GUIDE TO STARTUP COMPANIES

at the University of Nebraska–Lincoln

Table of Contents
Overview
NUtech Ventures is the commercialization affiliate of the University of Nebraska, serving the Lincoln
03 Overview
and Kearney campuses. We protect and license the university’s intellectual property and promote
entrepreneurship through programming and sponsored events. Ultimately, our mission is to improve
04 Making the Decision to Form a Startup
quality of life and promote economic development.
06 Validating the Idea

06 Steps to Startup Launch NUtech Ventures has created this guide to help aspiring University of Nebraska entrepreneurs in
starting their entrepreneurial journey. It is focused on companies formed to commercialize innovations
07 Intellectual Property and Your Startup Company
07 Ownership of University-Owned Intellectual Property developed at the University of Nebraska–Lincoln and protected via intellectual property rights owned by
07 Inventions and Patents UNL and assigned to NUtech Ventures.
08 Copyright
11 How to Protect Your Intellectual Property University of Nebraska entrepreneurs have started several companies in the last decade based on
11 Developing the Business Plan licenses to UNL innovations. We are proud of all our UNL startups; some examples include: Virtual
15 Licensing the Technology Incision, Neurocarrus, Epicrop, Synbiotic Health, GC Image, Turfgrade, Airlift Environmental, and Drone
15 License Negotiations Amplified.
17 Patent Ownership & Future Intellectual Property Ownership
17 Joint Inventions
If you’re contemplating forming a startup, you probably have many questions. NUtech Ventures prepared
17 Licenses for Technology Owned by Other Institutions
this guide to help you navigate the entrepreneurship ecosystem at UNL, the city of Lincoln, and the
17 Research License to UNL
18 Funding Your Startup broader state of Nebraska and region. We hope you will use it as a starting point in your startup journey.
20 Exit Strategy

21 University of Nebraska IP Policy

22 Startup Ecosystem Resources

22 Startup Resources at UNL
23 Additional Startup Resources

26 Appendix 1: Corporate Structure

Acknowledgment: This Guide is adapted in part, with permission, from the University
of Illinois’s Start-Up Handbook and Stanford University’s Startup Handbook.

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Making the Decision to Form a Startup
Starting a business usually requires a large time commitment and it is not uncommon for new entrepreneurs
to underestimate the time needed. Additionally, you should consider your personal resources and whether
you are comfortable committing those resources to the endeavor, although it is not always necessary to do
so. Furthermore, while starting a business may lead to wealth creation, it often comes at significant risk.
Unfortunately, unforeseen challenges typically arise when starting a business, and the reality is that many
Starting a company is one way to further develop and commercialize technologies created at UNL. Several startups fail. It helps if you can adapt quickly to changing conditions and remain committed to the endeavor or
factors should be weighed when deciding whether to form a business. These considerations comprise a recognize when to stop.
feasibility checklist and can be divided between business and personal factors.
Validating the Idea
When you are contemplating starting a company, one of your first steps should be to assure that you are creating
a product or service that solves a problem which customers will pay for. The Customer Development Model,
created by Steve Blank, can help you do this.
Business considerations concern the marketplace for the startup’s envisioned products, as well as the potential
performance of the products in that market. The model consists of four steps: customer discovery, customer validation, customer creation, and company
building. Because the process is iterative, you may return to any or all of the steps over time, refining and
Business considerations include:
repeating the processes involved.
• The product(s) or service(s) the startup will offer.

• Technology innovation and intellectual property position.

1 Customer Discovery
• Whether the product or service satisfies a need that people value. Identify potential customers and determine if the problem your product solves
is important to potential buyers.
• How is this need being met today? What is the competition?

• The price a customer would pay for the product or service. 2 Customer Validation
Develop a sales process that successfully sells your product.
• The size of the market and effect on startup profitability.

• The scope of the regulatory landscape, if any.

• How far along is the technology? How much time and money will be required to bring a product to market?
3 Customer Creation
Build on the sales accrued during customer validation and begin to put money
into marketing your product.
• Development costs versus investment returns.

Identifying the market need can be a challenge if your expertise is in research and development, rather than
4 Company Building
product marketing and sales. If your startup’s technology solves an actual problem or delivers an unmet need at Transition the company from an informal development team into a
a competitive price, then the startup is more likely to succeed. It is important to understand the market in which formal entity.
the products resulting from your technologies will compete. Knowledge of a market can be acquired through
professional market research, government data, trade publications, and interviewing prospective customers and
stakeholders. The decision to form a startup should be made only after acquiring a thorough understanding of NUtech Ventures and its partners offer the Nebraska-Introduction to Customer Discovery program, with typically
the market and how your product or service would fit into that market. two cohorts per year. It is modeled after the National Science Foundation’s Innovation Corps (I-Corps) program,
in which researchers interview stakeholders to understand their needs and use that feedback to guide decisions
Personal considerations include your ability to commit to the process and the willingness to start a business. about a startup company or technology commercialization.
Personal considerations include:

• Available time

• Personal resources

• Risk tolerance

• Resilient and flexible attitude

• Managerial support

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 Intellectual Property and Your Startup Company
Steps to Startup Launch
For many university startups, intellectual property is the business’s first and key asset, and will give the startup
its potential competitive advantage. The following subsections briefly discuss intellectual property in the form
of inventions and patents, as well as copyright. For a more in-depth review, please refer to the NUtech Ventures
Handbook for Inventors and Innovators.

