Startups by UT inventors

Starting a company can bring great value to the community, the university, and the inventor. The University of Texas at Austin appreciates this contribution and will assist the UT entrepreneur throughout the process.

Invention disclosure

The first step of any activity involving a technology invented at the University is for the inventor to submit an invention disclosure form to OTC. See Commercialization for Inventors in this website.

Making the decision and getting started

Once the University has asserted rights to the technology, appropriate intellectual property protection can be sought and the University can work with the startup company.

If you decide that you would like to start a company, the next steps include developing a more complete business model, drafting a business plan, assembling a management team, and approaching investors. Some inventors hand off almost the entire process and stay on in a minimal advisory capacity. Others assume the role of CEO and manage the entire affair.

Conflict of interest

You must contact the appropriate Associate Vice President for Research, who will manage the conflict of interest. Your Licensing Associate is able to provide you with the contact information. More information about developing and submitting a plan to avoid conflict of interest may be found at the website of the UT System's Office of General Counsel (OGC). Sample letters and plans are also available at the OGC website.

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 you wish to negotiate different terms, the licensing terms will be:

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, or 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:

5% of stock (on a fully diluted basis), dilutable after first equity funding exceeding an industry-appropriate threshold (University does not share this equity nor proceeds thereof with inventors.)
Immediate recoupment of past patent costs and obligation of continued patent prosecution
Requirement for active product development and commercialization by the startup; license review after three to five years to ensure active use
Bankruptcy or cease-to-exist provision terminates license (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, or 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:

2.5% stock (on a fully diluted basis), dilutable after first equity funding exceeding an industry-appropriate threshold (University does not share this equity nor proceeds thereof with inventors.)
Recoupment of past patent costs after first funding event or product revenues
Payment of all future patent costs
Gifts to academic unit of inventors to be used as research support
Non-exclusive license terms shall be renewable on comparable terms every three to five years
Bankruptcy or cease-to-exist provision terminates license (change of control is allowed, however)