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University of Michigan Innovation Partnerships
University of Michigan Innovation Partnerships

Hardware, Device, and Materials Startups

Where U-M has IP that covers core aspects of a product, a royalty arrangement is typically appropriate. To facilitate the licensing process, we offer a term sheet for U.S. based startups licensing a single invention. This term sheet has been adopted by over twenty-five U-M startups in the last five years. We believe it covers most circumstances; however, we are happy to discuss different arrangements. Contact us to discuss our standard term sheet for qualifying hardware, device, and materials startups.

For U.S. based startups created to commercialize a single U-M invention

License Type

Exclusive license with right to sublicense

Upfront Fee



  • No royalty due in first 4 years of license or until closing of change of control, whichever is earlier; 2% royalty on Net Sales thereafter
  • Royalty stacking reductions up to half of royalties otherwise due if licensee is required to pay royalties to third party
  • Minimum royalties starting in year 4: $5k year 4; $10k year 5; $15k year 6; $20k years 7+


4% equity at $2M of equity financing

  • Common stock
  • Participation rights providing U-M, or its assignee, the right to purchase up to 10% of the securities issued in subsequent rounds


20% of non-royalty sublicensing revenues received by licensee for sublicenses entered in first 4 years; reduced to 10% thereafter

Patent Expenses

  • Future patent expenses paid as incurred
  • Back patent expenses reimbursed 1/3 at first anniversary; 1/3 at second anniversary; 1/3 at third anniversary

Benefits of Innovation Partnership License:

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Other Startup Support
Specifics About Equity Provisions (U-M’s Typical Equity Provisions)