Boundary Awareness for Academic Faculty Engaging in Entrepreneurship: Navigating Roles, Ownership, and Conflicts

Faculty members are key stakeholders in university-spinoff companies. First, they are the inventors of the intellectual property that forms the core of these startups. They may also serve as founders, assuming management roles in the early stages, assisting with fundraising, or helping to make critical business decisions. Therefore, faculty members need not only to define their roles within the company but also to understand their motivations for launching the venture. They must clarify who owns the ideas underpinning the startup, what startup ownership entails in terms of control, and the types of conflicts of interest or commitment that may arise.

With these questions in mind, we have continued to excerpt selected passages from Research to Revenue, authored by Cam Patterson and Don Rose with a foreword by Genentech co-founder Herbert Boyer, to address them one by one.

If you ask faculty members why they start companies, there is rarely a single answer; their motivations vary. Many hope to see their research make a tangible impact in the real world; others see opportunities for significant financial returns; and some view startups as an important source of funding for their laboratories. Finally, driven by innate curiosity, many are deeply interested in understanding how science is applied in the business world.

Of course, these motivations come with expectations for startups, making it crucial for faculty members to maintain realistic expectations about how this process will unfold. Here, we debunk several “myths” about startups that faculty members are prone to believing:

My startup will provide significant financial support to my laboratory.Such occurrences are rare; even when they do happen, funded research seldom results in published articles because the findings are typically proprietary. An exception exists in engineering fields where laboratories possess specific expertise or specialized equipment, allowing development funding to be synchronized with laboratory work (e.g., optimization studies).

I hope to always hold at least 50% of the company's equity in order to maintain control.It is rare for faculty founders to retain majority equity when their companies reach a stage of fully stable and sustainable operations. Since most technology-driven companies require substantial capital to develop their products, the ownership percentage of most faculty founders tends to decrease due to dilution. Exceptions occur when product development costs are low and the company can generate significant revenue at an early stage (e.g., web-based or service-based companies).

I hope to fund my retirement through a successful company.The world of startups is fraught with high risks, to the extent that perhaps only one in a thousand startups launched at such an early stage will succeed. Even if a startup achieves success, the diluted equity stake may not yield millions of dollars in returns.

"I am very confident in my technology, and I plan to invest all of my retirement savings into the company."Please refer to the aforementioned viewpoints. However, for investors, certain investments demonstrate your strong confidence in your technology and your willingness to take risks.

I hope to becomeChief Executive Officerand operate the company.Few research faculty members possess the breadth of experience required to serve as chief executive officer. Moreover, unless they leave their academic positions, they typically do not have sufficient time to devote to this role.

“I’m not in it for the money; I just want to make an impact.”This may be true, but the function of a startup is to create value, which is achieved by generating profits through product sales. Impact naturally emerges when products reach customers, but this can only be realized through the manufacturing and sale of those products.

I hope to see my research findings translated into commercial products.Despite the lack of extensive research on this topic, the final products of many startups bear only a slight direct relationship to the technologies developed during their founding stage. This is because obstacles (such as technical failures or intellectual property issues) may arise, or other opportunities may emerge (such as larger alternative application markets for the technology) during product development or business strategy formulation.

Finally, regardless of the motivation or combination of motivations, the following three points are critically important:

1) Honestly understand your motivations,

2) Understand how these motivations will play a role in the company’s formation, launch, and growth.

3) Assess whether your expectations will be met.

Faculty members can assume a variety of roles in startups, depending on their professional expertise, career stage (e.g., whether they have attained tenure at a university), level of interest, and other personal factors (such as spouse and children).

At one extreme, there are companies founded by several entrepreneurs around university technology. Faculty members may occasionally serve as advisors to the company and may hold some stock options. In such cases, the control and strategic direction of the company are determined by external founders. (For this type of startup, the technology has either developed to a commercially viable level or can be quantified, thus reducing the company’s reliance on researchers; alternatively, external founders may be developing products that could be derived from core technologies, or the core technology may constitute only part of the final product.)

At the other extreme, faculty members identify commercial opportunities within their own research, engage attorneys to incorporate companies, assemble advisory teams to formulate business strategies, hire professional managers to operate the companies and assist with fundraising. The table below illustrates the many different roles that faculty members may assume in startups.

