Image of Rana GuptaThe Journey to Impact is a monthly blog featuring insights from Rana K. Gupta, Director of Faculty Entrepreneurship at Boston University. He helps BU researchers bring technology and other research breakthroughs to the marketplace to increase their impact through programs and workshops, one-on-one consulting with faculty, educational resources, and community building among BU innovators. Email Rana at rkgupta@bu.edu


Conventional thought is that once a researcher has engaged in an SRA (sponsored research agreement) with a corporation that researcher should not pursue a startup with that idea; move on to a new idea to commercialize.

I say engaging in an SRA may limit a researcher’s subsequent commercialization options (with that same idea) but hold on, don’t go binary on me. Life is rarely binary and that holds true for business engagements. There are some commercialization paths you can and should consider even if you’ve engaged in an SRA. Keeping your options open requires forethought, education, and planning.

Before we explore pathways, so that we’re clear on terminology, here’s a definition taken from our Research Support web page on SRAs: “SRAs are used when an industry sponsor funds a specific research project for a defined time period and in return receives certain deliverables such as research data, reports, and certain rights to intellectual and tangible property.

Did you catch that last part? It said, “and certain rights to intellectual and tangible property.” Yeah, you’re giving up something in exchange for the money: (certain rights to) your intellectual property (IP). But note an important word in there: “certain.” Aha, it does not say “all.” While it may turn out to be “all,” it need not be. Therein lies one of the forks in the road.

The second word we need to define is commercialization, elegantly explained by the University of Pittsburgh’s Innovation Institute as follows: “the process by which a new product or service is introduced into the general market.” For the purposes of this article, let’s consider two paths to commercialization for a researcher: startup and license. A startup is when the researcher forms a company and licenses his or her idea from the university to the startup that undertakes the task of commercialization. A license refers to licensing to a third party, an existing company, who uses the IP to commercialize the idea.

Returning to the beginning of this letter, if you engage in an SRA don’t consider a startup, is the statement that prompts me to write this article. To that I say: 1) always remember, risk should be managed, not avoided, and 2) game on. I’m going to assume the researcher I’m addressing in this article is interested in commercialization but has neither looked into nor decided which path they wish to pursue, license or startup, and is now considering an SRA to augment their research funding. We’ll consider three decision nodes from idea to SRA to commercialization to help determine if there’s a path for you. Those decision nodes are 1) your objective; 2) the terms of the SRA and 3) the pathway to commercialization and if a startup, the source of funding.

I’ll offer some guidance and scenarios. Please note, this article simplifies some of the terms, events and variables involved, to make a point. That point is to offer perspective and some ideas so that researchers 1) don’t passively accept an SRA as a definitive barrier to all subsequent commercialization paths AND 2) are circumspect about future pathways when negotiating the terms of an SRA.

Decision node #1: What’s my objective?

This is the first, first question, whether you’re a pure researcher publishing papers or an entrepreneur, to ask yourself when embarking on the journey to bring an idea forward (even if publication is a pathway under consideration). By answering this question it’ll clarify whether an SRA IS a good idea. If an SRA does not help you achieve your objective, perhaps you need to question your motivation for pursuing it. Don’t do it “just for the money”. If an SRA is not advancing your efforts to achieve your objective, it’s a distraction. Note, I said above I’m assuming the researcher in question is interested in commercialization. Here’s some more context behind my starting with this first, first question of one’s objective (by the way, the second, first question is, “Is there a need (for your idea)?”).

Conclusion: Before you engage in an SRA, be sure an SRA helps you achieve your objective. Talk to your colleagues in Industry Engagement and Technology Development to learn more about the pros and cons and different types and terms of SRAs.

Pay close attention to what you’d give up if you engage in an SRA. Understand what freedoms the corporation is granting themselves with your IP. As Jon Gilbert, Director of BU Industry Engagement noted in a conversation recently, “most corporations want exclusive rights to the IP or a NERF.” Exclusive rights mean they alone can use the IP and they’ll probably also ask to use it in all fields of use (any industry or application). A NERF license is a non-exclusive, royalty-free license; the company can use the IP in negotiated fields (BU tries to make the fields of use limited) and not pay for it (royalty-free) but the university can license it to other parties if we wish (however given the first NERF, the others will be non-exclusive as well). In either scenario the company wants to make sure their products are not blocked in those fields (industry, market, application) by IP generated by the BU researcher that they funded.

