In a guest post on the TechCrunch blog, former entrepreneur Vivek Wadhwa — now a visiting scholar at UC-Berkeley, senior research associate at Harvard Law School, and executive in residence at Duke University — advises entrepreneurs how to gain direct access to researchers whose technologies might yield commercial products. His post is instructive for TTO professionals in that — true, false, or somewhere in between — it reveals commonly held negative perceptions among outsiders, who often think askance of TTOs and may devise strategies to circumvent the TTO structure. Although some universities are working to improve research commercialization, “unfortunately, things change slowly in academia and those solutions are years off, at best,” Wadhwa maintains. In the meantime, he says, ambitious entrepreneurs can imitate smart VCs by tapping into the goldmine of university research using the following tactics:

• Pick a field of interest and learn the science. Find ideas that VCs put in the “proprietary deal flow” category. Look for inventions that no one else has discovered. Ask yourself: If the technology works, will its technical abilities be sufficiently better than anything in the market to make a big impact? If the answer is yes, bet on the technology and run with it, but make sure you have an exclusive — usually a materials or biological patent or a process patent that relates to an actual process.
• Go mining. Start by knocking on the front door: the TTO. “Some of these offices are really competent and will help you analyze their portfolio of discoveries,” Wadhwa says. “They’ll take the time to explain the value and help you shape your thinking. They will connect you with the inventors and may even team you up with other entrepreneurs and potential investors.” Unfortunately, “most [TTOs] are staffed by lawyers and bureaucrats whose purpose in life is to squeeze every dime out of a potential licensor while protecting their butts just in case they asked too little and the technology makes it big,” he adds.
• If the front door doesn’t work, try the back door. That back door, he says, can be found in university “centers” that focus on specific areas of research. Crouch advises investors to sign up for their mailing lists and attend a few of their meetings. If you hear some great ideas, ask the faculty member to meet over a cup of coffee. Prepare yourself for these meetings by reading the articles the faculty member has written.
• Identify the individual(s) on the university staff who know everyone and “can make things happen for you,” Wadhwa advises. Often, these include non-”line” administrators such as vice deans and associate provosts of research. “Find them, buy them coffee, and all doors are open,” he says.
• Network with top students through entrepreneurship clubs and business plan competitions. “Students, particularly PhD researchers, are usually in the know about what’s happening at campus,” Wadhwa points out.
• When you strike gold, prepare for “painful” negotiations with the TTO. “They will ask for the world, but almost everything is negotiable,” he writes, including milestone payments, royalties, and upfront costs. Only patent costs are not negotiable, because these funds go into a different bucket and fund additional patents, he adds. “Ownership demands usually range from 0-5%, and they’ll hit you for around 2.5%-5% royalties,” Wadhwa says. “Late stage marketable technologies will draw 10% demand while early stage breakthroughs will only garner perhaps 1%.”
• If you find worthwhile inventions, discuss licensing directly with the faculty, but don’t encourage them to sidestep the TTO, which “can create immense amounts of litigation and deferred liability risk,” Wadhwa writes. “Be honest and open with [faculty] and they will generally be honest and open with you. Protect their interests, and guide them through the system — the tech transfer office, term sheets, valuation, options, vesting, etc. Whether you succeed or fail in your mission, you’ll come out a lot smarter. If everything goes really well, you might change the world.”

Source: TechCrunch

Posted October 7th, 2009 under Tech Transfer

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