through the start-up process or help them network and gain eedback or their new company.
maintain transparency regarding University policies. OTL is one
ORGANIZATIONS AND PROGRAMS AT STANFORD
small part o Stanord’s entrepreneurial culture, with over 200
Association o Industry-Minded Stanord Proessionals (AIMS)
companies started around technology licensed through the oce. OTL’s goal is to have Stanord inventions commercialized or society’s use and beneft. When an entrepreneur is passionate and committed to making that a reality, we are willing to work with them to negotiate an agreement to help them succeed.
AIMS is the postdoc link to entrepreneurship and industry. Their main goal is to create a ertile networking environment or entrepreneurially minded postdocs and ease the transition between postdoc and industry http://aims.stanord.edu Business Association o Stanord Entrepreneurial Students (BASES) BASESisanonprot,student-runorganizationthathasgrownfromve
ounding engineering students in 1996 to more than 5,000 members, including undergraduates, graduate students and aculty rom all seven schools at Stanord. It is a community that encourages learning, osters innovationandinspiresthenextgenerationofentrepreneurialleaders.BASES
sponsors annual business plan competitions, the E-Challenge and Social E-Challenge. During these competitions, industry experts, venture capitalists andlawyersjudgeandcoachstudentsontheirideas,plansandpresentation skills.BASESalsoorganizesworkshopsandotherprogramsthatassist
students in employment and business plan development. It has unding relationships with several leading venture capital frms. http://bases.stanord.edu / Center or Entrepreneurial Studies at the Graduate School o Business (CES) 36
CES was ounded in 1996 to build understanding o the issues aced by entrepreneurial companies and individuals. It provides personalized
37
OTL and Entrepreneurs tanord’s approach to educating entrepreneurs is to provide an environment that encourages networking and collaboration across disciplines and industries; to oer opportunities or testing ideas; to be open and welcoming to new and experienced entrepreneurs and investors; and to
RESOURCE GUIDE
Stanord has a wealth o entrepreneurial history and knowledge. Some entrepreneurs are already aware o the various organizations, classes and websites that are available to them. Below is a list o resources, both on- and o-campus that can educate and guide Stanord entrepreneurs through the start-up process or help them network and gain eedback or their new company.
maintain transparency regarding University policies. OTL is one
ORGANIZATIONS AND PROGRAMS AT STANFORD
small part o Stanord’s entrepreneurial culture, with over 200
Association o Industry-Minded Stanord Proessionals (AIMS)
companies started around technology licensed through the oce. OTL’s goal is to have Stanord inventions commercialized or society’s use and beneft. When an entrepreneur is passionate and committed to making that a reality, we are willing to work with them to negotiate an agreement to help them succeed.
AIMS is the postdoc link to entrepreneurship and industry. Their main goal is to create a ertile networking environment or entrepreneurially minded postdocs and ease the transition between postdoc and industry http://aims.stanord.edu Business Association o Stanord Entrepreneurial Students (BASES) BASESisanonprot,student-runorganizationthathasgrownfromve
ounding engineering students in 1996 to more than 5,000 members, including undergraduates, graduate students and aculty rom all seven schools at Stanord. It is a community that encourages learning, osters innovationandinspiresthenextgenerationofentrepreneurialleaders.BASES
sponsors annual business plan competitions, the E-Challenge and Social E-Challenge. During these competitions, industry experts, venture capitalists andlawyersjudgeandcoachstudentsontheirideas,plansandpresentation skills.BASESalsoorganizesworkshopsandotherprogramsthatassist
students in employment and business plan development. It has unding relationships with several leading venture capital frms. http://bases.stanord.edu / Center or Entrepreneurial Studies at the Graduate School o Business (CES)
CES was ounded in 1996 to build understanding o the issues aced by entrepreneurial companies and individuals. It provides personalized
36
