Spin-off guidelines

Licensing VUB technologies to spinoffs is based on a contract by which VUB gives to a company the commercial right to use certain intellectual property (IP). IP includes any intangible asset (patents and patent applications on inventions, copyrights on software or plans, drawings and the like, trademarks, or know-how) as well as tangible assets (demos, prototypes, or biological materials). To fulfil the IOF requirements, licenses granted by VUB are usually exclusive (i.e. only the beneficiary of the license will have the right to use the IP) and can be combined with a non-exclusive license on e.g., know-how. Exclusivity may be provided by patents, according to territorial extension. The license is generally limited to a certain field of application that the company plans to develop. Any prior commitments to third parties with regard to the concerned IP must be listed by the researchers and excluded from the application scope of the license.

IP created by VUB employees (including professors, doctoral and postdoctoral students) in connection with their activities for VUB belongs to VUB by law. This is why a spinoff willing to further develop and commercialize a technology based on or using, such IP, needs to secure a license, even if the spinoff creator is the inventor of such IP. VUB only grants licenses to incorporated companies and not to individuals. 

A spinoff willing to obtain a license on VUB IP shall first present its business case to VUB TechTransfer and in particular to the TechTransfer spinoff team. In general, the business case is described in documents like investor pitch decks or business plans, and it should demonstrate that the spinoff has sound development and commercialization plans for the VUB IP, including the financial perspective. Such a well-developed business plan stipulates the basis to determine the compensation for the VUB.
 

For the license, VUB is compensated through (a combination of) the following principles:

• VUB may take an equity position in the spinoff, usually through a contribution in kind of IP or in the form of an option to contribute in kind or sell the IP at a predefined time (e.g. VC funding secured). 
• VUB may request royalties from the net sale of products or services covered by the IP and/or lumpsum or milestone payments. A minimum annual fee is requested after a few years, subtracted from the due royalties. The minimum annual fee represents a financial commitment of the spinoff towards the development of the licensed technology. The VUB reserves the right to take the license back, if the spinoff does not show sufficient efforts of commercializing the IP. In that case, the VUB can license it to another company.
• Milestone payments may apply in the pharma and healthcare business.
• Exit fees apply when the spinoff is sold or going public. 
• The spinoff covers the future costs of the maintenance of any licensed patent, from the date of the signature of the license, so that it can manage the cost-benefit analysis of territorial patent coverage. In case VUB has covered substantial past patent costs, e.g. for national phases, prior to the license, the spinoff will reimburse them within an agreed date or upon a substantial investment round.
• The VUB will continue to have free and universal access to the IPR, but exclusively for purposes of education and further research.
• The licensed IP is provided to the spinoff without any warranties and the spinoff will indemnify VUB for any exploitation risks.

A Transfer of VUB technologies to spinoffs can sometimes be more advantageous. It means that the ownership of the IP will be transferred from the VUB to the spinoff through the negotiation of a transfer agreement. 

Equity is a consideration for the access to the VUB IP as an asset enabling the company to start the business, attract funds, and grow. Equity is a form of compensation for the opportunity cost, which is monetized in the event of a future exit (acquisition, IPO), or distribution of dividends. Equity reduces the company’s burn rate and is cash-friendlier in the opening phases and the VUB involvement may add credibility.

Royalties remunerate the rights granted to the spinoff to use and sell products and processes under the VUB IP. The payments to VUB are proportional to the income generated from the exploitation of the VUB IP. This ensures a fair return to VUB in case the spinoff becomes a company with regular revenue. Royalties are applicable on sales and mainly depend on the industrial sector, product margins, maturity of the technology and expected time-to-market Royalties are more cash-expensive at the start, but leave the team with more equity to work with.

An exit fee is typically defined as the amount of money VUB would receive if the spinoff were sold or went public.

The lowest royalties are applicable to cases where: 

a.    very small product margins are expected, or 
b.    the technology is in a very early-phase of maturity with an anticipated time-to-market over many years and requiring large expenses with a high risk on the return on investment, or 
c.    the licensed products depend on third-party IP, already licensed to the spinoff with royalties due. 

The highest royalties are applicable when products have high margins or the technology is mature and can rapidly be put on the market.
 

Negotations and signatures

Licenses are established and negotiated by TechTransfer on VUBs side; they are signed by the rector and co-signed by the professor heading the laboratory from which the technology originated.

For further details and requirements access our spinoff guidelines through the VUB TechTransfer website: Spinoff regulations and Conflict of Interest regulation.