Do You Have an Idea Ownership of University-Owned Intellectual Property

for a Startup? Organizations almost always own the intellectual property developed by their employees. The Board of Regents
of the University of Nebraska owns University of Nebraska inventions and innovations/creations (please see our
BOR policy on page 21). If an innovator engages in “substantial use of university resources” in conceiving of the
innovation, then they have an obligation to disclose and assign that innovation to the university. That means, if
• Disclose the technology or innovation. the innovation is conceived as part of their employment, or if it is conceived outside of the scope of employment
Get in Touch with • Work with NUtech to protect the intellectual property.
NUtech Ventures but the innovator uses university equipment or lab space, then the university has an ownership stake.
• Enter into a Stand-still Agreement.

Inventions and Patents

• Network and seek input.
Develop Your • Engage in customer discovery. An invention can be anything man-made that is new, useful, and non-obvious. Inventions may include, but are
Business Model • Consider using the business model canvas not limited to, processes, methods, machines, articles of manufacture, devices, chemicals, and compositions of
to inform your business model. matter. Inventions can be protected by patents.

U.S. law recognizes the value of innovation to the economy and provides the owner of a patent with a time-
limited monopoly of 20 years. This monopoly is intended to prevent others from exploiting the invention, as
Clear Conflicts of defined by the patent claims, without permission. In exchange for this exclusive right, the published patent
• Contact (402) 472-6907 and/or UNLCOI@unl.edu. document must fully describe the invention so that others can reproduce and learn from it. In that way, the patent
Interest
monopoly provides the incentive to share advances with the public and contribute to growth in the field.

• Incorporating is a simple process, but there are Inventorship

Form Your
numerous details that should be addressed to
Company position your company for long term success. Inventorship is defined by U.S. patent law. An inventor is one who, alone or together with others, conceived
of the ultimate working invention. A patent application must be filed in the names of the true inventors.
The criterion for inventorship is different than for academic authorship. Inventorship is a legal definition
that has been refined through statutes and case law. Inventorship flows from invention conception, is
Negotiate Definitive tied to the claims in a patent application and is determined at the time the patent application is filed. As
• Work with NUtech Ventures to license the IP to
License with NUtech the claims in a patent application change, so may inventorship. If a person only works at the direction of
your company.
Ventures others to perform experiments and doesn’t conceive of some part of the invention, then that person is not
an inventor.

Pursue • Review relevant resources at the end of this guide.

Funding

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Copyright Intellectual property may include, but is not limited to:

Copyright is the form of intellectual property that protects the expression of a creative idea that is fixed in a
tangible form. It is an acknowledgement of who created the work. Copyright constitutes a bundle of legal rights,
which include the right to copy, display, perform, distribute, and make changes to the original copyrighted work.
These altered versions of original works are known as derivative works. Copyright provides the owner with
the right to determine how the work is copied and distributed to others, such as through traditional or online
publication, open access, sale, lease, or lending. It also gives the copyright holder the right to charge royalties for
a work’s use. Biological Germplasm Chemicals Machines
materials methods

Automatic Application of Copyright

Unlike patentable inventions, copyrighted works are automatically protected under U.S. copyright
laws without having to undergo a formal registration process. However, it is still important to affix an
appropriate copyright notice to notify others that they are not free to utilize the work without permission.
Works owned by the University should bear the following copyright notice: © 20XX The Board of Regents Books Software Photographs Videos
of the University of Nebraska. All rights reserved.

There is also a formal registration process to document copyright in the Library of Congress. Author-
owned copyrights last for the life of the author(s) plus 70 years after the last surviving author’s death.
Employer-owned copyrights last for 120 years from the work’s creation or 95 years from the first
publication of the work, whichever is shorter.
The invention disclosure will include:

How to Protect Your Intellectual Property

1 The category of the innovation and a detailed summary describing it
• Is it a compound, process, machine, manufacture or composition, a new use for, or an
improvement of, a known item, software, mobile application, process, or other?
Intellectual Property (IP)
The benefit or use of the innovation, including:
IP encompasses creations of the mind, including patents, plant variety protection (PVP) certificates, 2 • The problem it solves.
copyrights, trademarks, and trade secrets. NUtech will determine the appropriate protection type through
its screening and evaluation process. • Advantages it has over existing solutions (cost, convenience, safety, performance).

3 Any pending public disclosures, including:

NUtech Ventures serves the UNL innovation ecosystem by identifying, evaluating, protecting, marketing, and • Any publications, presentations, or manuscripts where the invention is described.
licensing the university’s intellectual property. Submitting a disclosure form is the first step in assessing market
potential and options for intellectual property protection. For any questions about the process, or for help filling
out the disclosure form, please contact one of our technology managers.
4 A list of other research collaborators and funding sources including:
• Collaboration with other scientists within the university and outside of the university.
What to Include in Your Invention Disclosure
• A list of all research projects funded by an agency, foundation, or another source specific to
• A written description of what makes your innovation unique and exactly how it works, what applications it the invention.
might have, and how it is different from existing innovations in the field. • Materials obtained under a material transfer agreement.

• Information about funding sources and public disclosures, to determine if we have the ability to protect
the invention. 5 Faculty interest in a startup opportunity.

• Information about all the inventors/creators/authors, including each person’s contribution.