counseling, introductions between edgling entrepreneurs and the venture capital community, liaison between experienced and new entrepreneurs or
Stanord Angels & Entrepreneurs (SA&E)
mentorshippurposes,andsupplementaryfundingtorst-yearMBAstudents
relationshipsamongpotentialinvestorsandentrepreneurs.Beyondfunding
who fnd summer employment with an entrepreneurial company that cannot pay competitive wages. The CES also col laborates with aculty, students, alumni and the broader Silicon Valley community to create events that support entrepreneurial activities. http://www.gsb.stanord.edu/ces /
start-ups, SA&E supports both angels and entrepreneurs through educational programs and access to the Stanord entrepreneurial network. http://stanordangelsandentrepreneurs.com /
37
SA&E seeks to strengthen Stanord’s entrepreneurial community by ostering
Stanord Biodesign StanfordBiodesigntrainsstudents,fellowsandfacultyintheBiodesign
Entrepreneur Club at the Graduate School o Business
Process: a systematic approach to needs fnding and the invention and
TheGSBEntrepreneurshipclubisoneoftheoldeststudent-run
implementationofnewbiomedicaltechnologies.Biodesignadministersseed
entrepreneur’s clubs in the nation. It ocuses on the interests o risk-seeking students who want to build and manage new organizations. http://www.gsbeclub.org /
fundingfromseveralsourcesformedicaldeviceandinstrumentationprojects
and provides mentoring and networking with relevant experts in the medical technology, venture and legal industries. http://innovation.stanford.edu/bdn/index.jsp
Innovation Farm Teams (iFarm Teams)
The iFarm Team program, begun by OTL in 2011, is an experimental initiative that aims to accelerate the commercialization o new Stanordinvented technologies (particularly physical sciences inventions) while providing a unique educational experience to iFarm Team participants. Each iFarm Team consists o current Stanord community members (students, aculty, alumni), relevant industry experts, and an OTL licensing associate. iFarm Team activities may include business activities such as due diligence research or technical development such as prototyping. http://www.stanord.edu/group/iarmteams / SPARK SPARKisapartnershipbetweenStanfordUniversitySchoolofMedicine andvolunteersfrombiotech,pharma,andhealthcareinvestment.SPARK
is working to make translational medicine a r eality by promoting innovative research; educating students in technology, drug discovery and drug development; creating partnerships between scientists and entrepreneurs; and bridging basic science and pre-clinical studies with exper tise in clinical
Stanord Entrepreneurship Network (SEN) SENisafederationoftwodozenentrepreneurship-relatedcampus
organizations that conduct research, teach courses and provide outreach services.SENorganizesEntrepreneurshipWeek,oneofthehighlightsofthe
academic year. https://sen.stanord.edu / Stanord Technology Ventures Program (STVP)
STVP is the entrepreneurship education center located within the University’s School o Engineering. STVP is dedicated to accelerating high-technology entrepreneurship education and scholarly research on technology-based frms. They oer Stanord University’s Entrepreneurship Corner with 2000 ree videos and podcasts, eaturing entrepreneurship and innovation thought leaders. In addition, STVP has an entrepreneurship concierge that is charged with developing programs and building Silicon Valley relationships that serve Stanord’s entrepreneurship community. http://stvp.stanord.edu /
testingandproductdevelopment.SPARKprovidesfunding,education,access 38
tofacilities,expertadvice,andmentorshiptoresearcherswhoseprojects
show promise as uture medical therapies. http://sparkmed.stanord.edu /
39
counseling, introductions between edgling entrepreneurs and the venture capital community, liaison between experienced and new entrepreneurs or
Stanord Angels & Entrepreneurs (SA&E)
mentorshippurposes,andsupplementaryfundingtorst-yearMBAstudents
relationshipsamongpotentialinvestorsandentrepreneurs.Beyondfunding
who fnd summer employment with an entrepreneurial company that cannot pay competitive wages. The CES also col laborates with aculty, students, alumni and the broader Silicon Valley community to create events that support entrepreneurial activities. http://www.gsb.stanord.edu/ces /
start-ups, SA&E supports both angels and entrepreneurs through educational programs and access to the Stanord entrepreneurial network. http://stanordangelsandentrepreneurs.com /