These roles are categorized based on the employment status of faculty members, as universities have regulations governing how staff allocate their time. The time commitment required by certain role frameworks can be substantial; consequently, university employees may need to devote personal time to fulfilling these responsibilities outside their academic duties (this is further discussed in the “Conflicts of Interest” section later in the text). Hybrid roles may also exist. In such cases, faculty members serve as visiting scientists in companies or take a temporary leave from the university through sabbatical or unpaid leave. These temporary positions typically result in faculty members either returning to the university or leaving their academic posts to join startups.

The employment status of faculty members also raises questions regarding titles. Some founders feel the need to appoint someone as Chief Scientific Officer (CSO) or Chief Executive Officer (CEO) during the company’s early stages. This can create confusion for external parties, such as potential CEOs or investors. Unless faculty founders leave their university positions to join the company full-time, the title of “Founder” is sufficient; it effectively signals to the outside world that, although the company currently lacks a formal management team, the founders are actively seeking to recruit professional managers.

The roles of faculty members in startups are never static, as companies may grow or shrink over time, or pivot their strategic direction. Consequently, a faculty member’s level of engagement in a startup may gradually increase to the point where he or she must decide whether to leave academia and work full-time at the company. Conversely, a faculty member’s involvement may diminish over time. The reasons for such declining engagement among faculty founders vary, and in some cases, this process may be accompanied by unpleasantness.

Some faculty members may lose interest in their startups due to the combined effect of their commitment to university duties and the declining demand from the startups for their services (such as technical or strategic advice). Friction may arise when the company requires technical support, but the faculty founder lacks the time to provide it (e.g., delivering investor presentations, writing grant applications), or when the faculty founder wishes to play a more active role in the company, yet the company’s growth has surpassed their area of expertise or its strategic direction has shifted away from the foundational technology. In the former scenario, the lack of technical advice and guidance may place the company in jeopardy. Although other external technical experts can be brought in, they rarely fill specialized technical gaps. In the latter scenario, the faculty founder may be voted out by the board of directors, or their consulting agreement may not be renewed.

A critical aspect of faculty members’ involvement in a company is recognizing the importance of collaborating with others to build a management team. Many faculty founders underestimate the time and expertise required for management and business development. Their primary role is to provide the technical foundation for product development and offer technical guidance throughout the process. A common mistake made by many faculty founders is undervaluing the contributions of entrepreneurs or business leaders in launching the company. The relationships brought by entrepreneurs—such as those with service providers, investors, and customers—are as valuable to the company as its technology. Meanwhile, many business leaders, particularly those lacking a technical background, also underestimate the technical hurdles a company faces when bringing technological products to market (e.g., FDA approval, scaling, etc.). This can lead to strained relationships or conflicts between the two parties. The ideal partnership between faculty founders and entrepreneurs is one in which each party understands both the market dynamics and the technical risks the company will face, and respects the skills the other brings to addressing these risks.

For faculty members, one of the more challenging aspects of founding a company is determining when an invention or idea belongs to the faculty member and when it belongs to the university. To gain a comprehensive perspective, consider a private company: it asserts ownership over all your ideas related to its business operations. As a condition of employment, employees are typically required to sign an agreement stipulating that they must promptly disclose any ideas, discoveries, or inventions to the company and assign these disclosures to the company. Most universities have similar policies, although the extent of their enforcement may vary across institutions. Some faculty members are even unaware of such agreements, as they are often part of the cumbersome paperwork signed during onboarding. The determination of ownership for an invention depends on the specific policies of the university. The issue becomes further complicated when considering the sources of research funding for the invention (e.g., government-funded versus industry-funded).

First, it is important to clarify certain legal terms related to patents and ownership. An inventor is the individual(s) involved in conceiving the idea. Collaborators who jointly conceive an idea are generally considered co-inventors, even if they did not conceive the entire invention. The names of the inventors appear on the patent. Patents are typically assigned to a third party or assignee, pursuant to an agreement between the inventors and the third party. As previously discussed, these agreements are often comprehensive contracts signed by employees upon hiring. The assignee holds the patent, or owns the rights to “make, use, and sell” products based on the invention. The assignee may license the patent to a licensee, who then holds specific patent rights as stipulated in the licensing agreement.