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 When to Submit an Invention Disclosure to NUtech Ventures Developing the Business Plan
A disclosure form is confidential and used for internal assessment; it is not a patent application. Complete a
disclosure form if:
Entrepreneurs should develop a thoughtful business case to understand the market potential, competition, and
funding needs. This should include a plan for developing the technology and attaining sufficient revenue to
sustain and grow the company. This plan will be essential when meeting with investors and pursuing funding.
You plan to publish or present your research. Once you publish or present — known as a public
disclosure — foreign patent rights may be forfeited. Also, after a public disclosure, there is a one-year A business plan should be clear and concise. It will be easier to “sell” the vision to investors and attract
deadline to file a U.S. patent application. Once that deadline passes, no U.S. protection is available. management talent with a formal business plan. Investors are interested in investing in startups with high growth
potential. The business plan should address what investors want to know: the compelling concept, competitive
advantage (including patent/IP position), market and financial potential, and proven management team. The
Your research has resulted in a new solution to a problem or has potential market applications. Our business plan is generally a confidential document and should be carefully distributed.
team will help further assess the market size, commercialization readiness and intellectual property.
Components of a typical business plan include:

• Executive Summary
Your federally-funded or privately-funded research may have resulted in intellectual property. Funding
• Business Description
sources often require disclosing research that may have intellectual property, such as a new solution to a
problem. Our office is responsible for reporting your disclosed research to the funding agency. • Market Analysis

• Marketing Plan
You want to start a company based on your research. Learn more about university and community • Management Team
startup resources.
• Financials

The remainder of this section will look at some of the most important parts of a business plan. It is not a
To complete the disclosure process, visit: www.nutechventures.org/disclosures/. UNL researchers can use an comprehensive guide, but it serves as an introduction to the various elements you should consider.
online platform to disclose. Alternately, documents are available to download and email.

After a disclosure is received, NUtech Ventures will screen the technology within eight weeks for potential prior
art and commercial market. If the technology meets both of these criteria and a decision is made to seek IP Executive Summary

The executive summary is a snapshot of the business. It acts as an elevator pitch and is usually the first
opportunity to catch the interest of an investor. Consequently, it is the most important part of the plan. It should
answer these questions:

• What is the company’s mission?

• Why is it important?

• How will the company make money pursuing its mission?

• How will the company develop its technology into products?

• What experience do the founder and management team have?

• How much money is necessary to reach a milestone or create a prototype or product?

10 11
 Business Description

The business description provides more extensive information concerning your company’s mission than was
provided in the executive summary. If the executive summary is an elevator pitch, then the business description
is similar to an extended, more descriptive elevator pitch, helping investors quickly understand the business’s
goals and its unique position. The business description should include:

• The nature of the business and the marketplace needs the business will satisfy.

• An explanation of how the startup’s products, technologies, or services address those needs.

• The specific companies or customers the startup will serve.

Management Team
• The company’s competitive advantages, such as personnel, technology, or value creation.
The management team section defines the roles of the management team and presents their biographies.
• The company’s patent and IP landscape. Investors prefer to see that the team has relevant business and technical experience.

Market Analysis Financials

The market analysis presents market research showing the current state of your startup’s industry segment, as The financials should provide the current status of the business and a realistic expectation of its position after
well as the target market for your product or service. At a minimum, the market analysis should contain: five years. The goal is to determine the cash needed for the startup to succeed, as well as the reasonable
revenues and profits that can be expected from the investment. A five-year projection will necessitate
• A specific description of the target market. making some assumptions, which should be noted. You should also be prepared to justify on what basis the
• The revenues and growth rates of the market, including a five-year projection. assumptions were made. Additionally, this section should detail how any cash invested in the business will
be used.
• A demonstration of a compelling market need for your product or service.
Points to Remember When Preparing the Business Plan
• A competitive analysis.
• Focus on the customer and the market need, NOT on the technology.
• The results of marketplace interviews or other primary market research.
• Acknowledge your competition honestly.
Investors want to know that you have carefully considered and fully understand the market your startup will
target. Further, the market analysis must honestly address the competitive environment. Unfortunately, there • Ask for ongoing feedback from an experienced entrepreneur.
are few, if any, profitable markets that are void of competition, and investors are keenly aware of this. Even new • Discuss current finances and any projections.
products in so-called “uncontested markets” face indirect competition from substitute offerings. The analysis
should acknowledge this reality. • Make sure the plan flows narratively from section to section.

Additionally, most investors want to see independent evidence of market validation. Examples of this include the • Keep the business plan as succinct as possible.
results of your market research, customer surveys, and interviews.

Business Model Generation and Value Proposition Tools

Marketing Plan
There are different tools that you should consider for business planning. Books by Alexander Osterwalder and
There are many factors that go into the marketing process. For the marketing plan, it is important to show how colleagues, Business Model Generation, Value Proposition Design and Testing Business Ideas are useful to outline the
your product or service will be positioned in the minds of customers versus the competition. Elements deserving key customers, challenges and value proposition your startup company will seek to address — namely, how you
consideration are: will develop and operate your business to solve a problem that the world cares about and will pay to have solved.

• Key factors in the customer selection process.

• Customer perception of competitor performance in the key factors.

• How your startup’s offering will perform in the key factors.

• Market share goals and how they will be achieved.

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 Potential Pitfalls
Licensing the Technology
New company formation usually is a high-risk proposition. While many startups are successful, most are not.
Some common problems that can cause academic startups to fail include:

Technology does not meet commercial need. Sometimes the science is innovative and exciting but does A license to UNL intellectual property is a contract between NUtech Ventures and a company. The contract
not correlate to a critical commercial need, or current solutions are still better or are a more cost-effective grants certain university technology rights to a company, in return for payment and a commitment to develop the
alternative to the new technology. technology. Most startups seek an exclusive license, because it is typically required to raise funding.