SA&E seeks to strengthen Stanord’s entrepreneurial community by ostering
Stanord Biodesign StanfordBiodesigntrainsstudents,fellowsandfacultyintheBiodesign
Entrepreneur Club at the Graduate School o Business
Process: a systematic approach to needs fnding and the invention and
TheGSBEntrepreneurshipclubisoneoftheoldeststudent-run
implementationofnewbiomedicaltechnologies.Biodesignadministersseed
entrepreneur’s clubs in the nation. It ocuses on the interests o risk-seeking students who want to build and manage new organizations. http://www.gsbeclub.org /
fundingfromseveralsourcesformedicaldeviceandinstrumentationprojects
and provides mentoring and networking with relevant experts in the medical technology, venture and legal industries. http://innovation.stanford.edu/bdn/index.jsp
Innovation Farm Teams (iFarm Teams)
The iFarm Team program, begun by OTL in 2011, is an experimental initiative that aims to accelerate the commercialization o new Stanordinvented technologies (particularly physical sciences inventions) while providing a unique educational experience to iFarm Team participants. Each iFarm Team consists o current Stanord community members (students, aculty, alumni), relevant industry experts, and an OTL licensing associate. iFarm Team activities may include business activities such as due diligence research or technical development such as prototyping. http://www.stanord.edu/group/iarmteams / SPARK SPARKisapartnershipbetweenStanfordUniversitySchoolofMedicine andvolunteersfrombiotech,pharma,andhealthcareinvestment.SPARK
is working to make translational medicine a r eality by promoting innovative research; educating students in technology, drug discovery and drug development; creating partnerships between scientists and entrepreneurs; and bridging basic science and pre-clinical studies with exper tise in clinical
Stanord Entrepreneurship Network (SEN) SENisafederationoftwodozenentrepreneurship-relatedcampus
organizations that conduct research, teach courses and provide outreach services.SENorganizesEntrepreneurshipWeek,oneofthehighlightsofthe
academic year. https://sen.stanord.edu / Stanord Technology Ventures Program (STVP)
STVP is the entrepreneurship education center located within the University’s School o Engineering. STVP is dedicated to accelerating high-technology entrepreneurship education and scholarly research on technology-based frms. They oer Stanord University’s Entrepreneurship Corner with 2000 ree videos and podcasts, eaturing entrepreneurship and innovation thought leaders. In addition, STVP has an entrepreneurship concierge that is charged with developing programs and building Silicon Valley relationships that serve Stanord’s entrepreneurship community. http://stvp.stanord.edu /
testingandproductdevelopment.SPARKprovidesfunding,education,access 38
tofacilities,expertadvice,andmentorshiptoresearcherswhoseprojects
39
show promise as uture medical therapies. http://sparkmed.stanord.edu /
StartX
STVP oers over 30 courses to students across campus including MS&E273
StartX is a non-proft organization organized and run by Stanord students. Its mission is to accelerate the development o Stanord’s top entrepreneurs through experiential education. StartX companies receive mentoring, advice and other resources. startx.stanord.edu
(Technology Venture Formation). This class provides a learning experience that simulates the process o star ting a high-tech company. Students work in teams on a business plan or a star t-up and present it to a panel o experienced Venture Capitalists (http://www.stanord.edu/class/msande273 /).
OUTSIDE RESOURCES ENTREPRENEURSHIP CLASSES OFFERED FOR STANFORD STUDENTS Stanord oers a wide variety o classes on entrepreneurship which reside
BayBio
acrosstheUniversityintheLawSchool,theGSB,theSchoolofEngineering
regional bioscience community through advocacy, enterprise support, and enhancement o research collaboration. They also support entrepreneurship,
and the School o Medicine. For example:
BayBioisNorthernCalifornia’slifescienceassociation.Theysupportthe
scienceeducationandlifesciencecareerdevelopmentthroughtheBayBio Entrepreneurial Design or Extreme Aordabilityisacoursejointlyoffered
Institute.BayBio’sNetworkforEntrepreneurialStrategies&Tactics(NEST)
bytheGSBandtheSchoolofEngineering(http://extreme.stanord.edu /).