The following are some common misconceptions among faculty members regarding university ownership of inventions:

I conceived this invention at home, so I own it.Ownership depends on the subject matter of the invention. If the subject matter is related to a faculty member’s research field, ownership typically belongs to the university in accordance with the relevant signed agreements. Ownership also depends on whether university facilities or resources were used. The subject matter may be unrelated to the research field; however, if the invention was conceived using the university’s software and hardware systems (e.g., library materials, databases), even when accessed from home, ownership may still belong to the university.

I conceived this invention during my university years, but my startup turned it into a product.Invention is typically defined as a two-step process: 1) conception of an idea and 2) reduction to practice (i.e., creating a working prototype of the idea). Inventorship pertains solely to the first step, although patent application requires both steps. Therefore, conceiving the idea at a university means that the university is highly likely to own the idea.

I came up with this idea while consulting for my startup.In such cases, the boundaries may become somewhat blurred. Take, for example, a faculty member who provides consulting services to a large corporation. Most universities require faculty members to disclose their consulting arrangements (or “paid external activities”). Typically, the company requires the faculty member to sign an agreement assigning to the company all inventions conceived during the consulting period. For a startup, however, the boundaries are not always clear. Startups often operate based on technologies invented by faculty members and have obtained licenses to these technologies. Consulting with the startup may lead the university to claim ownership of a new invention, on the grounds that it is a derivative of the licensed subject matter and was developed as part of the faculty member’s university duties.

I have never signed any agreement with the university, so I own my inventions.Some U.S. court cases have demonstrated that, with very few exceptions, if you invent something while employed by a university, the university owns the invention. Typically, whether or not an agreement is signed is insufficient to assert ownership.

My undergraduate student conceived this idea, so the university does not own it.If an undergraduate student conceives an idea and implements it at a company or another university, ownership may reside with the student (though rights may be assigned to the entity where the idea is implemented, such as the employing company or the new university). If the student implements the idea within a faculty member’s laboratory, the university may hold rights to the invention under its patent policy, depending on the extent of university resources utilized.

Given that universities typically retain ownership of inventions conceived during the course of normal research activities, faculty members should promptly disclose new inventions to the Technology Transfer Office (TTO). As previously mentioned, in certain cases, the TTO may choose not to pursue patent protection and may instead release the invention back to the inventor. Such release can complicate matters, as faculty members may continue to improve the invention in their laboratories using government funding (raising the question of who owns the improvements). Release terms vary among universities; some grant a full release (imposing no further obligations to the university), while others stipulate ongoing obligations (such as royalty sharing from sales).

Universities’ strong ownership of inventions can actually be viewed positively. Universities are willing to bear the risks associated with filing technology patents (such as upfront costs and the time commitment involved) and are prepared to license these patents to startups founded by faculty members under reasonable terms, sharing the licensing revenue with the inventors. Furthermore, when universities cover the patent costs for an invention, they provide a degree of external validation, signaling that the technology indeed holds commercial potential.

When the company is established, the founders hold 100% ownership. Faculty members who found university spin-offs may retain a significant equity stake at inception. Consequently, they must determine how much equity to share with others to drive business growth and how much to retain for corporate control and ultimate financial returns. Let us examine several key issues regarding the distribution of company ownership. First, startups have little to offer beyond their future potential, and the only way to secure assistance in realizing that potential is by granting equity. For instance, entrepreneurs contributing to building the business exchange their time—which could be devoted to other opportunities—and even forego a stable salary in return for this future potential. Similarly, investors fund product development in anticipation of capturing some of this future value. By granting ownership (i.e., a claim on future potential) to others, the founders’ ownership becomes diluted (a fixed-size pie must be divided into smaller slices, as there is only one pie). Before sharing equity with others, founders should address the following questions:

1. Do the new equity owners share our philosophy?

2. How important is control to us, especially when everyone shares the same long-term interests?

3. At which stage of our company’s development are we willing to become a minority shareholder?

4. What Does Control Look Like in Startups?

   
   

The answer to the last question is that control can be exerted in many ways.

