IN N OVAT I O NS & PA RT NERSH IPS OFFICE VO L.

2 — 2021

Start–Up Guidebook
START– UP G U I D E BOOK 2

The University of Toronto

(U of T) is where research
excellence comes together
with a collaborative,
entrepreneurial spirit.
U of T entrepreneurs tackle
global challenges and solve
real-world problems.
Innovation comes in many forms, follows many pathways, and emerges
from many disciplines. Our entrepreneurs have a common passion for
ideas and a willingness to take risks. They might fail, but they might
succeed in ways they could not have imagined. It is the possibilities
that excite us all.

For more information, contact:

University of Toronto Phone: 416-946-7342

Innovations and Partnerships Office E-mail: Innovations@utoronto.ca
Banting Institute, 100 College St, Suite 413 Web: https://research.utoronto.ca/inventions-commercialization-entrepreneurship/start-or-grow-company
Toronto, Ontario M5G 1L5

Certain sections contain information derived with permission from the Stanford University Office of Technology Licensing Start-up Guide.
U of T is thankful for their support.

U of T’s policies and practices may be revised from time to time. Inventors should refer to U of T’s current policies—for example, Inventions
Policy and Policy on Conflict of Interest – Academic Staff—as well as to any other university policies or guidelines that may be relevant to their
situation. Additional information may be found on the Innovations and Partnerships Office (IPO) website.
START– UP G U I D E BOOK 3

The University of
Toronto Start-Up
Guidebook
This guide is intended for U of T faculty, staff, and
students interested in launching a start-up company
based on intellectual property developed at the University
of Toronto. It is also a broad overview of the start-up
process and provides background on resources available
for all U of T entrepreneurs.

Contents
1. Innovation and Entrepreneurship at U of T 4
2. Getting the Business to Take Off 6
3. Technology Transfer at a Glance for Start-Ups 13
4. Frequently Asked Questions
16
5. U of T Policies and Conflict of Interest
19
6. For Faculty: Best Practices for Start-Ups 21
7. For Students: Best Practices for Start-Ups 22
8. Appendix 1: Resources Guide
23
9. Appendix 2: IPO Innovation Team Contacts
25
START– UP G U I D E BOOK 4

Innovation & INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

Entrepreneurship
at U of T GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY
ASKED QUESTIONS

U of T ignites innovation. U of T students, faculty, and alumni have been starting U OF T POLICIES
AND CONFLICT OF
companies and growing them into global businesses for decades. This guidebook is INTEREST

about—and intended for—the many start-ups that have been created by U of T

faculty and students to commercialize discoveries and intellectual property
developed at U of T.
FOR FACULTY:
BEST PRACTICES
FOR START-UPS

FOR STUDENTS:
BEST PRACTICES
FOR START-UPS

APPENDIX 1:
RESOURCES GUIDE

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 5

INNOVATION AND

The Innovations & Partnerships Office (IPO) There are lots of ways to create a start-up at ENTREPRENEURSHIP
AT U OF T
is an important part of a dynamic innovation and U of T. This guide focuses on starting a company
entrepreneurial ecosystem at U of T. IPO assists to commercialize technology stemming from
the U of T community by supporting invention U of T’s research programs, but it is full of useful
disclosure and the commercialization processes for information for every entrepreneur.
intellectual property developed at U of T. IPO also
GETTING THE
manages U of T’s intellectual property portfolio and BUSINESS TO
A technology or innovation is considered
has an ever-changing and expanding number of TAKE OFF

U of T intellectual property if it was created

innovations and technologies available for licensing.
using U of T facilities or funds (either direct
or administered by U of T).

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
Some examples of start-ups based on intellectual property developed at U of T are listed below. In some START-UPS

cases, inventors took personal ownership of the intellectual property, in other cases, the inventions were
licensed through the Innovations and Partnerships Office (IPO).

FREQUENTLY
ASKED QUESTIONS

U OF T POLICIES
AND CONFLICT OF
INTEREST

FOR FACULTY:
BEST PRACTICES
FOR START-UPS

Whether U of T is licensing the technology or innovation to a start-up or an existing company, the goal
is to maximize the chances of successfully advancing products to market while supporting the University’s mission
of research and education. This obligation is the shared responsibility of U of T and the start-up entrepreneurs,
especially if they maintain connections to the university (as faculty, staff or students) during the creation of the FOR STUDENTS:
BEST PRACTICES
start-up or after it is launched. This guide summarizes some of these responsibilities and best practices, but FOR START-UPS

individuals are expected to know and follow U of T’s policies and those of the research sponsors. These policies
and procedures can be found on the website of the University of Toronto’s Office of the Governing Council.
IPO is here to help, advise, and support.

