Work with your TTO, file an IDF on time, line up PI approvals, and structure spinout terms investors will back. Translate investor needs into a university deal and lead negotiations confidently on valuation-critical points.
1. Working with Your University Tech Transfer Office (TTO)
What a TTO Does and How to Engage Them
Your university's Technology Transfer Office (TTO) bridges academic research and commercial application. These organisations manage how university discoveries become real-world products and services.
TTOs handle five core functions:
- IP protection – Filing patents, managing portfolios, and protecting discoveries
- Market assessment – Evaluating commercial potential and identifying pathways to market
- Deal-making – Negotiating licences with companies and structuring spin-out agreements
- Company formation – Supporting new ventures based on university research
- Industry networking – Connecting researchers with partners, investors, and customers
Start engaging your TTO before publishing anything with commercial potential. Book an introductory meeting to understand their processes and timelines. Most TTOs welcome proactive researchers—it simplifies their work and improves commercialisation outcomes.
How to file an Invention Disclosure Form (IDF)
The Invention Disclosure Form starts your formal commercialisation journey. This document captures your invention's key details and helps the TTO assess its potential.
Submit your IDF 3+ months before any public disclosure. TTOs need time to assess patentability, search prior art, and file provisional patents. Remember: in most countries, public disclosure before patent filing destroys patent rights.
Role of Your Principal Investigator (PI) in Approvals
For PhD students and postdocs, your PI holds significant influence over commercialisation. University IP policies typically require PI approval for any commercial use of lab research.
Your PI's responsibilities include:
- Endorsing the IDF – Confirming accuracy and supporting commercialisation
- Structuring ongoing research – Defining how the spin-out and lab will collaborate
- Managing conflicts – Ensuring commercial activities don't compromise academic duties
- Choosing involvement level – Some become co-founders; others remain advisers or stay hands-off
Discuss your commercialisation plans with your PI early. Some actively encourage entrepreneurship; others worry about distraction from research. Understanding their position helps you find a mutually beneficial path forward. In general, if a professor wants to be a co-founder but not leave to join the venture full time, it is important they don’t retain significant ownership. Best practice is 5% which should be vested with agreed ongoing contribution to the venture.
2. What NZ University TTOs Usually Require Before Licensing
New Zealand universities set specific requirements before licensing IP to spin-outs:
Business fundamentals:
- Credible business plan demonstrating market need
- Capable management team (often requiring external expertise)
- Development roadmap to market
- Funding strategy and financial projections
These requirements can often be well in excess of what a venture capitalist will require to back you. Its worth remember that you get a lot of moral authority from bringing money to the table which can shortcut a lot of these requirements and improve your negotiating position.
IP Ownership Pathway: Universities increasingly include IP assignment triggers:
- Significant funding round (typically Series A or $5m+ rounds)
- Revenue milestones
- Time-based transfer (often 3–5 years)
Ongoing Relationships:
- Research agreements for continued university work help
- Facility access during transition
- Publication rights balancing academic and commercial needs
Typical Commercial Terms
- Equity: 10–25% is standard, though ranges from 1–49% exist in the market. You’ll notice a tension here with investors who are typically looking for 10% or less.
- Royalties: Single-digit percentages (ideally under 5%) with caps
- Upfront fees: Usually minimal to preserve early-stage capital
- Milestone payments: Linked to commercial, not technical, achievements
3. How to Secure Your Intent to Spin Out (and Protect IP in the Meantime)
Declaring spin-out intentions whilst protecting IP requires strategic planning:
Step 1 | Early Declaration
| Inform your TTO when you're seriously considering a spin-out—even months before company formation. This allows them to:
• Prioritise your IP protection
• Stop marketing to other licensees
• Draft spin-out-friendly terms
• Plan around critical deadlines |
Step 2 | Protection Strategies | • File provisionals quickly – Most NZ deep tech companies file in Australia first for their provisional search service (AUD $1,100 extra), providing early patentability insights
• Coordinate publications – File patents before any public disclosure
• Document development – Detailed records support future filings
• Control information – Use NDAs with potential co-founders, advisers, and investors |
Step 3 | Formal Commitments
| Request a letter of intent or option agreement that:
• Confirms exclusive negotiation with your spin-out
• Sets negotiation timeline (typically 3–6 months)
• Outlines key terms to prevent surprises
• May transfer ongoing IP costs to the company |
Step 4 | Building Positive Relationships | • Share your funding timeline and milestones openly
• Propose contract research benefiting both parties
• Highlight how the spin-out supports university impact goals
• Maintain research collaborations where possible |
Remember: TTOs generally support spin-outs as they bring committed founders and validated commercialisation paths. However, they must protect university interests and justify public research investments. Understanding both perspectives creates agreements that launch successful companies whilst maintaining valuable university relationships.
Insider Tip: I have seen the best success for founders who negotiate on an “arms length” basis. This means not relying on the TTO to help with company formation. But rather starting the company yourself and negotiating with the TTO for a license on a purely commercial basis.
4. What Investors Look For in Spinout Terms
Q: What licensing terms make a spinout investable?
Q: How much equity should universities take in spinouts?
5. Negotiating From a Founder's Perspective
Q: Who should lead spinout negotiations - founders or investors?
Q: What's a fair value exchange between universities and founders?
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