The traditional approach is based on percentage of ownership. If a founder holds the majority of shares in a company, it can be assumed that he or she has full control, as the founder can outvote other shareholders. In practice, few decisions require shareholder voting; when they do, they are either major decisions (such as acquiring the company) or have become so contentious that the team cannot reach consensus (which is not a desirable situation for a small company). Control should not be measured by votes or shareholding, but rather by influence. The most effective way for founders to exert and generate influence is through active participation in the company’s operational activities: formulating product development strategies, writing grant applications, conducting market research, contributing to business plans, recruiting and hiring employees, or seeking investors. Of course, active engagement demands time and energy, which faculty members may have limited capacity to provide.

For university spin-offs, equity dilution resulting from investment is a very real scenario. While this is certainly worthwhile when the company succeeds, dilution can become a source of frustration and anger for founders if the company fails to thrive. A concrete example of dilution and the resulting founder dissatisfaction comes from the case study of Syntonix Pharmaceuticals:

In 1997, when the company was just founded, the four founders held 90% ownership: Rick and Laur accounted for approximately 64%, while the other two founding researchers held 26%. Academic institutions owned the remaining 10%. After the first round of financing, the founders’ ownership decreased to 25% (with Rick and Laur holding approximately 18%), venture capital firms held 29% (with one VC firm owning 14%), management and employees held 30%, and others (including advisors, academic institutions, and angel investors) held 16%. Following Series B financing, venture capital ownership rose to 70% (with one VC firm owning 20%), the four founders’ stake dropped to 7.4% (with Rick and Laur holding slightly more than 5%), management and employees held 9%, and others held 13%. As a founding owner, Laur commented on the approach taken by venture capitalists: “It was bittersweet, but we felt hurt. We had invested tremendous effort and energy into the company, yet we were severely diluted. Venture capital would lead to a favorable outcome, but they diluted us excessively. It felt as though they wanted to stifle us, though not fatally.”After the Series B round, Syntonix explored additional sources of funding. According to Laur, “It is not that we did not attempt to secure other funding sources over those years. We approached nearly every entity we eventually licensed to, particularly Amgen and Serono, but clinical development had not yet progressed to a sufficiently mature stage. The entire industry harbored doubts about the likelihood of success for pulmonary delivery, and this was before Pfizer abandoned Exubera®. We could not make significant progress until this issue—pulmonary delivery—was resolved.”

Here, the challenging financing environment, combined with the need to raise substantial capital to bring products to market—a common requirement for biopharmaceutical companies—has led to multiple rounds of financing at low valuations, resulting in significant equity dilution and dissatisfaction among founders. There is no secret formula to avoid equity dilution, but the following strategies may help: 1) Prioritize raising non-dilutive capital, but do not wait until the company faces extreme distress, which could force a down-round valuation; 2) Raise as much capital as possible in the current round to mitigate potential dilution from future financing rounds; 3) Explore alternative sources of capital that employ different “valuation” methodologies (e.g., venture philanthropy or corporate venture capital).

Given the numerous startups spun out of universities over the past few decades, most universities have gained some understanding of the conflicts that arise around faculty members and the startups they found. Many universities have established policies, guidelines, and review panels to oversee and manage these conflicts, which can vary significantly across institutions.

Before we evaluate these conflicts, it is worth emphasizing the separation between the company and faculty members and their laboratories. This separation is a critical concept because it forms the framework for discussions on conflicts of interest. Often, faculty members struggle to conceptually distinguish themselves from startups, particularly in the early stages when they own all or most of the company’s shares. A startup is a legal entity whose purpose and function are fundamentally different from those of a typical academic research laboratory. Its existence is aimed at bringing products to market in a manner that creates value for shareholders. In contrast, faculty members and their research are dedicated to generating new knowledge and educating students. They focus on discovering knowledge that can impact society, whether or not this is achieved through commercial channels.

The degree of separation between research institutions and companies is determined by the following factors: 1) university policies and procedures, and 2) the nature of activities conducted by each entity. Many universities mandate complete separation, to the extent that startups must use non-university computers and email addresses and hold company meetings off-campus. Other universities welcome entrepreneurial activities on campus but manage them through rigorous oversight.