Many technologies created at a university are early stage and require a significant investment to bring to market.
APPENDIX 1:
Entrepreneurs must have passion and persistence! They need faith in their technology along with an eagerness to RESOURCES GUIDE

commit time and resources to develop their inventions. IPO will work with new companies to craft agreements that
help them succeed.

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 6

Getting the INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

Business
to Take Off GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY
ASKED QUESTIONS

Launching a successful start-up company requires commitment, dedication, and U OF T POLICIES

AND CONFLICT OF

perseverance. Many companies fail even if the core technology is innovative and INTEREST

promising; however, when the right technology is implemented at the right time,
it has the potential to benefit society significantly. Components of a successful
start-up include a compelling concept, a strong market opportunity, a competitive
advantage, a sound business and financial plan, and an experienced management FOR FACULTY:
BEST PRACTICES

team. Luck and timing are also important. FOR START-UPS

Entrepreneurs spearheading a new company formation Often an important immediate question for inventors
will be the key champions for the technology and is whether they want to be involved in these tasks
FOR STUDENTS:
the start-up. In addition to navigating the typical directly as part of the company team or to continue BEST PRACTICES
FOR START-UPS
technology transfer process, they are responsible in their U of T roles as faculty, research staff
for a variety of tasks such as identifying the market or students. Your division head or department
opportunity, developing a business plan, and pursuing chair can offer guidance about these decisions
financing. Every start-up follows a unique path, but and information about options (e.g., taking a leave
there are many common steps to get the business of absence), including putting you in touch with
off the ground as outlined in this section. Additional faculty mentors who may be willing to share their APPENDIX 1:
RESOURCES GUIDE
resources are available through U of T Entrepreneurship. own experiences with other inventors.

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 7

INNOVATION AND
ENTREPRENEURSHIP
Steps to Start-up Launch AT U OF T

1
Talk to IPO
We encourage you to contact the Innovations & Partnerships Office
early in the process to discuss your invention, how to protect the IP, GETTING THE
BUSINESS TO
and your thoughts about a start-up company. TAKE OFF

2
Protect Intellectual Property TECHNOLOGY
TRANSFER AT
A major source of value­—and a major tool for attracting investment A GLANCE FOR
—is IP. Engage with IPO to get a patent application filed for your invention START-UPS

before you make any public disclosure of it.

FREQUENTLY

3
ASKED QUESTIONS
Seek Input and Network
U of T provides a wealth of resources and numerous support programs.
IPO can guide U of T inventors to these programs, investors, mentors,
and other resources.

U OF T POLICIES
AND CONFLICT OF
INTEREST

4
Plan the Business
A formal business plan may or may not be part of this phase, but you’ll
need to understand your invention’s market potential, competition, funding
needs, and how you plan to develop the product and attain the revenues
sufficient to sustain and grow the company.
FOR FACULTY:
BEST PRACTICES
FOR START-UPS

Secure a License or Option Agreement

5
IPO will work with representatives of the company to grant a license
to the start-up. In some cases, a short-term option agreement may precede
FOR STUDENTS:
a license so your company can demonstrate to potential funders that it has BEST PRACTICES
secured the rights to negotiate for a license to the technoloy. FOR START-UPS

Pursue Funding

6
Commercializing technology is typically a capital-intensive process. You’ll need APPENDIX 1:
RESOURCES GUIDE
to present your opportunity to people with the funds to help you make it happen:
venture captitalists, angel investors and perhaps in the initial stages, friends and
family. You can start the personal introduction process that can help you get the
attention of angel and captial investors by working with IPO.

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 8

INNOVATION AND

• Market size, dynamics and potential: Is the ENTREPRENEURSHIP

AT U OF T
Seek Input and Network market big enough? Is it controlled by a few
players? Is there a healthy growth trend?
Throughout the start-up process, advice and
• Financial potential: What market share can
mentorship are invaluable in building the foundation
be obtained? Is it worth the effort?
for a successful business. U of T cultivates a strong
entrepreneurial spirit and has many resources to IPO can help answer all of these questions. GETTING THE
BUSINESS TO
help with networking and guiding a path to TAKE OFF

commercialization. A business plan should be clear and concise. It will

be easier to “sell” the vision to investors and attract
U of T Entrepreneurship enables student and management talent with a business plan. Investors
faculty innovators to access U of T’s ecosystem are interested in investing in start-ups with high
of accelerators, incubators, programs, courses, growth potential. The business plan should address
and partners. It helps faculty and student what investors want to know: the compelling concept, TECHNOLOGY
TRANSFER AT
entrepreneurs turn ideas into viable ventures. competitive advantage (including patent/IP position), A GLANCE FOR
START-UPS
The U of T Entrepreneurship community provides market and financial potential, and proven
mentorship, expertise, space, and networks for management team.
all stages of the innovation pipeline and provides
the skills and resources entrepreneurs need to
effectively pitch ideas, find collaborators, and
build and scale their businesses. Pursue Investors/Funding FREQUENTLY
ASKED QUESTIONS

