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.
Benefits of Innovation Partnership License:
Innovation Partnerships is proud to make available the “Powered by Michigan Technology” logo for U-M licensees. U-M is one of a very few universities that makes available a version of the university logo for use by its startups. If you are a U-M startup or are discussing a U-M startup license, please ask us about the license documentation for this logo. There is no additional charge.
Beyond our best-in-class licensing approach, Innovation Partnerships offers the following support for U-M startups:
U-M has three investment funds to invest early-stage capital exclusively into U-M-licensed startups.
Innovation Partnerships offers flexible leases for world-class lab and office space adjacent to Innovation Partnerships within the U-M North Campus Research Complex. Tenants are provided with concierge services and networking opportunities to accelerate their programs guided by the Innovation Partnerships Ventures team.
Innovation Partnerships provides seasoned entrepreneurs to bring a wealth of entrepreneurial experiences and connections to startup projects and licensed U-M startups.
The Innovation Partnerships Ventures team is available to help connect U-M startups to talent and to market open positions.
Innovation Partnerships has dedicated marketing support to help market the achievements of U-M startups and to make U-M’s central marketing resources and media external to U-M aware of marketing opportunities related to U-M startups.
We will proactively connect our startups to external resources (e.g., SBIR grant support, investors, industry experts), internal U-M resources (e.g., school-specific entrepreneurial support, experienced faculty, grad students), and internal resources (e.g., mentors-in-residence, our venture team, other licensing professionals with market expertise). Innovation Partnerships Ventures publishes a Pipeline Report that is received by over 800 seasoned investors around the world.
U-M’s standard equity arrangement is to receive common stock after the first priced round (determined by a mutually-agreed upon funding threshold).
U-M typically receives “participation rights” allowing U-M to invest capital in the startup in future rounds. U-M exercises these participation rights through Michigan Investment in New Technology Startups (MINTS) and Osage University Partners (OUP).
For software startups, note that equity-only models only make sense if the startup is raising institutional investment and therefore on a trajectory for an eventual exit (acquisition or IPO). If there is potential that the startup makes early revenues and does not need to raise institutional investment, then a straight equity-only license likely does not make sense. It is possible to have a “hybrid” license with a royalty or annual fee that then converts to equity only upon a venture capital round.