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One Million Dollar Question: how profitable is my spin-off?

  • 07 January 2015
  • Articles

In recent years universities have been creating technology-based companies, known as spin-offs, placing on the market the knowledge generated within the research and creating a positive impact, transforming local economies.

Creating products and/or profitable innovative services is the great challenge to come in the current economic context. Recognition of innovation, as the true source of value creation, achieves increasingly important competitive advantages in the market, through Intellectual Property Rights, its most valuable asset.

These companies are created to commercially exploit the knowledge produced by academic activities, including not only innovations or patents, but also all the scientific and technical knowledge accumulated by a researcher/teacher during his career.

The creation and development of these companies has been considered as a viable alternative to licensing, in the commercialization of the academic intellectual capital.

One of licensing weaknesses lies mostly in its slowness to generate revenue, considering the embryonic nature of academic inventions. Most require further technological developments, an additional effort of the inventor and a close involvement of the licensee.

However, while the license agreements between universities and companies have no location constraints, that is, the agreements can be established in any country where Intellectual Property assets are protected, this academic entrepreneurship is decisively a local phenomenon.

In general, entrepreneurs are near their home university, which serves as a source of comparative advantage in providing skilled labor, specialized facilities and a source of knowledge.

The question that arises in the creation of the company is how profitable will be is my spin-off.

There is no objective response and success depends on a variety of factors, including: the product intended to be commercialized, access to adequate funding, culture and Intellectual Property policies of the University, the team and the company’s own characteristics (including legal form, the type of financing and the business model). Nevertheless, there is a secret ingredient which is the basis of success: an adequate protection and management of their Intellectual Property.

In this sense, it is essential that the Universities Policies of Intellectual Property cover a specific regulation for this way of transferring knowledge, facilitating an entrepreneurial culture and stimulating the success of these young companies.

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One Million Dollar Question: how profitable is my spin-off?One Million Dollar Question: how profitable is my spin-off?