Conflicts of interest arise when faculty members hold financial interests in a company and, by virtue of their university employment, are in a position to make decisions or provide opinions that favor such financial interests. For faculty members who hold equity in startup companies, the following are typical situations that give rise to conflicts of interest:

Clinical Trials.A conflict of interest arises if a startup (or any company in which faculty members hold equity) is conducting clinical trials and faculty members are involved in any capacity (e.g., in study design, patient recruitment, or data review). Faculty members may have the authority to make trial-related decisions that affect their financial interests (e.g., manipulating data to obtain FDA approval). This represents one of the most severe forms of conflict of interest, and nearly all universities strictly prohibit faculty members from participating in trials testing products derived from their own research.

Education.In the early stages of a startup, graduate students and postdoctoral researchers provide significant outputs in terms of knowledge capital and experimental results related to the startup’s technology. In many cases, the research conducted by graduate students is compatible with and aligned to the startup’s direction. Publishing articles in Science or Nature would provide excellent publicity for the startup. However, some research required by startups is not publishable, either because it lacks sufficient quality of outcomes (e.g., optimization or reproducibility studies) or because it is confidential. Faculty members must ensure that their students’ academic training is not compromised by involvement in corporate activities.

Procurement.Some startups are able to offer services or products shortly after their establishment. A conflict of interest may arise when faculty members own a startup and decide to purchase services or products from that startup.

Most universities will establish department-level Conflict of Interest (COI) committees to meet regularly and discuss these issues.

Conflicts of interest can also exist between institutional entities. They may arise in situations where “financial relationships between a university and external entities compromise the integrity of institutional decision-making.” This occurs when a university participates in licensing agreements with start-up companies as a shareholder. Universities must ensure that their decisions do not appear to be influenced by their equity stakes and potential financial gains in these start-ups. To this end, some universities have established independent research foundations to manage intellectual property and equity holdings in start-up companies.

For many faculty members, the world of entrepreneurship is new. Although there is already a wealth of information and resources available on startups, more valuable first-hand lessons can be learned from those who have gone through the experience. Many universities are launching entrepreneur-in-residence programs, inviting seasoned entrepreneurs to campus to guide students and faculty through the early stages of the entrepreneurial process. Faculty members who have previously navigated the startup journey are effective sources of information. Most are willing to share their experiences. It is important to note that, given the high failure rate of startups, many stories may be negative and discouraging. Do not lose heart. Focus on the lessons they learned along the way, and ask what they would do differently if given another chance.

In addition to building a professional network on campus, you can also access valuable connections and resources through local and regional events. Many regions host startup pitch events designed to attract executives and investors for local businesses. You can also participate in various roundtables and salons covering topics such as startup funding, regulatory approvals, and accounting.

Many faculty members struggle to find time to participate in these activities and are also resistant to attending, as doing so would push them out of their comfort zones and require them to engage with individuals they do not typically interact with. While interacting with scientific peers at academic conferences is commonplace, engaging with business professionals, entrepreneurs, and investors can be unsettling.

For university spin-offs, collaboration with their parent institutions is crucial, primarily for technology licensing, but also encompassing participation in university-sponsored initiatives such as grant programs or incubator spaces. However, given the complexity of these relationships, universities are often positioned on the opposite side from the startups.

There are various reasons for this perception. It may stem from historical factors, where certain policies were established but have not been updated to reflect the current landscape of academic entrepreneurship. The limited support universities provide to startups may also be due to legal constraints, such as state laws prohibiting the use of public university facilities for private enterprise activities. In other cases, the expectations of faculty members and entrepreneurs are unreasonable. Faculty members, having invested significant time and effort in their research, may lack the objectivity needed to understand the position of the university or its Technology Transfer Office (TTO). For instance, budget constraints or cuts can severely limit the patent fees that a TTO can afford, meaning that frustrated faculty members may be unable to file their patent applications. Furthermore, most TTOs operate within the office of the vice president, which manages millions of dollars in research grants and related compliance matters. Consequently, TTOs may not have sufficient resources to fully carry out their functions.