Except with certain software companies,

Develop a Business Case commercializing technology is typically a capital-
intensive process. Entrepreneurs need to present
Entrepreneurs should develop a strong business their opportunity to individuals or organizations
case to understand the market potential, competition, with funds to help launch the company. Typically, U OF T POLICIES
AND CONFLICT OF
and funding needs. A business plan should include these are venture capitalists, angel investors and— INTEREST

strategies for developing the technology and perhaps in the initial stages—friends and family, all
attaining sufficient revenue to sustain and grow of which may likely be further supported via public
the company. This plan will be useful when programs. Accessing U of T’s network is one way to
meeting with investors and pursuing funding. start the networking process that can help get the
attention of angel and venture capital investors.
Several key factors should be considered when FOR FACULTY:
BEST PRACTICES
deciding to form a start-up company: One way U of T helps promote companies based on U FOR START-UPS

of T Research is through the Deep Tech Download

• Technology innovation and patent/IP position:
newsletter that goes out to investors and industry
Is broad patent coverage possible? Are there
around the world and highlights companies that are
background patents owned by others? Will the
raising money.
company have freedom-to-operate to develop
FOR STUDENTS:
the product? First, decide what type of funding is required for BEST PRACTICES

• Development risk: How far along is the your venture. Technology commercialization often FOR START-UPS

technology? How much time and money is requires multiple rounds of funding from multiple
required to bring a product to market? sources. Angels and venture capitalists (VCs) are
• Development costs versus investment return: private investors who take on high-risk ventures
Can investors obtain their required rates of with goals of high returns. Return requirements
return(e.g., venture capital looks for 10X initial vary based on industry and stage of funding, but APPENDIX 1:
RESOURCES GUIDE
investment in 5 years)? many investors seek 10X their initial investment
• Product strategy: Does the technology lend itself over five years. Not all start-ups are well-suited
to opportunities for multiple products/platforms? for angel or VC financing. Other options exist.

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 9

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T

Types of Early-Stage Investment

Angel Investing
Angel investors are typically high-net-worth individuals who have a personal interest in funding new
companies. They are often willing to invest in earlier stages and with smaller amounts of money than VCs GETTING THE

in exchange for equity. They can take passive or active roles in the start-up and typically have a longer BUSINESS TO
TAKE OFF
investment horizon than VCs. To learn more about the vibrant Angel investor community in Canada please
visit the National Angel Capital Organization’s (NACO) website.

Venture Capital (VC)

Compared to angels, venture capitalists can invest larger amounts of money (usually millions of dollars) in a
TECHNOLOGY
company. In exchange they tend to receive more equity. VCs also exercise control and often bring experienced TRANSFER AT
A GLANCE FOR
management talent to help guide and grow the company. Sometimes they invest in several rounds of funding START-UPS

and are part of a larger consortium of investors in the company.

FREQUENTLY
ASKED QUESTIONS

Startup Financing Cycle

Secondary Offerings

Angels, FFF VC, Acquisitions/Mergers & Strategic Alliances

U OF T POLICIES
AND CONFLICT OF
INTEREST
Seed Capital
Later Stages

Early Stages
Revenue

FOR FACULTY:
Mezzanine Initial Public Public Market BEST PRACTICES
Offering or FOR START-UPS
Acquisition

3rd

Break even
2nd

FOR STUDENTS:
BEST PRACTICES
FOR START-UPS
1st

Valley of Death
Time

APPENDIX 1:
RESOURCES GUIDE

This graphic is an example of a start-up financing cycle using traditional funding sources, through an initial public offering.
There could be more or fewer rounds of funding. The 1st, 2nd, and 3rd rounds can be equivalent to Series A, B, and C. (Source:
“Startup Company” Wikipedia, The Free Encyclopedia. Wikimedia Foundation, Inc. 11 March 2009. Web. August 2017 under
GNU Free Documentation License, Version 1.2).
APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 10

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T
Other Sources of Capital How Investors Evaluate a Company

Start-ups may also investigate and pursue Investors receive numerous requests or “pitches”
funding from non-traditional sources. for funding, but only a small portion of start-ups
Some examples include: get funding. Investors will determine if the start-up
meets their strategic and financial goals and if the GETTING THE
• Government grants: Certain research grants are BUSINESS TO
company fits into their current portfolio of invest- TAKE OFF
available through a vast array of programs.
ments. VC funds target an annual return on the fund
Additionally, the Government of Canada has
which is significantly higher than other investment
implemented Innovation Canada, a service from
vehicles such as stocks and bonds.
Innovation, Science and Economic Development
Canada” that provides a single access point where Investors typically perform due diligence before
small and medium-sized enterprises can find funding new opportunities, and they often view the TECHNOLOGY
TRANSFER AT
high-quality, timely advice to help them innovate fact that a new company is working with U of T A GLANCE FOR
START-UPS
and accelerate their growth. SRED credits positively in this analysis. For example, IPO’s
(Scientific Research and Experimental involvement may provide an extra measure of
Development Tax Incentive Program provided by reassurance to investors that IP rights are being
Canada Revenue Agency) are also a great source of properly secured by the company.
funds from government.
Funders and Founders has an infographic that FREQUENTLY

