Startups created and operated by the inventor

UT Austin has recently changed its policy regarding startups that are created and operated by the UT faculty inventor of a technology. See the policy statement from UT Austin President William Powers, Jr. here. The following guidelines give further detail:

Obtaining rights to the technology

If you choose to create a company, you will want to obtain the rights to the intellectual property from the university. This is done through OTC. You should not negotiate the license agreement to your own invention. Appropriate individuals to do this negotiation include other officers of the company, investors, or retained counsel.

Except in unusual cases and unless the UT creator of the intellectual property wishes to negotiate different terms, the licensing terms will generally be as follows:

Exclusive License

UT inventors requesting an exclusive license to UT technology they have created will be granted said license for their startup, after approval by the President or his designee and the Research Manager. The license can be granted after confirming that the contractual terms, if any, of the sponsored resources used to develop the intellectual property permit granting the license. After approval and except in unusual cases, the license to the startup will contain standard terms, including:

UT to be granted up to 5% of stock (on a fully dilutable basis)
Recoupment of UT's documented past patent costs, and obligation of continued patent prosecution
Requirement for active product development and commercialization by the startup
Bankruptcy or cease-to-exist provision terminates license (certain or bona fide change of control is allowed, however)
Startup has right to sublicense

Nonexclusive License

UT inventors requesting a non-exclusive license to UT technology will be granted said license for their startup after approval by the President or his designee and the Research Manager. The license can be granted after confirming that the contractual terms, if any, of the sponsored resources used to develop the intellectual property permit granting the license, and that no prior exclusive license to the technology exist, and that the technology has not previously been released by UT. After approval and except in unusual cases, the license to the startup will contain standard terms, including:

UT to be granted up to 2.5% of stock (on a fully dilutable basis)
Recoupment of UT's documented patent costs after first funding event
Bankruptcy or cease-to-exist provision terminates license (certain or bona fide change of control is allowed, however)
Startup has right to sublicense non-exclusively