Inexperienced management. A strong, experienced, cohesive team is required for a successful startup If you would like to license university technologies for use in your startup, you will be asked to demonstrate
company. Problems can arise if founders or other members of the team do not have enough startup and commitment by providing a written technology and business development plan, or business model canvas. This
business experience or if founders, new management, and/or investors do not have the same strategic vision. plan should include, but is not limited to: a description of the technologies to be licensed, the resulting product,
market analysis, a product development timeline, and the company resources committed to development.
Lack of funding. A startup needs sufficient capital to overcome technical challenges, reach critical business Further, if the founders have participated in a customer discovery cohort, the results of the team’s findings are
milestones, and progress to the next phase of product development. To attract investors in the company, in valuable information to convey to future investors and partners.
addition to great technology, the startup must have a solid business plan and a strong management team.
Standstill or option agreements are often used to reserve rights in an invention while founders evaluate the
Timing. Even when a commercial need exists, the startup may miss the market. Sometimes, this is because technology, explore the market and funding opportunities, or raise the capital needed to fully license the rights
the market is not ready for a product, e.g., too early, too expensive, lack of need. Sometimes, it is because the in question. Option agreements may include financial consideration to NUtech Ventures in order to reserve
product is too late to the market and the need has already been filled by a different technology or competitors those rights. Startup companies usually prefer this route and NUtech Ventures may grant standstill or option
have leapfrogged the company with a better product. agreements for three to six months in duration, but no more than one year. After that point, the license
negotiation typically begins.
Marginal niche. If the target market is smaller than expected, the company may not meet its financial
targets.

Unanticipated external factors. Sometimes events outside of the entrepreneur’s control can negatively License Negotiations
impact a company. But even failure, as long as important experiences and learning were extracted during the
process, is often seen as one of an entrepreneur’s greatest strengths. The licensing process starts by discussing a term sheet summarizing the essential business terms of the
agreement. Below are the types of business terms generally addressed.

Scope of License Rights

License rights — such as exclusive, nonexclusive, field-of-use limitations, and territory limitations —
are established to be commensurate with the licensee’s product development plans and the market.
The university’s licensing objective is to obtain widespread use of its technologies through a robust
commercialization plan.

Upfront License Fee/Consideration

An initial fee based on the scope of license rights and the university’s investment in the intellectual
property may be negotiated. Alternatively, in lieu of an initial license fee, the parties may agree upon an
equity stake to the university or possibly, a success or exit fee. The contractual language regarding equity
generally includes a non-dilution provision based on an agreed upon level of startup company funding.

14 15
 Royalties

Your company will be expected to pay royalties when products or services that require the use of the
technology are sold or transferred. Royalties can be expressed as a percentage of net sales or a fee
per selling unit. Royalty rates vary according to the industry and the contribution of the invention to the
product or service. Royalty payments may be structured in different ways, such as one-time or recurring
fees.

Sublicensing
Patent Ownership & Future Intellectual Property Ownership
Exclusive licenses usually allow the right to sublicense, or authorize others to make, use, and sell the
university’s technology to facilitate widespread use. Royalties and other revenues you receive from NUtech Ventures does not assign or transfer IP rights. When appropriate, NUtech can grant an exclusive license
sublicenses are also shared with the university. after marketing and deciding that the startup is the best candidate to commercialize the invention.

Typically, NUtech Ventures will have filed the initial patent application that is exclusively licensed; the exclusive
Minimum Royalties licensee provides input for the prosecution of this original patent. Follow-on inventions conceived by the licensee,
without the university’s involvement, usually belong to the licensee. Follow-on inventions based on work at UNL
Minimum royalty payments are established to encourage diligence in developing and selling products or will be owned by NUtech Ventures and the licensing of the new invention will be handled by NUtech as if it
services based on the technology. were a new disclosure. In other words, the existing licensee will not be automatically granted a license to the
follow-on invention.

Patent Reimbursement
Joint Inventions
Recovery of the costs incurred by the university for protecting the technology in the U.S. and other
countries is part of the license. Typically, NUtech Ventures will delay the reimbursement obligation for U.S. If there are other institutions that contributed to the patented invention (i.e., in a collaboration with faculty from
patent(s) expense; however, reimbursement of any international filings directed by the company will be due another university), NUtech will enter into an Inter-Institutional Agreement whereby one of the institutions will
when incurred. take the lead. This way a company can negotiate a single agreement with an exclusive license to IP rights owned
by both parties.

Performance Milestones
Licenses for Technology Owned by Other Institutions
University technologies often require significant additional development before they are ready for the
market. You will be asked to provide periodic reports and meet specific milestones in order to retain an Under most circumstances, the startup will need to negotiate separately with the other institution for a license
exclusive license. Milestones are usually industry specific. to technology owned by another institution. However, sometimes universities work together to package their
technologies together in a single license agreement. For most technologies, it is usually advisable for the
company to have a freedom to operate (FTO) analysis conducted on its behalf. The objective is to confirm that
the company has a path to acquire all the necessary IP components the startup will need to make its
License Compliance proposed products.
After you license UNL technology, NUtech Ventures will manage the license to ensure all terms and
conditions are adhered to, so that the technology reaches its fullest potential. If the terms and conditions Research License to UNL
are not met, the license may be terminated or revised, in which case the invention may become available
for licensing to another company. UNL and NUtech Ventures always reserve the right to practice their own inventions for research purposes
under licenses they grant. However, researchers are not permitted to continue to develop technology at UNL for
the benefit of a startup in which the researcher has a financial interest. Please refer to the Conflict of Interest
discussion below.

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Funding Your Startup • Foster participation in innovation and entrepreneurship by socially and economically disadvantaged
persons.

