The changing face of university technology transfer

ChangeTechnology transfer started in 1980 when the Bayh-Dole act was created, that allowed universities and other research institutions to own the intellectual property created from federal research funding. The business has evolved substantially over the past 37 years, just like any other business.

  • Business model – Licensing was the predominant business in the early days of technology transfer and it was highly transactional. This created the technology licensing offices around the country. In fact many of them called themselves Technology Licensing Offices (TLOs). This transactional nature of the business has changed through the years. Where large upfront payment driven multimillions dollar deals are almost unheard of in the technology transfer business today. In fact the trade association of technology transfer is still called the Association of University Technology Transfer Managers (AUTM), which I understand is trying to change its name as well. The new model is much more focused on startups, technology commercialization and economic development and will continue to evolve.
  • Talent – People who were joining technology transfer were mostly folks who did not want to do a postdoctoral fellowship after completing their Ph.D., and were looking for an alternative career path. That has simply changed. Many of the professionals who are coming in to technology transfer field want to join the profession proactively. Most importantly, there is validation of technology transfer as a profession. Technology transfer leaders are being recruited at a very high level by industry and venture capital. The industry has also gone through changes and the mid to high level position salaries are comparable to industry. The osmosis between technology transfer and industry is much more efficient now than it was even a decade back.
  • Startups – Startups were really an after thought when technology transfer started out. There were very few startups being created directly as a result of the Technology Transfer Office’s (TTO’s) efforts. It was more driven by the venture capitalists (VCs), entrepreneurs and faculty. Now, startups are the lifeblood of technology transfer. Classical licensing to large companies for very successful payoffs are far and few between. The key reason for this is the fact that most university technologies are very early stage and hence licensed at a huge discount. Startups on the other hand are de-risked through the maturation of the technologies and become very attractive acquisitions. Recent studies have shown that technologies acquired from universities are orders of magnitude lower in value than acquisition of startups. Startups will be the crown jewel of technology transfer in the future.
  • Early stage capital – Universities are generally not risk takers, in fact they are supposed to be risk averse! That has changed substantially, with universities now taking active leadership in creating proof of concept funds and other funds where they are either the lead limited partner or catalyzing the raising of funds with the sole motivation of starting companies. NYU launched a $20 million venture fund in 2010, while the University of California backed a $250 million fund led by Vivek Ranadivé 5. The University of Chicago has designated $25 million from its endowment to co-invest with other funds in university-based startups
  • With the early stage risk capital, incubators and accelerators on campus, universities have now become an engine of economic development.

So, what can you expect university technology transfer to look like in 5 years from now? How will the business model evolve further? For one, you have to understand the business model of technology transfer. It is about creating impact, not necessarily to increase revenues. Yes, I know that is perhaps the most controversial topic in technology transfer! For a medium sized TTO, that has an operating budget of $5 million, for it to break even on a yearly basis, the sales of products from the intellectual property needs to be $1 billion! The math is simple:

  • For university licenses of technologies all across the board if we can assume a average royalty of 2%1.
  • Of the revenue that come in to the university, only about 25% gets to be retained by technology transfer offices.
  • On an annual basis the university needs to generate $20M in revenues coming in to the university (so that $5M comes back into technology transfer).
  • To generate the $20M in revenues at a 2% royalty rate, $1B in annual sales of products is necessary. (if royalty income alone is considered)
  • There are more than 200 TTOs, which report their licensing results to AUTM on an annual basis. Most are small offices, but still you are looking for >$80 billion dollar in sale of products for these offices to just break even, if average spend is $2 million in operating expenses. I am not saying it is impossible, but it is not an easy task.
  • The total licensing income for TTOs in FY15 was $2.5 B as reported by AUTM. That is an equivalent to $125B in product sales stemming from university intellectual property. Not bad for early stage university technologies, huh?

Today (TTOs) are increasingly being run by professionals who are experienced in startups, licensing, monetizing and have tremendous depth of technical knowledge in a variety of fields. But they are all waging a losing battle in an industry where 73% of the offices are losing money and an additional 16% just breakeven2. It is not because of the efficiency of these offices, it is because of the underlying business model. The “Free agency” professed by the Kauffman model will not change that! If you take the example of Stanford University, the most successful in technology transfer, according to many experts. Only 77 of their 10,000 technologies have ever made more than $1M cumulative. That means only 0.77% of their licensed technologies are successful. Interestingly, Stanford has a 4.7% acceptance rate for college admissions, which is among the lowest in the country.

What TTOs are increasingly doing is diversifying the model of technology transfer. Traditionally, most offices focused on licensing and in the last decade, are focusing much more on startups, with 2.5 startups being created everyday from technology transfer4! Increasing number of universities are adopting new strategies such as monetization, creating a marketplace for intellectual capital, and crowdfunding.

  • Monetization is essentially the model of licensing patents like IBM or Microsoft does successfully, where the patent claims are of value to the licensee from either a defensive standpoint or a freedom to operate standpoint. Many look at this and think that universities might be acting like a non-practicing entity (NPE) or pejoratively a “patent troll”. Clearly that is not the case, because patent is a negative right that the patent owner has a fiduciary right, and I would argue obligation, to protect patent rights. Increasingly, universities are taking action just like other successful industry examples to protect their patents and bring value back to their stakeholders. Most recent examples are from Wisconsin Alumni Research Foundation or University of Wisconsin (against Apple), Carnegie Mellon University (against Marvel), Rensselaer Polytechnic Institute (against Apple) and University of Minnesota (against Verizon, AT&T, T-Mobile, and Sprint).
  • Marketplace in intellectual property has evolved over the last 20 years, where many entities have attempted to create an efficient transactional platform to promote a seamless mechanism to transact. Unfortunately, most of those have either gone out of business, or they are fledgling with the primary source of revenue coming from the listing entity or the subscriber. Universities have massive amounts of intellectual capital which are otherwise not commercially utilized, including various kinds of materials such as chemicals, antibodies, mouse models and plants varieties to name just a few. On the technology side, software, apps, and copyrighted materials. Not overlooking the arts and humanities, there is tremendous amount of value in the copyrighted materials. All of these resources could be made available to the public by creating simple but efficient marketplaces.
  • Crowdfunding is not a new concept anymore. Whether it is an Indiegogo type model or an equity crowd funding model, there is tremendous potential for universities to explore this by engaging the large number of alumni at each of the universities. If you look at the staggering numbers for the NCAA, in terms of fans and revenue ($995.9 million in 2016) and how much they like their alma mater, it is really a no brainer to capitalize that following for taking technologies to market from the universities.

In conclusion, technology transfer is still evolving and will continue to change significantly. But the impact of technology transfer on the US economy has been enormous. Since 1980 more than 5,000 startups have been created. From 1996-2013 technology transfer has contributed $518 billion on the US gross domestic product, and $1.1 trillion on the US gross industrial output. The impact of that has produced 3.8 millions job for the US economy3. So, next time you think of your local TTO, think about the impact that they are making to your region and around the world.



  1. AUTM licensing Survey FY2012 – Reported 1.8% average royalty
  2. Billions at Stake in University Patent Fights -
  3. The Economic Contribution of University/Nonprofit Inventions in the United States: 1996-2010
  4. AUTM licensing survey 2016 –


DISCLAIMER: The views and opinions expressed in this presentation are those of the author and do not necessarily represent official policy or position of The Ohio State University or any of its affiliates.



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