Enventure, Houston’s medical entrepreneurs, were at it again last night. They hosted a panel at Rice University’s Biosciences Research Collaborative which discussed how a researcher can best go about licensing her technology from her university’s or institution’s technology transfer office. The panel also considered how to build a successful business around such a technology. The crowd was made up of mostly young PhD candidates and post-docs from around the medical center who were interested in founding a medical device or other tech startup. Here are 5 things I learned at the event.
1. If your technology is not disruptive, you cannot build a business around it.
Nine times out of ten, the technology a researcher is trying to license is not one a business can be built around. For a new company to work, the underlying technology must be truly disruptive, or it will be unable to penetrate the market. Further, the more uses a technology has, the more likely the business is to succeed. If the technology you are developing is an improvement, rather than a disruption, consider licensing it to an existing company that can better make use of it.
2. Don’t be afraid to approach the university technology transfer office early.
More and more, universities are offering early support to researchers who are considering starting a company based on their research. If you approach them early, the people in the TTO can help you figure out what you need before you begin asking for a license. Further, many can help you learn more about startups, business and fundraising.
3. Universities will only grant a license if you are committed and passionate.
In general, universities only want to license technology when there is a committed and passionate leader on the team. Before embarking on starting a business around your technology, reflect on the amount of time and effort it will require. If you are not 100% on board, you cannot expect the university to be too. Universities need passion for the technology from the team as much as they need a great idea.
4. A proven technology is worth much more than an unproven one.
If you can find the money, possibly through a grant, taking your technology to trial before asking for the license will greatly increase your chance of success. The more developed your technology is, the greater the chance getting a license and finding an investor. However, if the university is paying for the trials, keep in mind…
5. The party taking the most risk has the most leverage when negotiating a royalty rate.
Negotiating a proper royalty rate for licensing a new technology is tricky. If you are pretrial and the technology is unproven, the royalty rate should be smaller because most of the risk will fall on the company and not the university. However, if the university has paid for trials, then they have also paid for much of the risk and will need to be compensated via a higher royalty. You can use all kinds of complicated models to determine the appropriate royalty rate, but at the end of the day, it boils down to what someone is willing to pay for it and who is taking on the most risk.
Want to attend Enventure’s next panel? Check out their upcoming events.