A lot is involved in setting up a spin-off. You are making the switch from academic research to entrepreneurship. This means that you have to negotiate with the university about the transfer of the IP. To facilitate this process and to level the playing field, uniform deal terms were created. Brechtje Vreenegoor, manager of the Knowledge Transfer Office of the WUR, talks about these rules for negotiations with spin-offs.
This article previously appeared in the TTT Magazine.
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When setting up a spin-off, the IP of an invention is transferred from the university to the entrepreneur. The negotiation about whether, and if so, what compensation the university receives, can be complex, lengthy, and frustrating. “It usually just goes well,” says Brechtje. “It just requires some explanation. You can compare it to doing a dance with many people at the same time. That can become a fantastic flash mob, or a big chaos. The chance of success increases when everyone knows the steps of the dance. This is also the case with the process of establishing a spin-off. There was no transparent process for all universities, so the spin-off founders often did not know what to expect. Now uniform principles have been defined and the process can be compared more to a basic recipe, to which universities can give their own flavour. It is therefore much clearer for all parties involved what they can expect in the process and which rules apply.”
Clear expectations
A working group from the Dutch universities has arrived at these shared principles. In doing so, they looked at the situation as it was in the Netherlands, but also at best practices from abroad. Since you cannot simply give away IP in the Netherlands, three compensation options have emerged for spin-offs in the process of being established. Brechtje: “The first is that the university transfers the IP in exchange for a financial compensation, such as royalties. The second is that the IP is transferred for shares in the company. The third option is a combination of both. The exact deal always depends on the value of IP for the company, how far the technology has already progressed and the sector in which the company operates. We also look at whether the compensation is necessary at all. So it is still complex, but these guidelines ensure that we can make comparable considerations at almost all Dutch universities and that expectations are clear in advance.”
First effects
These deal term principles were presented on February 16, 2023. The first effects are now slowly becoming visible. “The advantage is that we now know where we do not differ and therefore where we do not have to negotiate,” says Brechtje. “During a negotiation, we can first explain the basic principles that have been established and then discuss where there is room for manoeuvre. That is not only good for the universities, but also for the spin-offs and ultimately the investors.” The reactions from abroad were also positive. Brechtje: “Other universities are also playing with this issue, because making a deal takes quite a lot of time. So they found it inspiring to see that we have tackled this together in the Netherlands.”
Fair and successful collaboration
Brechtje would therefore like to see the principles also being adopted by other countries. “It would be great if there was a standard for Europe, or even for the world,” she says. “As a spin-off, you don’t compete at the Dutch level, but internationally. The support is now largely in the Netherlands, but it is important that we become better known so that everyone knows what we mean when we talk about deal terms. First in the Netherlands, and then internationally. That is something we should strive for. Because when we all speak the same language, that leads to honest, pleasant and successful cooperation.”