• Banks: Banks do not usually participate in equity explains “How Startup Valuation Works – A Way to ASKED QUESTIONS

investments in new companies, but they are a Measuring a Company’s Potential.”

source of loans, particularly for capital purchases
when there is some collateral (such as large
equipment) Exit Strategy
U OF T POLICIES
• Crowdfunding: Various crowdfunding companies Investors plan to recoup their investments via exit AND CONFLICT OF
INTEREST
enable entrepreneurial fundraising by pooling strategies. Typically, a VC hopes to sell its equity in
small investments from a network of individuals. a portfolio company within 3-7 years, ideally through
A variety of crowdfunding platforms exist. Find the an initial public offering. Another exit strategy could
one that best suits your needs. For example, certain be through mergers and acquisitions (M&A).
crowdfunding platforms focus on funding social
innovation. Platforms include GoFundMe, FOR FACULTY:
BEST PRACTICES
Kickstarter, Indiegogo, Chuffed, Ideapros, etc. FOR START-UPS

• Other funding sources as found at

U of T Entrepreneurship.

FOR STUDENTS:
BEST PRACTICES
FOR START-UPS

APPENDIX 1:
RESOURCES GUIDE

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 11

INNOVATION AND

U of T companies that have gone public: ENTREPRENEURSHIP

AT U OF T

GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY
ASKED QUESTIONS

U of T companies that have been acquired:

U OF T POLICIES
AND CONFLICT OF
INTEREST
Acquired Acquired
by Google by Apple

FOR FACULTY:
BEST PRACTICES
Acquired Acquired FOR START-UPS

by Zealand Pharma by Cederlane

FOR STUDENTS:
Acquired BEST PRACTICES
Acquired by FOR START-UPS
by Fluidigm
Marketwire

Acquired Acquired by Silanna APPENDIX 1:

RESOURCES GUIDE
by Twitter Semiconductor

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 12

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T
Risks

New company formation is a high-risk proposition. While many U of T start-ups are successful,
others are not. Some common challenges for academic start-ups:

• Inexperienced management: A strong, experienced, cohesive team is required for a successful

GETTING THE
start-up company. Problems can arise if founders or other members of the team do not have enough BUSINESS TO
TAKE OFF
start-up and business experience or if founders, new management, and investors do not have the
same strategic vision.
• Lack of funding: A start-up needs sufficient capital to overcome technical challenges, reach critical
business milestones, and progress to the next phase of development. The company must have a solid
business plan and a strong management team to attract investors.
TECHNOLOGY
• Technology does not meet commercial need: Sometimes the science is innovative and exciting, but TRANSFER AT

does not meet a commercial need or perhaps current solutions are still better than the new technology. A GLANCE FOR
START-UPS

For example a diagnostic technology might not be sensitive enough or a new material cannot be
produced at scale.
• Timing: Even when a commercial need exists, the company may miss the market opportunity.
Sometimes the market is not ready for the product (e.g., too early, too expensive, unrecognized
need). Sometimes the product is too late to the market and the need has been filled by a different
FREQUENTLY
technology or competitor. ASKED QUESTIONS

• Marginal niche: If the target market is smaller than expected, the company might not meet its
financial growth targets.
• Bad luck: Sometimes events outside of the entrepreneur’s control can negatively impact a company.
Remember that resilience is often seen as an entrepreneur’s greatest strength.
U OF T POLICIES
The business website Inc.com offers some additional information about why start-ups fail. AND CONFLICT OF
INTEREST

FOR FACULTY:
BEST PRACTICES
FOR START-UPS

FOR STUDENTS:
BEST PRACTICES
FOR START-UPS

APPENDIX 1:
RESOURCES GUIDE

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UPS
UP G G
UUI DI D
E BOOK
E BOOK 13

Technology INNOVATION AND

ENTREPRENEURSHIP

Transfer at
AT U OF T

a Glance for
Start-Ups
GETTING THE
BUSINESS TO
TAKE OFF

1. Research
TECHNOLOGY
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TRANSFER AT

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FREQUENTLY
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ASKED QUESTIONS
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AND CONFLICT OF
INTEREST
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FOR FACULTY:
BEST PRACTICES
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FOR START-UPS
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BEST PRACTICES
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5. Create t
FOR START-UPS

The technology transfer process at U of T can be conceptualized as a continuous APPENDIX 1:

cycle—one where discoveries in the laboratory are developed into licensed products RESOURCES GUIDE

in the marketplace that then help fund the next generation of research and innova-
tion. For the most part, the steps of the cycle are similar whether the company
commercializing the technology is a new venture or an established one.
APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 14

INNOVATION AND
ENTREPRENEURSHIP

Key steps for entrepreneurs starting a new AT U OF T

venture based on U of T intellectual property.

