Who is this for?
Anyone at the University of Toronto (U of T) interested in launching a startup company based on U of T Intellectual Property (IP).
What do I need before I can begin?
There is no information required to begin. Please reach out to the Innovations & Partnerships Office (IPO) at the VPRI contact listed below if you have questions regarding launching a startup company.
The University of Toronto (U of T) has a vibrant entrepreneurial community with many initiatives and programs to help create and grow new companies. U of T is a leader in Canada and among the top five institutions in North America for creating research-based startups. The U of T entrepreneurship community has created over 500 companies in the last 10 years and secured over $1 billion in investment.
The Innovations & Partnerships Office (IPO) supports the creation of early stage companies by providing entrepreneurship education and mentorship, IP protection, go-to-market strategies, networking, and investor preparation for companies based on U of T Inventions.
The following steps apply to all startup companies based on U of T Inventions.
- Talk to IPO
Observations and experiments can often lead to new discoveries and inventions. An ‘invention’ is defined as any new process, machine, composition of matter, or useful improvement thereof.
Starting a company based on U of T research begins by formally disclosing the invention to IPO by submitting a Confidential Invention Disclosure form. This form defines the invention, inventors, and funding sources to begin the commercialization process.
For more information, visit Disclose an Invention.
- Protect IP
Once an invention is disclosed, inventors may choose to assume full ownership and responsibility for patenting and commercialization or can offer the invention to U of T. If the inventors choose to take personal ownership, the University will assign the invention to the inventors
Patent rights may be affected by public disclosure, e.g. written publication or presentation, of the invention, so it is best to involve IPO early in the invention disclosure process.
Learn more at Protect Intellectual Property.
- Seek Input & Network
With diverse expertise across faculties, departments, campuses, U of T has many resources to help bring ideas to life. Startup companies can take advantage of U of T’s growing ecosystem of accelerators, courses, and programming across a diverse range of sectors and company stages.
Learn more about University of Toronto Entrepreneurship.
- Plan the Business
One of the first steps to launching a startup can be to formally incorporate and register a new corporate entity. Typically, U of T companies incorporate federally in Canada for wider rights and to avoid incorporating separately in each province. IPO uses external legal counsel to provide support during the company creation process.
The company founders will need to create a capitalization table to define the equity distribution amongst the founders. In most cases, the company will set aside equity to allocate to new employees as the company grows; this is commonly referred to as the employee stock option pool (ESOP). The founders and equity holders will also need to execute a shareholder agreement. This agreement defines the shareholder rights and protocols and provides protection if company founders leave or new shareholders become part of the company.
Most university inventions (e.g. product or service) are early-stage and require further research and development. The company typically makes significant investments of time and funding to commercialize the product or service. These steps may entail regulatory approvals, sales and marketing, support, training, and other activities.
- Negotiate the License or IP Agreement
For inventions assigned to U of T, IPO will negotiate and execute an option, license or assignment agreement between the University and the company. Agreements to license U of T technology into a startup have both financial and non-financial terms based on the technology, stage of development, field of use, and commercialization risks. Typical terms include the following.
- Cash considerations, including annual fees, milestone payments, and/or royalties on product sales
- A minority share of equity in the company (typically 5 – 10%). Most start-up companies have limited cash, so equity is often provided in partial lieu of cash consideration. Equity is also a way for the university to share some of the risks and rewards associated with start-ups
- Repayment of patent expenses incurred by the university
- Diligence terms to ensure reasonable progress in growing the company and commercializing the invention
- Pursue Funding
Technology commercialization is typically a capital-intensive process. Entrepreneurs will typically need to work with venture capitalists, angel investors and, perhaps in the initial stages, their network of friends and family, all of which may likely be further supported via public programs. Accessing U of T’s network is one way to start the networking process that can help get the attention of angel and venture capital investors.
The University of Toronto Early-Stage Technology (UTEST) program is a 12-month incubator for high-potential start-ups based on U of T Inventions. UTEST provides funding, workspace, mentoring and business strategy support. To learn more, visit the UTEST website.
- Provide entrepreneurship education and mentorship
- Develop go-to-market strategies, networking, and investor preparation
- Advise on U of T’s Inventions Policy
- Receive and evaluate Confidential Invention Disclosures for technologies created at U of T
- Support the protection of U of T IP through patenting and other means
- Assist in finding partners and funding to support proof-of-concept and commercialization