In an informal survey, we asked faculty members who had previously founded companies during their university tenure to answer the following question: “If a young faculty member came to your office seeking guidance and advice on starting a company, what advice would you offer?” Below are their responses (unedited):

“Not every good idea should or can be commercialized. Do not rely solely on your own judgment; always consult seasoned experts in the field to critique your ideas. I did this when founding both of my companies (which were unrelated to universities), and it served as both a reality check and a source of encouragement to move forward.”

Companies should be pulled out of universities, not pushed out. If a university itself needs to invest substantial effort, funding, and resources to commercialize a technology, the value of that technology warrants careful scrutiny. The best technologies attract investors and partners who eagerly compete for the university’s permission to take them forward, thereby enabling more favorable deal structures.

Recognize Your Limitations. Scientists, engineers, and technical professionals—regardless of whether they hold an MBA—are rarely the right individuals to drive the full commercialization of a product, let alone lead an entire company. They should acknowledge their strengths, namely their deep understanding of and passion for technology, as well as their eloquence and enthusiasm in demonstrating technological capabilities (which often leads them to serve as Chief Scientific Officer for a period). Subsequently, they should step back and allow business professionals to take charge of investor relations, finance, human resources, and business and product development (including scaling, supply chain management, pricing, etc.).

Select the right partners. Conduct thorough due diligence on the management team and investors to ensure consensus and suitability for the formidable tasks ahead. The management team should possess specific knowledge of the product under development (for instance, former employees from the biotechnology industry can be leveraged for protein development). Investors should bring “smart money,” meaning they are familiar with your industry sector. At some point in the future, they will steer the company in a new direction; this is inevitable, but as a founder, you should be comfortable with the potential directions they may take. Furthermore, when circumstances become challenging—as they inevitably will—personalities, goals, and missions must remain aligned, as other urgent challenges will arise, and peripheral disputes will surely become distractions.

“If you offer things for free, people will always come asking for them” (a quote from my friend Mitch Barron, CEO of Trudell Medical). When you are first approached by industry partners for collaboration, or even when attempting to raise funds, there is a significant likelihood that you will be subtly encouraged to conduct feasibility studies at your own expense. This tendency should be curbed as soon as possible. If people are genuinely interested, they should pay. Regardless of the amount, the principle is that they should contribute something as a gesture of good faith. Otherwise, you will exhaust substantial resources catering to those who simply cannot say no but have no real intention of collaborating with you. Note: Business development professionals are not adept at handling this situation. They prefer to claim they are collaborating with as many parties as possible to create an impression of success, thereby encouraging such activities. Ultimately, this is a dangerous strategy, as public perception and financial health can deteriorate rapidly when these “partners” disappear.

I would offer three pieces of advice to any faculty member considering launching their first startup: First, recognize that the criteria for success in academia and business are fundamentally different, so be prepared to undertake substantial amounts of unglamorous work to translate your ideas into viable products. Second, build an extensive network within the entrepreneurial community and pay close attention to the insights they share. Third, do not expect to serve as the CEO—you likely lack both the time and the requisite skills. Finally, avoid being overly greedy about equity holdings; learn to let go.

“Many decisions made early on to quickly resolve issues often become critically important in hindsight. Your choices regarding human resources, intellectual property, licensing, and other areas will carry significant weight down the line (if the company is fortunate enough to have a ‘down the line’). Since it is rare for any single individual to fully comprehend all these early-stage decisions, it is advisable to engage smart people from the embryonic stage to provide input during the decision-making process. (I believe that talent is a company’s most vital resource. No amount of funding can sustain a poor team.)”

Moreover, some people spend too much time worrying about equity, dilution, and how many shares each person holds, which can paralyze the company, preventing it from ever achieving anything (or even getting started at all).

"In summary, it is essential to carefully review your decisions. Even for seemingly mundane choices, seek assistance from talented individuals, but avoid overthinking the issue of how much each person will receive during the decision-making process."

“Finding a suitable chief executive officer is extremely difficult. Universities should leverage their experience to vet CEO candidates. Although it would be inappropriate for me to speak freely about our first CEO, I can say that describing the position as a ‘hot potato’ would not be an exaggeration.”

“Never say, ‘I don’t care about making money; I just want people to use my technology.’ Building a startup is all about achieving success in the business world.”