U of T’s Inventor’s Guide, explains some of these
stages in further detail. GETTING THE
BUSINESS TO
TAKE OFF

potential based on patentability (if applicable), market

1. Research analysis, existing competitive technologies, and other
factors. At the conclusion of the assessment phase, IPO
Observations and experiments during research
and the inventors will decide if the best path to market
activities often lead to discoveries and inventions or TECHNOLOGY
for the technology is to create a start-up company. TRANSFER AT
the development of software and other copyrighted A GLANCE FOR
START-UPS
works. An invention is any useful process, machine, The assessment of commercial opportunities takes
composition of matter (e.g., a chemical or biological into account many factors that can be summarized
compound), or any new or useful improvement of the in six major areas:
same. Often, multiple researchers—including
• What is the core technology disclosed?
students, post-docs and research staff—contribute
What is unique about it? To what extent
to an invention and may be inventors. FREQUENTLY
does the technology work? ASKED QUESTIONS

• What products or services does the technology

2. Invention Disclosure enable? How can these products be designed and
built? By whom and where?
This written notice of an invention to IPO begins the • What are the potential markets for the products?
formal technology transfer process. The Invention Are these markets worthwhile? To whom? U OF T POLICIES
AND CONFLICT OF
Disclosure is a confidential document and should • What financial resources are needed to INTEREST

fully describe the new aspects of the invention, commercialize the technology? Which type
including the critical solution it provides and its of financing will be required?
advantages and benefits over current technologies. • Will the company have the freedom to operate?
Invention disclosures can be submitted to Is IP infringement easily detectable? Is the
ip.officer@utoronto.ca. patentable content strong? FOR FACULTY:
BEST PRACTICES
If you believe that what you have developed does not • What team is required to commercialize this FOR START-UPS

fall under the U of T Inventions Policy (i.e., it was technology? Who is missing at this stage? How will
invented without significant use of U of T resources) the company recruit the required expertise?
and wish to confirm, please fill out the Declaration of
Invention with No Significant Use Form.
4. Intellectual Property Protection
FOR STUDENTS:
BEST PRACTICES

3. Opportunity Assessment (If appropriate, necessary, or warranted) FOR START-UPS

Patent protection, a common legal protection

If the inventors choose to take personal ownership
method, begins with the filing of a patent application.
of the invention, the University will assign the
Once a patent application has been filed, it requires
invention to the inventors. Before doing so, IPO
several years and tens of thousands of dollars to
will ensure sponsors don’t already have rights APPENDIX 1:
obtain an issued patent. Other common forms of IP RESOURCES GUIDE
to the invention. If the inventors choose personal
protection include copyright and trademark. Unique
ownership, IPO will not assess the commercial
biological materials and software can often be
potential of the invention.
successfully licensed without formal IP protection.
If the invention is offered to U of T, IPO will review the
invention disclosure and evaluate the commercial APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 15

INNOVATION AND

agreement must fall within the normal range of ENTREPRENEURSHIP

AT U OF T
5. Create the Company terms and conditions of similar licenses to non-
inventor-associated companies (taking into
Once the decision has been made that the best vehicle
consideration the unique circumstances of each
for commercialization is a start-up, the company
technology and transaction).
should be formally incorporated. Typically, U of T
companies choose to incorporate federally in Canada GETTING THE
BUSINESS TO
for wider rights and so that they do not have to
7. Product Development and Commercialization TAKE OFF

incorporate separately in each province. It is required

at the time of incorporation that the company have at Most university inventions are early-stage and
least one company director and established company require further research and development. The
bylaws. IPO uses external legal counsel to provide company typically makes significant investments
support during the company creation process. of time and funding to commercialize the product TECHNOLOGY

or service. These steps may entail regulatory TRANSFER AT

The company founders will create a capitalization A GLANCE FOR
approvals, sales and marketing, support, training, START-UPS
table to understand the equity distribution amongst
and other activities. The company will be expected
the founders. In most cases the company will set
to meet commercialization milestones described in
aside equity to allocate to new employees as the
the agreement of rights.
company grows, this is referred to as the employee
stock option pool or ESOP. Next is the execution It is common for the company, particularly early-
of a shareholder agreement. This agreement ensures stage ventures, to evolve their strategy and FREQUENTLY
ASKED QUESTIONS