• Increase private-sector commercialization of innovations derived from federal research and

Commercializing technology is typically a capital-intensive process, with the possible exception of some development funding.
software companies. Entrepreneurs need to present their opportunity to investors or firms for funding their
STTR
operations and growth. Many startups require financial resources to fund the development, operations and
growth of the company. One of the keys to a startup’s success is securing such funding. Startup funding may STTR is another program that expands funding opportunities in the federal innovation and
come from several sources, each type having particular advantages. This section will briefly discuss different development arena. Central to the program is the expansion of the public and private sector
types of funding sources. partnership to include the joint venture opportunities for small businesses and nonprofit research
institutions. STTR’s most important role is to bridge the gap between performance of basic science
and commercialization of resulting innovations. The stated mission of the program is to support
Self-Financing scientific excellence and technological innovation through the investment of federal research funds in
critical American priorities to build a strong national economy. The program’s goals are to:
Self-financing is exactly as it sounds: a business funded by the personal savings of the founders. This
allows the entrepreneurs to maintain complete control of the business. Additionally, when external funding • Stimulate technological innovation.
is sought, investors look for entrepreneurs who have “skin in the game.” An entrepreneur who has self-
• Foster technology transfer through cooperative R&D between small businesses and research
financed a business has already signaled to investors that he or she is serious about moving the business
institutions.
forward. This type of funding may also include friends and family who provide additional resources early in
the life of a startup. • Increase private sector commercialization of innovations derived from federal R&D.

Bootstrapping
Loans
Bootstrapping can include the reinvestment of early product sales into a company. It requires a customer-
centric process of development that permits the company to bill for early sales. Bootstrapping allows The two primary options for startups to secure debt financing are either through banks or the Small
entrepreneurs to maintain control of a business without having to pursue outside funding and influence, Business Administration (SBA). Banks often want to see two to three years of financials before they
while also preventing entrepreneurs from risking their own personal savings. consider making a business loan. Obviously, this can pose significant challenges for new startups.
Additionally, if a bank considers lending to a startup operation, the loan would be heavily collateralized with
the entrepreneur’s personal assets. Alternatively, the SBA participates in loan programs that are designed
to help startups.
Federal Grants

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR)
programs offer grants to qualified small businesses. The purpose of these programs is to help fund early- Joint Ventures
stage research and development at small technology companies, including university startups.
Your startup may benefit from strategic alliances with larger companies. The advantages of entering
into joint development agreements include financial support from a corporate partner with a long-term
perspective, access to industry knowledge and key markets, and potential acceleration of a product’s
SBIR time to market. However, these potential advantages often come with some risks that should be carefully
SBIR is a highly competitive program that encourages domestic small businesses to engage in considered. These risks include: a potential claim to the IP rights of the startup; the larger partner
research and development that has the potential for commercialization. The stated mission of the demanding exclusive rights to some markets for a period of time; the startup’s dependency on the larger
SBIR program is to support scientific excellence and technological innovation through investment of partner’s continued support, leading to additional pressure to achieve predetermined milestones; the loss
federal research funds in critical American priorities to build a strong national economy. The program’s of the startup’s ability to control its destiny; and risk of diluting the financial benefit to the startup.
goals are to:

• Stimulate technological innovation.

• Meet federal research and development needs.

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 Angel Investors

Angel investors are typically wealthy individuals who meet the IRS and SEC definitions of an accredited
investor. Increasingly, however, angel investors are working in association with other angel investors, often
University of Nebraska IP Policy
in an organized angel group. Angels look for companies that have great teams and a potential competitive
advantage in rapidly growing markets. Angels typically are involved in the seed stage of funding and often
have expertise in the startup’s industry, putting them in a position to offer mentoring assistance.

The University of Nebraska Board of Regents Bylaw and Policies on intellectual property is written to encourage
Venture Capital (VC) innovative research at the University of Nebraska that has commercial impact. As employees of the university,
faculty, staff and students are obligated to disclose and assign inventions or discoveries to the university as
Venture capital firms are professional, institutional managers of risk capital used to fund ideas that
part of their employment contract. In exchange for this assignment of IP rights, the university spends time and
could not be financed with traditional bank financing. Additionally, the funded ideas generally threaten
resources in the commercialization of the IP, including providing funds for IP protection, and shares any revenue
established products or services and require five to eight years to launch. Venture capital firms make an
derived from the IP with the inventors and creators directly. Bylaw and Policies governing intellectual property
equity investment in the startup’s illiquid stock. Consequently, any return on the investment occurs from
include:
the stock’s appreciation and eventual liquidity, either in the form of a public offering or private sale. Venture
capital firms provide more than money to startups. Once an investment is made, the venture partner will
play an active role in the development and growth of the company, typically taking a board seat. This 1 Board of Regents (BOR) Bylaw 3.10
hands-on approach limits the number of companies in which a venture capital firm will invest. Establishes university ownership of inventions. When the Board of Regents established policy
3.10, the intent was to encourage the commercialization of inventions and discoveries arising
from research activities of the university, and when appropriate, the pursuit of patents or other
How Investors Evaluate a Company IP protection.

Investors listen to pitches constantly, and only a small portion of startups get funding. The investors will
determine if the startup meets their strategic and financial goals and if the company fits into their current 2 Board of Regents Policy 4.4.1
Establishes the copyright policies for the various copyright works and development scenarios
portfolio of investments. VC funds target at least an overall 20% annual return on the fund, which is
that can occur on campus.
significantly higher than other investment vehicles such as stocks and bonds. Investors typically perform
due diligence before funding new opportunities.
3 Board of Regents Policy 4.4.2
The patent and technology transfer policy governs invention disclosure, IP protection, and
licensing. This policy outlines the steps that the university can take to protect its IP and how
Dilution
you, the innovator, can also benefit.
When a startup issues new shares of stock, an entrepreneur must keep the effects of dilution in mind.
Dilution is when the issuance of new shares of stock decreases the proportional ownership of existing
stockholders. Every round of equity funding results in dilution. For example, if a company initially issues Managing Conflicts of Interest
ten shares of stock equally to ten individuals, then each shareholder will hold 10% of the company. If the
company then issues an additional ten shares to a single investor, the total shares outstanding is 20, and The UNL Conflict of Interest (COI) policy was developed to protect our researchers and our university. Annual COI
the original ten shareholders will each own 5% of the company. The single investor holding the newly reporting is completed by submitting an Interest and Outside Activity Reporting Form (IOARF) via NUgrant. By
issued shares will own 50% of the company. encouraging full disclosure, the university can manage any perceived or actual conflicts before they become a
concern.

