University of Saskatchewan

April 18, 2014   

What is a Start-up?

A start-up company is defined as a company founded upon intellectual property created at the U of S with the intention of commercializing products and processes which derive from that intellectual property.

Why Do Start-ups?

  • Provide employment opportunities for U of S graduates
  • Create long-term research relationship
  • Generate benefits for the local economy including job creation
  • Provide vehicle for commercialization that may not exist in Canada or elsewhere
  • Provide opportunities for faculty, staff and student inventors to become entrepreneurs
  • Create opportunities to show-case the excellence of research being conducted at the U of S

Criteria for a Start-up

Start-up companies require significant resources both in terms of time and money. Not all technologies are equally suited for start-up company creation. In evaluating start-up company opportunities the ILO considers the following criteria:

1. Platform Technology

  • Supports a range of products, possibly in different markets
  • Solid foundation to build a company on

2. Suitable licensee not available

  • Academic research discoveries are often too early for established companies who lack the infrastructure and resources to develop the technology

3. Technology addresses a large and growing market

  • In order to attract investment and management to the company the market for the technology/product(s) must be of sufficient size to allow for significant return on investment.

4. Sustainable competitive advantage

  • Broad patent protection available

5. Coachable and entrepreneurial inventors

  • Inventor is a champion and prepared to play a key role in the early stages of the start-up.

6. Low barriers to entry

  • It may not make sense to create a company to commercialize when there is an existing industry that has invested considerable funding to develop the market and create the means to manufacture and distribute product to that market

Industry Liaison Office’s (ILO's) Start-up Company Program

The Industry Liaison Office’s (ILO's) start-up company program allows the ILO to play different roles depending on the needs and wishes of the start-up.

1. Founder’s Role

The ILO, through the efforts and abilities of its Start-up Specialist and its Legal Manager can mentor and facilitate start-up company creation by acting as a founder of the start-up. These individuals will work with the inventors and other ILO staff to assist with the following activities:

    • Structure and Incorporate the new company
    • Draft and negotiate the initial Unanimous Shareholders Agreement and company articles and bylaws
    • Assist in the preparation of the company’s business plan
    • Assist the company with finding investors and negotiating the terms of financing
    • Recruitment of management
    • Where possible assist the company in locating appropriate space for its initial operations
    • Provide incubation support to the new company including intellectual property management, finding prototype development funds, advice regarding Scientific Research and Experimental Development tax credits, support in ongoing financing efforts

In exchange for providing this service ILO will take founder’s equity. Founder’s equity does not fall under the University’s revenue sharing policy with the inventors and therefore upon liquidation is not subject to distribution with the inventors.

2. Licensing Role

The ILO will provide a License for the U of S developed technology to the start-up company. Recognizing that start-up companies are constrained by their cash flow, the ILO is prepared to consider some or all of the following options in negotiating with start-ups in exchange for taking equity or debt convertible to equity in the start-up:

    • Reduced cash considerations (upfront fees, milestones, and running royalties)
    • Delayed patent cost repayment

Benefits

The future success of Saskatchewan's economy depends on innovation. The U of S is the major source of research and development in the province and it is the prime source of innovations. Although the ILO looks to existing companies in the local area first when trying to license U of S inventions many of the licensees are based outside of Saskatchewan with the licensee deriving the greatest benefit from the commercialization of the technology. In contrast, start-up companies tend to remain within the community contributing to the economic development and diversification of the local economy. It is crucial that the commercialization of University technology via start-up company creation be supported at the U of S to ensure the future growth of Saskatchewan's economy.

For more information on our Start-Up Company Program, please contact:

Lorna Shaw-Lennox
Office of the Vice-President Research
Suite 501 - 121 Research Drive
Saskatoon, SK S7N 1K2
Phone: (306) 966-7338
Facsimile: (306) 966-7806
E-mail: lorna.shaw-lennox@usask.ca


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