each shareholder has rights and protocols to make development plans as the company grows, faces
decisions and provides protection if company technical challenges, and recognizes new market
founders leave or new shareholders become part opportunities. IPO can work with the company to
of the company. amend and renegotiate rights agreements in response
to these changes if the request and reasons to
Eventually, a Board of Directors (BoD) should be U OF T POLICIES
renegotiate are reasonable. AND CONFLICT OF
established to provide strategic company direction INTEREST

and bring credibility to the company. At the onset,

a BoD can have as little as three members, with the
8. Financial Return
majority external to the company. It is also a good
idea to have a Board of Advisors (BoA). The BoA Revenues, including both cash and equity received
provides access to expertise that would not otherwise by U of T from companies in consideration for FOR FACULTY:
be available to a start-up. A good BoA can also bring granting a license, are distributed annually to BEST PRACTICES
FOR START-UPS
external viewpoints and a larger network of contacts. inventors, departments, and schools according
to U of T’s Inventions Policy. The inventors who
have not waived royalty rights due to conflict
6. Rights to the Technology of interest considerations will receive their share
under the policy.
For inventions that are managed by U of T, IPO FOR STUDENTS:

will negotiate and execute an option, license or BEST PRACTICES

FOR START-UPS

assignment agreement. This agreement is a contract

between the University and the company in which
certain rights to a technology are granted to the
company. Most start-ups request an exclusive
Royalties and the proceeds from equity
arrangement because they believe it is required are shared within the University to collectively APPENDIX 1:
to raise funding for the company. Terms may foster the creation of the next generation RESOURCES GUIDE

include equity, royalties, and milestone fees. of research and innovation.

When U of T inventors are involved in a start-up

company, offering rights to that company can raise
concerns about conflicts of interest. The final rights
APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 16

Frequently INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

Asked
Questions GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

How are inventors involved in the licensing process? FREQUENTLY

ASKED QUESTION

IPO encourages inventors to recommend potential licensees, provide input for

assessing technical and market feasibility, and offer suggestions on licensing
strategies to commercialize the technology. IPO will always consider inventors’
feedback and strive to keep inventors informed. U OF T POLICIES
AND CONFLICT OF

When an inventor is also a founder, the best practice is for IPO to negotiate INTEREST

the agreement with a founder who is not also a U of T inventor.

to take an option to a license, with the terms of

When can the start-up management the license outlined in a term sheet. The final
FOR FACULTY:
BEST PRACTICES

negotiate a license? negotiations for an option/license and investment

FOR START-UPS

funding agreement will often occur in parallel.

IPO can begin negotiations with any representative
of the company. It is best, however, if the company
has a business and financing plan. If possible, U of T
faculty members should not represent the company What is an option agreement and how FOR STUDENTS:
in negotiations. is it different from full license? BEST PRACTICES
FOR START-UPS

An option agreement is often used to reserve rights

Which comes first, the license agreement in an invention while a company evaluates the
or company funding agreements? technology, explores funding opportunities and
raises the capital needed to fully license the rights
This is a chicken and egg scenario. Investors usually in question. Option agreements may include financial APPENDIX 1:
RESOURCES GUIDE
want to be sure the entrepreneur has an option or consideration to U of T to reserve those rights.
license to the technology before investing in the Start-up companies sometimes prefer this route
company, but the entrepreneur often does not know and IPO may grant options for up to one year.
what kind of license (field of use, financials, etc.) the
investor requires. One solution is for an entrepreneur
APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 17

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T
How long does it take to license Does the university take equity in start-ups?
a technology from U of T?
U of T often accepts equity (typically) as part of the
The time it takes to license an invention varies. financial terms of the license. Because most start-up
After the technology is disclosed to IPO, it could companies have limited cash, equity is often
take several weeks to a few months to review the substituted for some of the cash consideration. Equity GETTING THE
BUSINESS TO
invention and then apply for a patent application is a way for the university to share some of the risks TAKE OFF

(if a patent application is appropriate). During this and rewards associated with start-ups. U of T’s equity
time, the entrepreneur(s) could begin to develop stake in research-based start-ups is comparable, and
the new venture to better position the start-up is often times much less than what other institutions
as a potential licensee (e.g., develop a business demand (e.g. CMU, NIH, UCSD)
plan, research entrepreneur resources, and begin TECHNOLOGY
seeking investors). If the start-up company is TRANSFER AT
A GLANCE FOR
the best possible licensee, negotiations with IPO Will U of T take a seat on the company board? START-UPS

for a license could take several weeks to months.

Some negotiations may only take a few days if both No, nor does U of T take an active role in managing
parties agree to terms easily. IPO has developed the company. IPO representatives may sit as an
a start-up licensing model to simplify software observer on the board or act as an informal advisor
licensing for U of T start-ups. to the company.
FREQUENTLY
ASKED QUESTION

What are typical licensing terms for U of T’s Will U of T assign the patent to a start-up
agreements with start-up companies? (or existing company)?