provides lie science entrepreneurs with the tools and resources needed to succeed. http://www.baybio.org
GSB oers 20 courses related to entrepreneurship. For example, STRAMGT 356
(Creating Startup I & II) isaGSBclasswiththeobjectiveforstudentstolearn about and practice the creation o a start-up (http://www.gsb.stanord.edu/ces/ teaching/356_description.html ). The CES website has a Road Map that outlines entrepreneurialcoursesforgraduatestudentsattheGSBandacrossStanford
generally (http://www.gsb.stanord.edu/ces/students/courses.html ). Lean LaunchpadisaclassbyProfessorSteveBlank(http://stanord.edu/
group/e245/cgi-bin/2012 /) that was designed or scientists and engineers but open to all Stanord students. It provides real world, hands-on learning on what it’s like to actually start a high tech company. Students learn how to use a business model to brainstorm each part o a company and customer development research to see whether anyone will use the product. Students learn frst-hand how agile development can help a company rapidly iterate a product to build something customers will use and buy. This class was adoptedbytheNationalScienceFoundationasthecurriculumforits
Innovation Corps. Many o the course materials can be ound on Steve’s website (http://steveblank.com/slides /).
40
Entrepreneurship.org CreatedbytheEwingMarionKauffmanFoundation,Entrepreneurship.
org was ormed as a ree, online international resource designed to help build entrepreneurial economies. This site eatures a vast array o content and resources to assist entrepreneurs, business mentors, policy makers, academics and investors through each phase o the entrepreneurial process. http://www.entrepreneurship.org innovation DAILY
innovation DAILY is an electronic newsletter with selected innovation-related articles rom around the world. The ar ticles are related to innovation and unding or innovative companies, and best practices or innovation based economic development. Users can access articles at the website or register to receive the ree newsletter daily. http://www.innovationamerica.us/index.php/innovation-daily
41
StartX
STVP oers over 30 courses to students across campus including MS&E273
StartX is a non-proft organization organized and run by Stanord students. Its mission is to accelerate the development o Stanord’s top entrepreneurs through experiential education. StartX companies receive mentoring, advice and other resources. startx.stanord.edu
(Technology Venture Formation). This class provides a learning experience that simulates the process o star ting a high-tech company. Students work in teams on a business plan or a star t-up and present it to a panel o experienced Venture Capitalists (http://www.stanord.edu/class/msande273 /).
OUTSIDE RESOURCES ENTREPRENEURSHIP CLASSES OFFERED FOR STANFORD STUDENTS Stanord oers a wide variety o classes on entrepreneurship which reside
BayBio
acrosstheUniversityintheLawSchool,theGSB,theSchoolofEngineering
regional bioscience community through advocacy, enterprise support, and enhancement o research collaboration. They also support entrepreneurship,
and the School o Medicine. For example:
BayBioisNorthernCalifornia’slifescienceassociation.Theysupportthe
scienceeducationandlifesciencecareerdevelopmentthroughtheBayBio Entrepreneurial Design or Extreme Aordabilityisacoursejointlyoffered
Institute.BayBio’sNetworkforEntrepreneurialStrategies&Tactics(NEST)
bytheGSBandtheSchoolofEngineering(http://extreme.stanord.edu /).
provides lie science entrepreneurs with the tools and resources needed to succeed. http://www.baybio.org
GSB oers 20 courses related to entrepreneurship. For example, STRAMGT 356
(Creating Startup I & II) isaGSBclasswiththeobjectiveforstudentstolearn about and practice the creation o a start-up (http://www.gsb.stanord.edu/ces/ teaching/356_description.html ). The CES website has a Road Map that outlines entrepreneurialcoursesforgraduatestudentsattheGSBandacrossStanford
generally (http://www.gsb.stanord.edu/ces/students/courses.html ). Lean LaunchpadisaclassbyProfessorSteveBlank(http://stanord.edu/
group/e245/cgi-bin/2012 /) that was designed or scientists and engineers but open to all Stanord students. It provides real world, hands-on learning on what it’s like to actually start a high tech company. Students learn how to use a business model to brainstorm each part o a company and customer development research to see whether anyone will use the product. Students learn frst-hand how agile development can help a company rapidly iterate a product to build something customers will use and buy. This class was adoptedbytheNationalScienceFoundationasthecurriculumforits
Innovation Corps. Many o the course materials can be ound on Steve’s website (http://steveblank.com/slides /).
