Spin-Out & Spin-In Companies
Why have Guidelines?
These guidelines clarify and simplify the process for you to start new companies based on technology created by them or with others at Jefferson. Also, these guidelines establish clear, fair and consistent practices and standards for the formation of and services provided to Jefferson spin-out and spin-in companies. Practices and standards are then widely known and understood among the Jefferson community.
How do I create a new business?
Contact Innovation@jefferson.edu. You can start a spin-out company if it is based on a technology developed by (1) a Jefferson employee (including student employees, faculty, staff, residents and fellows) in the course of the employee's responsibilities, or (2) a student, visitor, unpaid volunteer, visiting scientist or adjunct/honorary professor who have used more than incidental use of Jefferson resources to create the technology.
If your idea/technology is not something that directly relates to your Jefferson employment, or used no more than an incidental use of Jefferson resources, we can provide resources for you to start your own company.
What are the differences between a Jefferson spin-out, spin-on, & Startup company?
A Jefferson spin-out company is created by an employee, a nonemployed student, alumni or other person when Jefferson claims ownership of a property or technology.
A Jefferson spin-in company is created by an employee, a nonemployed student, alumni or other person where Jefferson does not claim ownership of the technology.
A Jefferson start-up is a company Jefferson creates based on a technology developed by a Jefferson employee, student or affiliate and/or by using Jefferson resources.
What if my idea directly relates to my employment or I used Jefferson resources to create my technology?
- If your idea directly relates to your employment or you used Jefferson resources to create your idea, Jefferson likely owns your idea (see Jefferson's Patent Policy). If you have not already done so, please complete and submit an Idea Disclosure form or Report of Invention (each a "disclosure"). A Report of Invention form is usually used for developed ideas that have had funding (which could be from a company, government or another non-profit); an Idea Disclosure form is a simpler form and, based on your answers, may be required to complete the Report of Invention.
- A panel consisting of Jefferson employees and outside experts will review your disclosure. The panel will decide one of three paths: more information is needed before any decision can be made; Jefferson will take the lead on commercialization of the disclosure; or Jefferson will let you take the lead on commercializing your idea or technology.
- If Jefferson takes the lead on a disclosure, we will work with you to get the idea or technology developed so it may be licensed; we may even create our own company to commercialize the technology (a Jefferson start-up).
- If the panel wants further information, you may choose to pursue development, but you must resubmit your disclosure when you have a more complete proposal. It does not mean that we have "released" ownership of your idea/technology.
- If the panel decides that we should not take the lead on commercialization, you have two choices: you can form your own company – a spin-out – and take an exclusive or nonexclusive license from Jefferson; or you can decide not to pursue the idea further. Please note that, in the spirit of the objectives of these guidelines, the terms of the spin-out license will be the standard; they should not be considered starting points for negotiating more favorable terms.
What if my idea does not directly relate to my employment or if I used a minimal amount of Jefferson resources to create my technology?
If your idea was created on your own time, using your own resources, Jefferson does not claim ownership of your idea. This is sometimes a close call, so we encourage you to ask us if there are any questions regarding ownership. You do not need a license and are free to do what you want with your idea. If you choose, we can help you.
A license is not necessary for a spin-in company, as Jefferson does not claim ownership of the technology. A spin-in company can still take advantage of our services: some of the services are free, some are not. If you are unsure of the status of your company, please contact us.
Does the spin-out license apply to any startup company?
No, it does not! A company can only have a Spin-out license if:
- At least one of the founders of the company is a member of the Jefferson community (student, employee, faculty, resident, staff, alumni); and
- The proposed Spin-Out and the idea/technology involved is within normal circumstances and within Jefferson's normal range of experience. If the circumstances are exceptional, a Spin-out license deal will not be available; for example if unusually large prior investments were made in the technology at or by Jefferson and/or if there were unusual research contract terms leading to the technology that would make the Spin-out license unfair and inappropriate. Deals for Spin-outs involving such exceptional circumstances will be developed and negotiated on a case-by-case basis.
Founders who wish to be active participants in the Spin-out (as consultants, members of an Advisory Board or Board of Directors, and/or other activities permitted under Jefferson conflict of interest policies) must negotiate their own financial arrangements with the Spin-Out after waiving their normal net proceeds sharing provisions under the Jefferson Patent Policy. If a Jefferson employee who is also the co-creator of the idea/technology chooses not to participate in the company, then that can be accommodated (see Special Situations, below)
What are the free services and the paid services offered by the Innovation team?
There are a variety of programs, such as speaker series and workshops, offered to the Jefferson community free of charge. However, if you need specific help, such as market research, business plan formation, project management and business development, we will reserve the right to ask for either a fee or a small percentage of your company (not to exceed 3 percent). Also, when we have physical lab space (no more than 400 square feet) available, we will ask for 1 percent equity for up to one year's services or 2 percent equity for up to two years.
Are there special Situations for spin-outs?
There will be times when it's best to combine two technologies into one spin-out (where applicable). When this occurs, equity percentages, royalty rates and licenses may differ from normal standards.
Please contact us to discuss whether merging technologies is right for you.
In addition, if a Jefferson employee helped develop the technology but does not want to participate in the financial structure of the spin-out, the person will rely solely on the provisions of the Jefferson Patent Policy and the spin-out license must be changed. Since the Patent Policy provides for 35 percent of the total equity received by Jefferson to go to the inventors, the spin-out will have to assign additional equity percentages to Jefferson to compensate those individuals who do not participate directly in the spin-out (non-founder creators), and the amount of royalties payable by the spin-out will need to be adjusted.
These guidelines provide only the general principles of the provisions and contractual requirements which will need to be established and negotiated in each specific case.
These guidelines may be changed in the future. They are neither a contract nor an offer to enter an agreement on these or other terms. Whether we will enter any agreement or license will depend upon the licensee, the technology and other aspects of the possible arrangements. Each technology and each transaction must be independently analyzed. We may determine other terms are appropriate for a particular transaction.
If you have questions, please contact the Innovation team.