Software Startup Licensing Terms

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:

Investment funds
U-M has three investment funds to invest early-stage capital exclusively into U-M-licensed startups.

Startup Incubator
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.

Mentors-in-Residence
Innovation Partnerships provides seasoned entrepreneurs to bring a wealth of entrepreneurial experiences and connections to startup projects and licensed U-M startups.

Talent/Networking
The Innovation Partnerships Ventures team is available to help connect U-M startups to talent and to market open positions.

Marketing
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.

Connections
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.

There are several reasons for a startup to license software from U-M, including:

• Rights to code developed at U-M or with U-M support
• Rights to know how or data associated with a software project
• Rights to a particular brand associated with a lab or software project
• Ability to use the “Powered by Michigan Technology” brand and logo
• Access to U-M mentors-in-residence
• Ability to lease space at Innovation Partnerships Startup Incubator
• Eligibility for U-M investment funds of capital
• Getting plugged into U-M’s marketing machine

We hope that every startup based on software created by U-M researchers becomes a U-M-licensed startup. Accordingly, we were the first university in the country to adopt equity-only licenses for VC-track software startups. While we are happy to adapt our terms to a startup’s particular circumstances, the following is our general framework for software startup licenses.

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.