Per the UNL COI policy, “the creation of a new startup company” constitutes a change that must be reported
Exit Strategy within 30 days. Startup companies must be disclosed because they meet the following criteria for review:

• Financial Interest: any ownership/equity interest must be reported, regardless of amount.

• Outside Activities: any activities that are completed outside of your UNL responsibilities, but have the
Investors plan to recoup their investments via exit strategies. Typically, a VC hopes to sell its equity in a portfolio
possibility of overlapping or conflicting with them, must be reported.
company within 3-7 years, ideally through an initial public offering (IPO). Another exit strategy could be through a
merger and acquisition (M&A), instead of an IPO. UNL personnel interested in forming startups should consult the UNL COI policy and contact the conflict of
interest coordinator at (402) 472-6907 or UNLCOI@unl.edu.

20 21
Startup Ecosystem Resources
Weibling Entrepreneurship Clinic, University of Nebraska College of Law
Schmid Clinic Building
P.O. Box 830902
Lincoln, NE 68583-0902
https://law.unl.edu/eclinic/
eclinic@unl.edu
(402) 472-1680
Startup Resources at UNL The Weibling Entrepreneurship Clinic (E-Clinic) at the University of Nebraska College of Law provides free advice and legal
representation to startup business clients throughout the State of Nebraska. The E-Clinic handles a variety of early-stage legal
matters, including entity formation, contract drafting and review, intellectual property protection, regulatory, compliance and
other transactional legal matters. Law students provide these legal services under direct supervision of Professor Brett Stohs.
Center for Entrepreneurship, UNL College of Business NIC Biotech Connector The mission of the Weibling Entrepreneurship Clinic is to:
HLH 315 Nebraska Innovation Campus • Offer early stage transactional legal advice and representation to Nebraska’s aspiring entry-level entrepreneurs, innovators,
730 N. 14th Street 1901 N 21st Street and startup businesses;
Lincoln, NE 68588 Lincoln, NE 68508 • Inspire an entrepreneurial spirit among law students by facilitating educational and professional opportunities that
https://business.unl.edu/outreach/center-for- https://biotechconnector.com/ connect law students with entrepreneurs and business leaders, relevant partner organizations, and legal practitioners who
entrepreneurship/ (402) 480-5837 represent entrepreneurs and startup businesses;
(402) 472-6273
The Biotech Connector has 7,700 square feet of well- • Contribute to the University of Nebraska’s mission as the state’s primary intellectual center by performing direct outreach
The Center for Entrepreneurship offers mentorships, equipped wet lab space located on Nebraska Innovation to rural and urban communities on legal issues facing entrepreneurs and startup businesses and providing legal support to
workshops, competition and funding opportunities to Campus. It provides incubation space and services to other University of Nebraska initiatives relating to entrepreneurship; and
help you grow, whether all you have is an idea or your bioscience startups and high-growth biotech and research-
• Be a meaningful contributor in the Nebraska ecosystem of entrepreneurs and supporting organizations that are working to
business is well underway. With the resources, faculty and based businesses. The Biotech Connector solves the
make the state of Nebraska one of the best places in the United States to start a business.
collaboration available at Nebraska, you will collaborate, problem of lack of wet lab space to develop biotech proof-
innovate, research and contribute to successful ventures of-concept prototypes in Nebraska.
on day one.

Nebraska Innovation Campus

Nebraska Innovation Studio
2021 Transformation Drive
Additional Startup Resources
2021 Transformation Drive Suite 1500
Lincoln, NE 68508 Entrance B
https://innovate.unl.edu/ Lincoln, NE 68508 The Combine Incubator Innosphere Ventures
innovate@unl.edu https://innovationstudio.unl.edu/ 2125 Transformation Drive https://innosphereventures.org
(402) 472-5535 (402) 472-5510 Suite 1000 Contact NUtech Ventures for an introduction.
Nebraska Innovation Campus (NIC) is connecting the Lincoln, NE 68508
Nebraska Innovation Studio is a makerspace where The Innosphere Ventures program focuses on ensuring
talents of experts, companies and the university to create creators of all sorts can share ideas, tools and https://www.nebraskacombine.com companies are investor-ready: connecting founders with
a unique culture of innovation. NIC is a campus designed knowledge. It features collaborative workspace and experienced advisors and early hires, making introductions
to facilitate new and in-depth partnerships between the areas for woodworking, fine arts, and rapid prototyping From initial goal setting and idea assessment to to corporate partners, exit planning, and accelerating top-
University of Nebraska and private sector businesses. and electronics. University faculty, students, staff and preparation for a capital raise, the Combine Program is line revenue growth. Innosphere supports entrepreneurs
NIC is adjacent to the University of Nebraska–Lincoln and community members are welcome to join the studio for designed to assist entrepreneurs on an individual basis. in many industries, including but not limited to: bioscience,
strategically provides access to research faculty, facilities a monthly fee. Members can take part in workshops, With a focus on food and ag tech, the Combine supports medical device, energy, advanced materials, hardware,
and students. NIC aspires to be the most sustainable be trained on available machines and ultimately, make undergraduate and graduate students, faculty and staff, enterprise software, fintech, and artificial intelligence.
research and technology campus in the United States. things here. and the general statewide community. Entrepreneurs in
eastern Nebraska are encouraged to utilize the incubation
space, however, the program is available on demand
digitally across the state.