Entrepreneurship.org CreatedbytheEwingMarionKauffmanFoundation,Entrepreneurship.
org was ormed as a ree, online international resource designed to help build entrepreneurial economies. This site eatures a vast array o content and resources to assist entrepreneurs, business mentors, policy makers, academics and investors through each phase o the entrepreneurial process. http://www.entrepreneurship.org innovation DAILY
innovation DAILY is an electronic newsletter with selected innovation-related articles rom around the world. The ar ticles are related to innovation and unding or innovative companies, and best practices or innovation based economic development. Users can access articles at the website or register to receive the ree newsletter daily. http://www.innovationamerica.us/index.php/innovation-daily
40
41
SVForum
SVForum osters innovation, entrepreneurship and leadership within the Silicon Valley ecosystem o individuals and businesses participating in emerging technologies. They create connections and community, provide education and access to resources, link the global business community to Silicon Valley, and acilitate the exchange o unbiased knowledge, insights and best practices. http://www.svorum.org Venture Capital Firms and Service Providers
There are many VC’s and business service providers who have worked with Stanord start-up companies in the past. OTL Licensing Associates or Liaisons can provide a partial list o these frms to Stanord inventors as needed.
STANFORD UNIVERSITY OFFICE OF TECHNOLOGY LICENSING 1705 EL CAMINO REAL PALO ALTO, CA 94306-1106 PHONE: (650) 723-0651
WRITING A BUSINESS PLAN The ollowing publications and websites provide guidance or writing a business plan: •CES Business Plan Resources – includes video presentations, books availablefromtheGSBlibraryandexternalwebsites.
http://www.gsb.stanord.edu/ces/resources/business_plans.html •innovation Daily – http://www.innovationamerica.us/index.php/innovationdaily/23021-a-business-plan-is-or-you-frst-then-or-investors •Lean Launchpad – the course materials rom this class by Proessor Steve Blankprovideguidanceondevelopingbusinessmodels.
http://steveblank.com/slides / •MS&E 273 Technology Venture Formation Class Resources –
42
includes books, additional reading, links and fnancial models. http://www.stanord.edu/class/msande273/resources.html •Osterwalder and Pigneur, Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (Wiley, 2010). http://www.businessmodelgeneration.com / •OTL’s New Company Prospectus – http://otl.stanord.edu/industry/ resources/industry_ncprospectus.html •Small Business Association – http://www.sba.gov/category/navigationstructure/starting-managing-business/starting-business/writing -business-plan
FAX: (650) 725-7295
[email protected] otl.stanford.edu www.stanford.edu/group/ICO / Published December 2012
SVForum
SVForum osters innovation, entrepreneurship and leadership within the Silicon Valley ecosystem o individuals and businesses participating in emerging technologies. They create connections and community, provide education and access to resources, link the global business community to Silicon Valley, and acilitate the exchange o unbiased knowledge, insights and best practices. http://www.svorum.org Venture Capital Firms and Service Providers
There are many VC’s and business service providers who have worked with Stanord start-up companies in the past. OTL Licensing Associates or Liaisons can provide a partial list o these frms to Stanord inventors as needed.
STANFORD UNIVERSITY OFFICE OF TECHNOLOGY LICENSING 1705 EL CAMINO REAL PALO ALTO, CA 94306-1106 PHONE: (650) 723-0651
WRITING A BUSINESS PLAN The ollowing publications and websites provide guidance or writing a business plan: •CES Business Plan Resources – includes video presentations, books availablefromtheGSBlibraryandexternalwebsites.
http://www.gsb.stanord.edu/ces/resources/business_plans.html •innovation Daily – http://www.innovationamerica.us/index.php/innovationdaily/23021-a-business-plan-is-or-you-frst-then-or-investors •Lean Launchpad – the course materials rom this class by Proessor Steve Blankprovideguidanceondevelopingbusinessmodels.
http://steveblank.com/slides / •MS&E 273 Technology Venture Formation Class Resources –
42
includes books, additional reading, links and fnancial models. http://www.stanord.edu/class/msande273/resources.html •Osterwalder and Pigneur, Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (Wiley, 2010). http://www.businessmodelgeneration.com / •OTL’s New Company Prospectus – http://otl.stanord.edu/industry/ resources/industry_ncprospectus.html •Small Business Association – http://www.sba.gov/category/navigationstructure/starting-managing-business/starting-business/writing -business-plan
FAX: (650) 725-7295
[email protected] otl.stanford.edu www.stanford.edu/group/ICO / Published December 2012
