mit_impact_full_report

An Evolving MIT Internal Entrepreneurial Ecosystem
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some venture capitalists and even more angel investor
groups still are interested in early-stage technologies,
even in difficult economic times.
Beyond the real incentives to faculty of having
their ideas brought to fruition and use in the real
world, some faculty, graduate students, and postdocs
also participate on an ongoing basis in the
companies that are started with their technologies,
the faculty usually as advisors or board members, the
students (once they are alumni) often as co-founders
and full-time leaders of the firms.
A typical deal that TLO structures provides
technology exclusivity in a clearly specified and
limited field of use (to provide clear economic
incentives to the licensee), a modest license fee
ranging from $25,000–$100,000, and a royalty of
3 percent to 5 percent of the sales that arise from the
licensed technology, often with a minimum annual
royalty that escalates over time. If and when royalties
are collected from the licensee, they are distributed
(after reimbursement of TLO expenses) one-third to
the inventors, one-third to the inventor’s department,
and one-third to MIT’s general funds.
For startups, instead of cash up front and in lieu
of some of the royalties, the TLO usually takes a small
equity ownership that is less than 5 percent of the
new firm. By its active engagement with faculty and
Number
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15
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other entrepreneurs, as well as venture capitalists, the
TLO is a vital participant in MIT’s entrepreneurial
ecosystem. Figure 19 shows the number of startup
companies it has licensed with MIT technology in
each of the past ten years, 1998–2007.
United States university licensing data are
available for many years from the Association of
University Technology Managers. In AUTM’s latest
survey, which covers 2006 (AUTM, 2007), MIT’s
twenty-three licenses rate it second only to the entire
University of California statewide system. Table 16
shows all of the U.S. universities that licensed ten or
more startups during 2006. For the 189 respondents
to that AUTM survey, the average number of licenses
per institution was four. In 2005, MIT was first in the
nation with twenty startups being licensed, while the
University of California system licensed nineteen, Cal
Tech assisted sixteen, and the University of Florida
provided licenses to thirteen. No other institution had
licensed ten or more new firms during 2005.
Over many years, MIT almost always has been
first among U.S. universities in technology transfer to
new enterprises. We do not know how many of
these licenses go to companies that are not MITalumni
founded. Nor do we know how much
“leakage” might occur with unlicensed MIT
technology becoming the basis for new-firm
Figure 19
Number of Startups Licensed by MIT TLO, 1998–2007
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
ENTREPRENEURIAL IMPACT: THE ROLE OF MIT