For Faster IP Transfer
Framework for Faster, More Predictable, and Fairer Technology Transfer Published.
Germany boasts excellent research, strong universities and research institutions, and a growing startup and investment ecosystem. Nevertheless, the path from research results to successful spin-offs often takes too long: differing expectations among research institutions, technology transfer offices, startup teams, and investors, complex negotiations over intellectual property, and unclear processes slow down many spin-offs.
“IP transfer takes far too long in Germany. The German Spin-off Framework brings transparency to the IP transfer market and helps accelerate spin-off processes,” says Dr. Dorothea Ringe, head of our “Entrepreneurial Thinking and Action” cluster.
On average, IP transfer in Germany takes 18 months. The reasons for this are multifaceted; here are two key causes:
- Lack of transparency regarding terms: IP is either out-licensed, the university takes an equity stake in the spin-off, or there is a combination of both. The terms are negotiated bilaterally between the university and the startup teams; subsequently, venture capital is invested in these companies. To ensure the companies remain attractive to VC, the investors’ interests must be taken into account from the outset—excessively high stakes held by the university are unattractive. Many young founders have little information about what equity stakes are appropriate for the university and how to determine the value of the underlying intellectual property (IP). University representatives who rarely oversee spin-offs find themselves in a similar situation. The current lack of transparency regarding standard market terms and conditions leads to widely varying expectations and also causes negotiations to drag on for a very long time.
- The administrative review processes within universities vary widely and involve many departments (technology transfer offices, legal, tax). This, too, often leads to delays—especially when the parties involved are also risk-averse.
The German Spin-off Framework (GSOF), published today, now provides guidance on current market conditions for technology transfer based on information from institutions currently active in the market. This creates transparency for the first time—through a joint effort by universities, research institutions, and venture capital firms. This is a first in Germany. In addition, the GSOF includes a recommendation for a professional process for negotiating spin-off agreements.
Important: The GSOF was designed for the transfer of technologies with disruptive potential that form the basis for a venture-capital-financed startup.
Why does the Joachim Herz Foundation support the GSOF?
- Transparency regarding the market helps align expectations on all sides. In this way, the GSOF helps accelerate the IP transfer process.
- A mutually agreed-upon framework between research institutions and venture capital firms helps ensure that newly founded startups can quickly attract VC investment after their launch.
- The GSOF serves as a guide for all universities and research institutions that wish to benchmark their own terms against the market.
- The GSOF serves as a guide for founders negotiating with their university for the first time, helping them determine whether the proposed terms fall within standard market parameters.