License agreements have both financial and non- Yes, U of T does assign or transfer IP rights
financial terms. These vary based on the technology, when previously agreed-upon commercial milestones U OF T POLICIES
AND CONFLICT OF

the stage of development, the field of use, and the are met, including technical development, INTEREST

commercialization risks. Typical terms consist of: investment, or revenues..

• Financial terms for patented intellectual property

may include annual fees, payments when mile- What happens if there are follow-on patents
stones are achieved, and royalties on product sales. to the original patent? FOR FACULTY:

• Financial terms may also include a small, BEST PRACTICES

It depends on who owns the follow-on patents. FOR START-UPS

minority share of equity in the company.

Typically, U of T will have filed the initial patent
• Exclusive licensees are generally expected
application that is exclusively licensed; the exclusive
to pay patent expenses.
licensee provides input for the prosecution of this
• Diligence terms to ensure reasonable original patent. Follow-on inventions conceived
progress in growing the company and by the licensee without U of T involvement usually FOR STUDENTS:
commercializing the invention. belong to the licensee. Follow-on inventions based
BEST PRACTICES
FOR START-UPS

Many entrepreneurs are concerned about the financial on work at U of T will be owned under U of T
terms. IPO has completed hundreds of agreements policies. In other words, the existing licensee
with start-ups. IPO’s goal is to negotiate an agreement will not be automatically granted a license to
that is fair and reasonable based on experience, on the the follow-on invention.
industry and on how the technology fits into the APPENDIX 1:

ultimate product. RESOURCE GUIDE

Can a start-up get an option or license

without being incorporated?

The company is required to be officially incorporated,

but it does not need to have a name. An agreement
APPENDIX 2:
can be made with a numbered company. IPO CONTACTS
START– UP G U I D E BOOK 18

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T
If the start-up is based on an invention jointly owned by U of T and
another institution, what happens to the invention?

Typically, U of T enters into an Inter-Institutional Agreement (IIA) whereby one of the institutions will
take the lead in negotiating. This way a company can negotiate a single agreement with an exclusive
license to both parties’ IP rights. GETTING THE
BUSINESS TO
TAKE OFF

If a start-up needs technology from another institution besides U of T, but the

technology is not jointly-owned with U of T, will the company need a separate license?

Under most circumstances, the company will need to negotiate separately with the other institution
for a license. For complicated technologies, the company will need to conduct a freedom to operate TECHNOLOGY
TRANSFER AT
(FTO) analysis and confirm that the company has a path to acquire all the necessary IP components A GLANCE FOR
START-UPS
the start-up will need to make its proposed products.

If the invention is unpatented software, will the start-up still need a license?

Yes, a license is required if the software falls under U of T’s Inventions Policy. FREQUENTLY
ASKED QUESTION

Can I continue to do research at U of T on the technology that is the basis of a start-up?

U of T always reserves the right to protect its own inventions for research purposes. However,
to develop technology at U of T for the benefit of a start-up, the researchers must follow U of T’s U OF T POLICIES

Policy on Conflict of Interest – Academic Staff. Guidance can be sought from IPO. AND CONFLICT OF
INTEREST

FOR FACULTY:
BEST PRACTICES
FOR START-UPS

FOR STUDENTS:
BEST PRACTICES
FOR START-UPS

APPENDIX 1:
RESOURCE GUIDE

APPENDIX 2:
IPO CONTACTS
START– UP G U I D E BOOK 19

U of T Policies INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

and Conflict
of Interest GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY

Intellectual Property Policy and Ownership

ASKED QUESTIONS

Unless U of T resources are used in the creation of the invention,

there is no obligation to U of T under the Inventions Policy.
U OF T POLICIES
AND CONFLICT OF
Intellectual Property (IP) created by U of T faculty, INTEREST

staff, or students using U of T resources is governed Managing Conflict of Interest at U of T

by U of T’s Inventions Policy.
U of T and inventors must be sensitive to conflict
In short, if University funds or facilities are used: of interest (COI) and public perception. A start-up
or a faculty-associated company should not utilize
• Inventions must be disclosed to U of T.
university resources to support company activity. FOR FACULTY:

• Inventors may choose to take personal ownership If university resources are required (e.g., space or
BEST PRACTICES
FOR START-UPS
of the invention or offer full ownership to U of T. equipment), IPO can advise.
• In all cases:
• IP access agreements must include In general, faculty members should not:
commercially reasonable terms • Use students at U of T for research and
• Revenue from the agreement is shared development projects for their company FOR STUDENTS:
between the inventors and U of T • Restrict or delay access to information BEST PRACTICES
FOR START-UPS
• U of T retains the right to use the invention from U of T research
for research and teaching
• Employ current U of T students at the company
One exception to joint ownership is if the rights
Conflicts of interest can also involve issues of time
to an invention were granted to a third party under
allocation. Faculty should discuss the situation with
a separate prior agreement, such as a sponsored
their division head or department chair. In general, APPENDIX 1:

research agreement or a material transfer agreement. RESOURCES GUIDE

faculty are allowed 20 days per academic year to work
Please contact IPO for more information.
on projects outside their University obligations.

