Industry Collaboration & Commercialisation

Professor Mark Harvey

University of Southern Queensland

Universities do not commercialise!

We transfer expertise/IP (knowledge)

Lets get the terminology right

In light of: Current funding environment

Emerging impact agenda

Putting aside the competitive grants scenario, working with industry and knowledge transfer is complex, it is case by case, and is human capital intensive. Issues include:

IP ownership

Patenting

Costing research

License terms

Valuation of IP

Equity holdings: ordinary vs preferred shares

Legal office bottleneck

Constant criticism from industry

There has never been a more compelling environment for collaborating with Industry & transferring

knowledge

Impact!

Attracting Research $

Income

What should be the major drivers of knowledge transfer

These should be the key drivers in our decisions

With an increased understanding of the issues and clear objectives we can (and must)

improve knowledge transfer

Consultancies

Testing (includes clinical trials)

Contract Research

How do we transfer knowledge?

Research Collaborations

Licensing

Start-up companies

Expertise/skill driven

Two distinct mechanisms that should be handled differently

Discovery driven

ConsultanciesTestingContract Research

Q. What’s important to the Industry?

Data, collected information, surveys, reports etc –

as such GIVE IT TO THEM (assign it).

Unlikely to be other IP (ie inventions, patents etc) - be silent

Note: Important to understand and control

the legal framework and process

Critical: TT team ability to triage

Research Collaborations & Licensing

You have agreed on the research program & dollars – what do we do about the IP?

Research Collaborations & Licensing

You have agreed on the research program & dollars – what do we do about the IP?

Options:

Negotiate License upfront (organise the wedding now)

Research Collaborations & Licensing

You have agreed on the research program & dollars – what do we do about the IP?

Options:

Negotiate License upfront (organise the wedding now)

Option to license (lets date now and talk about marriage later)

Research Collaborations & Licensing

You have agreed on the research program & dollars – what do we do about the IP?

Options:

Negotiate License upfront (organise the wedding now)

Option to license (lets date now and talk about marriage later)

Co-own the IP (Lets live together and see how it goes)

Research Collaborations & Licensing

You have agreed on the research program & dollars – what do we do about the IP?

Options:

Negotiate License upfront (organise the wedding now)

Option to license (lets date now and talk about marriage later)

Co-own the IP (Lets live together and see how it goes)

Uni owns the IP and give Industry a royalty (I can date others)

Research Collaborations & Licensing

You have agreed on the research program & dollars – what do we do about the IP?

Options:

Negotiate License upfront (organise the wedding now)

Option to license (lets date now and talk about marriage later)

Co-own the IP (Lets live together and see how it goes)

Uni owns the IP and give Industry a royalty (I can date others)

There is no right answer +/- with all Give partner options & ownership of decision

Critical: TT team !

Start-up companies

Start-upCompany

Intellectual Property

Investor University

$Research $

Shares

R&D on new products / ServicesIMPACT

Management

Start-up companies

Shares

Start-up companies

1. Dealing with Venture Capitalists

Start-up companies

1. Dealing with Venture Capitalists

Convertible notes

Liquidation preferences

Drag along rights

Tag along rights

Anti-dilution provisions

Preferred shares/Ordinary shares/convertible shares

Assignment triggers

Bank rate compounding coupons

Investor Director decisions

Investor Shareholder rights

Start-up companies

1. Dealing with Venture Capitalists

Convertible notes

Liquidation preferences

Drag along rights

Tag along rights

Anti-dilution provisions

Preferred shares/Ordinary shares/convertible shares

Assignment triggers

Bank rate compounding coupons

Investor Director decisions

Investor Shareholder rights

The Golden Rule -Who has the gold makes the rules!

Seed$1M

1

50

150

Value $m

Series A$5m

Sold for $200M

Series B$30m

Pre $ $1m

100

University = $20m (10%)

Start-up companies2. Getting a Return – the Dream Baby!

Seed$1M

1

Value $m

Sold for $100M

Pre $ $1m

University = $500k (5%)

Start-up companies2. The Reality Sunshine!

$80m in flat rounds!

50

150

100

Start-up companies2. Getting a Return – Licenses have delivered the

biggest returns to universities

Instead of shares consider a royalty bearing license

Advantages:

A royalty is a non-dilutable interest in the product

Simpler negotiation

Avoids valuation negotiations at each capital raising

Key Points

1. Establish your Partnership/knowledge transfer objectives

2. Establish your IP & financial position for each knowledge transfer mechanisms

3. Understand and control the legal process

4. Hire excellent TT professionals

Improved knowledge Transfer