22 23
 Additional Startup Resources

Invest Nebraska National Science Foundation I-Corps™ Teams no charge to the client. The program is hosted by UNO • Accelerator Studio: the five best individuals and
801 R Street, Suite 1 https://www.nsf.gov/news/special_reports/i-corps/ and supports its academic mission, and that of the teams from across the globe will spend 16 weeks
other four higher education partners, by employing the building a startup from scratch in Lincoln while
Lincoln, NE 68508 Contact NUtech Ventures for details talents of graduate and student workers in all programs earning a $100k investment.
https://www.investnebraska.com/ of NBDC. These students receive applied, experiential
The NSF I-Corps™ Teams program purpose is to identify • Venture Residency: ten participants, each receiving
(402) 742-7860 NSF-funded researchers who will receive additional learning opportunities, working directly with clients under
the supervision and direction of the NBDC consultants. a $3,000 stipend, will take part in this venture creation
support in the form of entrepreneurial education, mentoring sprint to test four business concepts over the course
Invest Nebraska is led by a team experienced at growing and funding to accelerate innovation that can attract Students learn what it takes to start or grow a business in
early-stage and lower-middle-market companies. The Nebraska, an experience that supplements their academic of four weeks.
subsequent third-party funding. Researchers interview
organization is committed to growing Nebraska’s stakeholders to understand their needs and then use that pursuits.
• gBETA Lincoln: a free, seven-week accelerator for
economy by assisting entrepreneurs and investing feedback to guide decisions about a startup company Program areas include: early-stage companies with local roots. Each program
capital in those companies that have growth potential. or technology commercialization. After participating in is capped at five teams, and requires no fees and no
Collaboration with strategic partners, state government, the program, researchers will have: (1) a clear go/no go • The Small Business Development Center (SBDC) of equity.
communities, and post-secondary education institutions decision based on an assessment of the overall business the U.S. Small Business Administration
is important. model; (2) substantial evidence for or against product-
market fit, with a definition of the customer segments and • The Procurement Technical Assistance Center
Sustainable Heartland Accelerator Regional Partnership
corresponding value propositions; and (3) a compelling (PTAC) of the Defense Logistics Agency
Midwest I-Corps™ Node (MWIN) Hub (SharpHub)
technology demonstration for potential partners.
https://www.midwesticorps.org/ • The FAST program of the U.S. Small Business https://www.sharpideahub.com/
Administration Contact NUtech Ventures for details
Contact NUtech Ventures for details
Nebraska Angels
• The EDA University Center of the U.S. Department of A significant part of SHARPhub’s focus is helping startups
MWIN is part of the National Innovation Network, a PO Box 81431 Commerce, NU Connections develop competitive SBIR and STTR grant applications
national network of NSF-funded researchers from
I-Corps™ Teams, Sites, and Nodes. Working together, Lincoln, NE 68501 to provide seed capital to fund early-stage research
• SourceLink® Nebraska, a statewide SourceLink®
this network of thinkers addresses America’s need https://www.nebraskaangels.org/ Network and development. These federal programs provide non-
for innovation education. MWIN serves as a hub for info@nebraskaangels.org dilutive funding that encourages technology-based small
education, infrastructure and research that engages companies to explore high risk technologies and profit
academic scientists and engineers in innovation. MWIN Nebraska Angels was founded in 2006 to support local from their commercialization. In addition, SHARPhub offers
Nebraska Department of Economic Development
hosts world-class training programs designed to get economic development and build the entrepreneurial the Mentoring, Assessment & Planning (MAP) Program to
researchers to extend their focus beyond the laboratory community. The member-led network of accredited 301 Centennial Mall South, develop strong commercialization plans for SHARPhub
and accelerate the transfer of cutting-edge research into investors are passionate about startups and helping 4th Floor companies to put them on a stronger development path.
commercial success. entrepreneurs scale with necessary capital. Lincoln, NE 68508 A consultant is assigned to the company to help develop
a business plan that enables the likelihood of funding
https://opportunity.nebraska.gov/start-your-business/ through an SBIR grant and/or equity provider application.
Midwest Research University Network (MRUN) Nebraska Business Development Center (800) 426-6505
https://www.mrun.us College of Business Administration
Contact NUtech Ventures for details 200 Mammel Hall NMotion: Nebraska’s Startup Accelerator
6708 Pine Street 151 N. 8th Street, Suite 517
MRUN provides programming focused on building and
supporting a Midwest research commercialization culture Omaha, NE 68182 Lincoln, NE 68508
that is transparent, systematic and connected. MRUN https://www.unomaha.edu/nebraska-business- https://www.nmotion.co
connects investors and talent to Midwest-based research development-center/
organizations in pragmatic, highly-curated events. Most info@nmotion.co
nbdc@unomaha.edu
of these events are virtual. All of them result in targeted, (402) 875-4166
productive conversations and stronger connections. (402) 554-6232 This guide is meant as a starting point
MRUN events are intentionally time- and cost-efficient; NMotion is Nebraska’s premier startup accelerator. for aspiring University of Nebraska
The University of Nebraska at Omaha, College of NMotion started as an idea to see if the burgeoning entrepreneurs aiming to commercialize a
they’re designed to help participants build relationships
Business Administration, hosts the Nebraska Business Lincoln startup community could come together and help technology developed at UNL. For more
and drive deal-making.
Development Center (NBDC). NBDC is a statewide move startups forward, faster. The idea was to provide information, you are encouraged to contact
program, with 10 office locations across Nebraska, that a small amount of capital, shared office space, mentors, NUtech Ventures at info@nutechventures.org
supports small business growth. NBDC’s credentialed and a deadline to make as much progress as possible on or 402-472-1783. We’re looking forward to
consultants provide confidential, one-on-one business a new startup idea. It worked. Since 2013, NMotion has working with you, answering your questions
services to entrepreneurs, established business owners, helped dozens of companies and now is part of gener8tor, and connecting you with entrepreneurship
innovators and economic and community development a nationally-ranked, GOLD-tier accelerator in the United resources.
professionals. NBDC’s services are provided mostly at States. NMotion operates three main programs:

24 25
Appendix 1: Corporate Structure Startups can be formed under different business entities recognized by law. While there are many options available to legally form the
business, the three most common entities for technology-driven startups are: C-Corporations, Limited Liability Corporations (LLCs), and
S-Corporations.

