Advantages of Building Start-ups
The university, through Innovation Enterprise, offers its support to stakeholders in the development of ideas, research and technologies through start-ups as these represent a direct transfer of knowledge into the community with economic impact.
- They provide opportunities for faculty, staff and student inventors to become entrepreneurs.
- They provide a vehicle for commercialization that may not exist in Canada or elsewhere.
- They generate economic benefits, including employment opportunities for U of S graduates.
- They create opportunities to showcase the excellence of research being conducted at the U of S and help sustain long-term research relationships.
Indicators that your technology may warrant creating a Start-Up company
Start-up companies require significant resources both in terms of time and money. One of the foremost requirements is coachable and entrepreneurial inventor(s) who will champion the technology.
In evaluating start-up company opportunities, some of the considerations Innovation Enterprise takes into account are::
- Is this a platform technology that supports a range of products, possibly in different markets, and provides a solid foundation to build a company?
- Is it a technology that addresses a large and growing market that will be of sufficient size to attract investment and allow for significant return on investment?
- Is there a sustainable competitive advantage?
- How high are the barriers to entry for competitors?
- Is it the case that a suitable licensee is not available among established companies who lack the infrastructure and resources to develop the technology?
University takes a founder’s role
One option in helping move a university technology forward within a start-up is for the university to assume a Founder’s Role in the start-up and thus retain ownership of the IP and have a direct stake in any financial return.
How would it work?
Innovation Enterprise, through its innovation and enterprise development expertise and portfolio managers can engage, mentor and facilitate start-up creation and development. Activities that professional staff from Innovation Enterprise assist, engage or invest in are:
- Structure and incorporate the new company
- Draft and negotiate the initial Unanimous Shareholders Agreement and company articles and bylaws
- Assist in the preparation of the company’s business plan
- Assist the company with finding investors and negotiating the terms of financing
- Recruitment of management
- Assist in finding Mentors, Team of Advisors and also potential Board of Directors for the start-up.
- Where possible, assist the company in locating appropriate space for its initial operations
- Provide incubation support to the new company including IP management, finding prototype development funds, advice regarding Scientific Research and Experimental Development tax credits and support in on-going financing efforts
Innovation Enterprise will provide a license for technology developed at the U of S to the start-up company. Recognizing that start-up companies are constrained by their cash flow, we are prepared to negotiate terms with start-ups.
This might include taking equity or debt convertible to equity in the start-up in exchange for:
- Reduced cash considerations (upfront fees, milestones, and running royalties)
- Delayed patent cost repayment