Assume you proceed with the SRA plan and now a corporation is interested in sponsoring research.

Decision node #2: Terms of the SRA

Above we referred to having to give up “certain rights to IP.” We also noted Jon Gilbert’s observation that most corporation really want all rights. It’s part of their risk protection measures. Corporations want exclusive rights or a NERF because they want to be able to go anywhere with the technology. Think about it from their perspective: they don’t want to be blindsided by an application in the future that they have not thought of today. Corporations will always ask for (demand?) as much leeway as they can to exploit the value of the IP. If however your IP has potential applications in industries where they don’t play, bring this up during the SRA negotiation. That’s your chance to raise your hand and express yourself and your interests. It IS a negotiation. That they asked for exclusivity or a NERF may be their default opening term. The burden now falls on you to express your interests, especially in areas where they have no interest. And once again remember Decision node #1: if the sponsor’s terms impede or block your objective, be circumspect about engaging in the agreement.

Take a moment to discard the word “corporation.” Negotiations are between people. The person or persons on the other side of the table, representing the corporation have a job, perhaps a family and objectives they need to accomplish in that job. Even more pressing, they need to keep that job. In the business world, it is not to any one person’s benefit to permit one modicum of additional risk into a deal that could, at some future date, come back to make that person look as if he or she negotiated and signed a bad deal. Put another way, they’d rather walk away from the table than sign something that could jeopardize their job. In academia we tend to use the words “industry” and “corporations” as if we’re negotiating with the entirety of those words. We are not. We are working with a person or a small group of people who have a job to do and do it the best they can under the policies, restrictions and guidelines put forth by their company.

OK, let’s say you signed the SRA.

Above we noted two paths to commercialization: license (to a third party) and startup (you start a company). Sentence number one in this article refers only to a startup. In this article, I’ll expand the notion from just a startup to include licensing. Both startup and licensing are pathways to commercialization: introducing your product or service to the market. In the following we will explore a couple of simplified scenarios and potential pathways forward.

Exclusivity Scenarios. Here we have two scenarios: 1) we’ve signed an exclusive deal with the sponsor of the SRA for all fields of use; 2) you negotiated exclusivity for certain fields of use, leaving others available to pursue. You may think that if Exclusivity Scenario #1 is your situation you have no path forward. Maybe you do, maybe you don’t. That licensee made an investment in your work. THEY are your potential path forward. Engage them in dialogue. Whether it’s more SRA work, developing new IP capitalizing on your other work for them to license or a startup they fund, they are your potential client, licensee and source of funding. If the second scenario (limited fields of use) is the outcome, you have other fields of use to pursue. As a general (not exclusive) rule VCs will not be interested in funding IP with limited fields of use. Why? Because they want to be able to go anywhere with the technology. Whereas a company is protecting its risk (downside) by asking for all fields of use an investor does not want to limit its upside. But you know what? Venture capital is but a tiny, tiny sliver of how companies are financed. Venture capital just gets oversized press due to its sex appeal (just remind yourself that >50% of VC funded companies fail). If you have fields of use open to you where you see the potential to create more IP either for license or startup, let’s talk. You have paths forward.

NERF Scenarios. If you signed a NERF, then a couple of variables come into play. Corporate players in certain industries and applications don’t mind sharing a core IP because each one is going to customize it. Do your homework; find out if the market sector in which you’re playing can tolerate a NERF (there’s precedent). Note also a NERF may give you ample opportunity to go to one or more licensee companies for more SRA funds. With those funds you may be able to develop valuable IP for that sponsor thereby creating a licensing opportunity and once again, that sponsor may be the financier of a startup.

Companies are looking to address market needs, generate revenue and create value for shareholders. Whether it’s licensing or startup if you can help them do that, don’t be shy about putting together a pitch to ask them to fund your work that will add value to their enterprise. Want help with the pitch? Let’s talk.

Before I end, let me point out that regardless of how your IP is commercialized, BU protects your ability to publish and retain rights to allow you and any BU or non-profit researcher to continue pursuing the research your IP covers. With respect to the above commercialization pursuit, I said somewhere in the beginning of this article about this being a simplification. Please don’t mistake simple for easy; it’s not. The objective of the article is to highlight that an SRA need not be the end of your commercialization dreams for that idea. In order to make those dreams reality you have to be clear about your objectives, do your homework and advocate for yourself. Oh, and let’s talk.