“Entrepreneurship is demanding work that requires a substantial time commitment. Even after attending various courses, seminars, and roundtable discussions, we, as scientists, clinicians, or scholars, often lack—and may never fully acquire—adequate understanding of many business aspects. We have not been trained to think in this manner. Therefore, you need to seek advice on your ideas from numerous experienced and qualified professionals and build a strong professional network.”

Successful enterprises require a diverse range of skills. This means bringing together a group of individuals with complementary skill sets who can collaborate effectively. I believe many startups fail because such a combination is rare.

No matter how well you plan, unexpected problems will arise. You must be flexible and resilient.

“Sometimes, this is the best way to move your ideas forward. You will gain a new perspective on your ideas, which is extremely valuable.”

“I am often shocked that inventors regard technology as the most critical aspect of a company and expect it to be treated accordingly. However, the easiest way to gauge the value of technology is to examine UNC’s royalty distribution ratio. Inventors receive approximately 1–2% in compensation. This indicates that 98% of the value lies in ‘commercialization.’ Nevertheless, if the technology fails—such as by being unable to achieve productization—the company will collapse as well.”

The Role of a Team. I most easily understand the role of a team from an execution perspective, but I did not anticipate its role in conveying a company’s potential. External parties, such as investors or partners, do not have time to scrutinize every aspect of each company. Their approach to rapid assessment is through the team. If they know Mary—and she is deeply involved with a particular company—it signals that the company possesses corresponding potential and opportunities. Companies are built by progressively assembling stronger teams because each subsequent member seeks validation from earlier joiners. This is particularly true for investors, who therefore look at the company’s team first.

Strategic Partners: As sales/distribution entities, we are primarily driven by market presence; therefore, our initial focus is on market size.

The company’s value encompasses all the elements described above. This model will be restructured over time. Please note that I have not mentioned technology, as intellectual property and products are of greater importance.

“If we can create a 3D model of this relationship, I will ensure that intellectual property rights are highlighted first. Some believe that intellectual property rights confer the greatest value to a company—at least, that’s what our IP lawyers tell us!”

“Business professionals will tell you that your success is primarily tied to your business plan. I disagree; success hinges mainly on science. Devote the majority of your time to refining the science, and the rest will follow.”

“Draw advice from all business experts, consultants, and presentations... Do not discard any advice, nor accept it blindly; instead, work with these ideas to make progress... At the very least, respond to each critique, as it will resurface later...”

You are the creator, the visionary, and you possess what they need… They hold the capital you require… But do not forget your uniqueness… Do not minimize your contribution… Do not let yourself be diluted to the point of no return… This will ultimately do you no good…

“Patience and optimism… you must have them… there will be many dark days, but when others understand and wish to share your vision, those days will quickly brighten.”

“Step out of the university... Understand your product, customers, and market. A common mistake—one I observe nearly 100% of the time—is assuming that your invention, discovery, or research is inherently a marketable product. Is there a need for it? If so, why? If there is a need, how much are people willing to pay for it? Are there enough customers willing to pay a sufficient price for your invention or discovery to justify building a company or a product line? The only way to answer these questions is to leave the lab and office... step out of your comfort zone... and engage with the market and customers. If you are seriously considering building a company around your invention or research, and have not yet had critical, serious, and thorough discussions with at least 10–15 genuine decision-makers/customers who have the authority and means to purchase your ‘product,’ then do so today... I mean today. Do it now!”

“No matter what you think, what I think, or what your friends and colleagues think… the market is always paramount. It will determine your company’s success or failure. So find out what it has to say!”

“Find an excellent business manager—you need someone who knows what they are doing to run the business.”

Don’t let your university lab lose focus—your lab has a much higher chance of success in five years than your company does.

Find a truly excellent corporate lawyer who can explain matters to you. Try to avoid relying solely on TTO recommendations. There are certainly better law firms that can make a significant difference. If you must use a firm recommended by the TTO, pay out of pocket to seek external counsel. This can save you substantial costs in the future and help protect your inventions.

“Don’t start a biopharmaceutical company for the sake of money. If you want to make a lot of money, there are much easier ways to do so.”