Steps for Getting Started
With so many steps involved in the formation of a new company, academic entrepreneurs often inquire about the proper sequence. There is not a set sequence in which these tasks should be accomplished, as every new company has its own unique circumstances and needs. Nevertheless, as a guide, a generalized chronology is shown below for starting an academic startup company. The list emphasizes compliance with an academic employer’s policies and practices regarding the inventor’s participation in a startup. It attempts to minimize early capital expenditures. Please note, however, that in reality many of these events do not unfold one at a time but typically occur in parallel or may occur out of the sequence below.
Talk to INVO
Talk with your invention manager to determine what type of intellectual property protection you will need and for suggestions regarding next steps. Make sure to understand the intellectual property and conflict-of-interest policies.
Protect intellectual property
For most startups, the intellectual property is the only capital. It is the only tool for attracting investment (usually one or more patents and/or substantial software code). A patent application should be filed before any public disclosure is made.
Network and find a mentor
Contact INVO for suggestions on how to network or recommendations for potential participation in University programs. These may include: Commercialization Clinics, INVO seminars, etc. In addition, the Farley Center for Entrepreneurship at the McCormick School of Engineering, the Levy Institute for Entrepreneurship at the Kellogg Student of Management and the Knight Innovation Laboratory provide access to management, students and/or business plan writing as well.
Plan the business
A business plan should be drafted to be able to communicate the market opportunity and vision of the company. The plan should include a market plan and a management and financial plan.
Disclose to INVO
At this point you should communicate with your individual School on how you will be managing any potential conflict-of-interest/conflict of effort that might result from the startup.
Assign a business person
A business manager (or CEO) should be selected to initiate negotiations with the University and fundraising.
Execute a founder’s agreement
This agreement memorializes the terms and conditions under which the founders have agreed upon to form the company.
The company needs to become a legal entity in a particular state. The company needs to be formed before a license can be executed.
Negotiate the license or option agreement with INVO
The businessperson leading the startup will negotiate a license for the startup with INVO. In some cases, a short-term option agreement may precede a license to demonstrate to potential funders that it has secured the rights to negotiate for a license to the technology.
Commercializing technology is typically a capital-intensive process. Fundraising becomes a non-stop activity until the company exit (either sold or IPO).