Each one of these entities is governed by different rules regarding taxation, ownership, fundraising, governance, and employee
Entities and Legal Formation of a Business developed by the Weibling Entrepreneurship Clinic at the University of Nebraska College compensation. It is critical for startups to consult an attorney who has experience advising startups prior to deciding a business entity
of Law. For more information, contact the clinic at eclinic@unl.edu. type. The following chart illustrates the different types of business entities and their characteristics.

Sole Proprietorship Partnership C-Corporation S-Corporation LLC

Owners One individual called the owner. Two or more individuals called partners.
Must be carrying on a business
One or more individuals called
stockholders or shareholders.
At least one, but no more than 100 individuals
called stockholders or shareholders.
One or more individuals called Members.
Multi-Member LLCs have more
together for profit. All must be U.S. citizens or permanent U.S. than one Member.
residents. Single Member LLCs have one Member.

Ownership Business and owner are one and the same.

Owner owns all of the business and its assets.
Partnership interests are equal shares
by statute unless otherwise agreed in a
Shares of company stock typically
evidenced by stock certificates.
Shares of company stock typically
evidenced by stock certificates.
Membership Interest expressed as a
percentage or as units.
Partnership Agreement. Can have multiple classes of stock with Can only have one class of stock (preferred Number of units or interest percentage
different rights and powers. shares not permitted). set forth in an Operating Agreement.

Management Owner manages and controls all aspects

of the business.
Management and control shared equally by
all partners unless otherwise agreed in a
Centralized in a Board of Directors
elected by the shareholders.
Centralized in a Board of Directors
elected by the shareholders.
Flexible. Either:
(1) Manager-managed, where elected
Partnership Agreement. Board can delegate authority to Officers. Board can delegate authority to Officers. managers make day-to-day decisions; or
Governing document is the Partnership Shareholders vote on major decisions. Shareholders vote on major decisions. (2) Member-managed, where all the
Agreement, whether in writing or Governing documents are the Articles of Governing documents are the Articles of members vote on decisions.
orally agreed. Incorporation and Bylaws. Incorporation and Bylaws. Governing document is the
Operating Agreement.
Pass-Through Tax “Check the Box”
Taxes Disregarded Entity
Owner simply reports all profits and losses on
Pass-Through Tax
Partnership does not pay tax; partners pay
Double Taxation
Corporation pays taxes on all profits. Corporation does not pay tax; shareholders pay Taxed the same as sole proprietorship
personal tax return. Owner is responsible for taxes on their respective share of profits. Each Shareholders must also pay personal taxes on their respective share of corporation (if one owner) or partnership
paying self-employment tax. partner is responsible for paying income tax on any distributions they profits. Each partner is responsible for paying (if two or more owners).
self-employment tax. receive. their own self-employment tax. Can designate May elect to instead be taxed like an
“Phantom tax” can occur if the business a reasonable portion as salary subject to S-Corporation or a C-Corporation.
retains or reinvests its income. employment tax with rest as income on
investment. “Phantom tax” can occur if the
business retains or reinvests its income.

Liability No Liability Protection

The owner is personally liable for all business
No Liability Protection
All partners are jointly and severally liable.
Limited Liability
Stockholder liability is limited to the
Limited Liability
Stockholder liability is limited to the
Limited Liability
Member liability is limited to the capital
debts and claims. Each partner can be sued for all the business capital they contributed. They are not capital they contributed. They are not they contributed. They are not personally
debts and all other partners are liable to personally liable for business obligations. personally liable for business obligations. liable for business obligations.
contribute. Exception: Piercing the Corporate Veil Exception: Piercing the Corporate Veil Exception: Piercing the Entity Veil

Formation Formation is automatic -- no filings or

documents are required.
Formation is automatic -- no filings or
documents required.
File Articles of Incorporation with the
Secretary of State.
File Articles of Incorporation with the
Secretary of State.
File Certificate of Organization with
the Secretary of State.
May register trade name with the Automatic if doing business for profit with Publish Notice of Organization Publish Notice of Organization Publish Notice of Organization in
Secretary of State. another individual. in the newspaper. in the newspaper. the newspaper.
May draft a partnership agreement and Make biennial fillings to the Make biennial filings to Make biennial filings to the
register trade name with the Secretary of State. the Secretary of State. Secretary of State.
Secretary of State. Draft bylaws. Draft bylaws. Draft an Operating Agreement.
File IRS Form 2553 to make
S-Corporation election.

Other Strict structural rules and more

regulated than other business forms.
Strict structural rules and more
regulated than other business forms.
Concerns Investors more likely to invest in
C-Corporations than other entity forms.

26 27
2021 Transformation Drive, Suite 2220 | Lincoln, NE 68508
(402) 472-1783 | info@nutechventures.org

nutechventures.org
| @NUtechVentures

Copyright 2021 by NUtech Ventures.