See Best Practices for faculty and student start-ups

below and U of T’s Policy on Conflict of Interest –
Academic Staff for more information.
APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 20

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T
Consulting and Ownership of Intellectual Property

When a faculty member is consulting for a start-up company with which he or she has another
financial relationship, it is particularly important to make certain that the separation between
consulting activities and the faculty member’s academic program, including research and teaching
activities, is clear to all parties. GETTING THE
BUSINESS TO
TAKE OFF
Companies may use U of T faculty members as consultants. U of T does not ordinarily review consulting
arrangements, but faculty members should be clear about the delineation between university work and
private consulting. U of T faculty members cannot enter into any agreement that creates obligations
that conflict with U of T’s Policy on Conflict of Interest – Academic Staff. Faculty members must
separate and distinguish ongoing university research from work being conducted at the company.
TECHNOLOGY

U of T will ordinarily presume that intellectual property developed while a faculty member is TRANSFER AT
A GLANCE FOR
consulting at the company or is involved in an on-going company program (e.g., drug development, START-UPS

medical device, chip development, software issue, or any other specific company research or design
activity), belongs to the company as long as there has not been more than incidental use of U of T resources.
U of T resources are considered to include facilities, equipment, and the time and expertise of students
and post-doctoral fellows and research staff. However, U of T resources do not include the use of
personal computers, telephones, or libraries. FREQUENTLY
ASKED QUESTIONS

When a question arises as to the appropriate delineation between a researcher’s U of T responsibilities

and a researcher’s consulting obligation, the researcher should discuss the situation with his or her
division head or department chair.

If there is ever a question of IP ownership, the IP should be disclosed to U of T.

U OF T POLICIES
AND CONFLICT OF
INTEREST

Obligation to Sponsors

Inventors should take particular care in disclosing all sponsors, including companies whose funding
or materials led to the invention. Sponsored research agreements specify what rights a sponsor has
in any IP developed as a result of the sponsored research. Under most circumstances, federal funding
of research leading to an invention will not impose significant impediments on commercializing the FOR FACULTY:
BEST PRACTICES

invention via a start-up. Funding or materials provided by other entities (such as companies) may FOR START-UPS

result in license rights to those entities, limiting the license rights available for a start-up. Corporate
sponsors are typically granted rights to negotiate a license for any IP arising from sponsored research,
but sponsorship agreements vary widely. IPO reviews the research agreements listed on the invention
disclosure to identify any licensing restrictions on the invention.
FOR STUDENTS:
BEST PRACTICES
FOR START-UPS

APPENDIX 1:
RESOURCES GUIDE

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 21

For Faculty: INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

Best Practices
For Start-Ups GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY
ASKED QUESTIONS

U of T encourages entrepreneurial activity by faculty, staff, students and alumni

and is supportive of its entrepreneurs. U OF T POLICIES
AND CONFLICT OF
INTEREST
U of T’s main mission, however, is education and research. There is a requirement
to maintain openness in research. Therefore, entrepreneurial activity must be
balanced by careful review of the proposed relationships. These relationships may
require active management to assure openness in research, academic freedom for
FOR FACULTY:
trainees, and clear understanding of how conflicts of interest are to be managed. BEST PRACTICES
FOR START-UPS

Faculty should also familiarize themselves with the University’s Graduate Supervision
Guidelines to help them strike the right balance between their education and research
missions and their entrepreneurial activities.
U of T is committed to avoiding either perceived or actual conflict of interest FOR STUDENTS:
BEST PRACTICES

issues concerning faculty start-ups. Both U of T and its faculty members have FOR START-UPS

responsibilities to optimize technology transfer and mitigate COI when

licensing U of T IP to a start-up.

APPENDIX 1:
RESOURCES GUIDE
University/IPO Responsibilities Faculty Responsibilities

IPO makes licensing decisions based on its Faculty members are responsible for separating
professional judgment about technology transfer to university duties for research and education from
achieve the best possible benefit to the public. personal financial interests in the company.
APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 22

For Students: INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

Best Practices
For Start-Ups GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY
ASKED QUESTIONS

U OF T POLICIES
AND CONFLICT OF
INTEREST

Innovation and the translation of inventions into products that serve the public FOR FACULTY:
BEST PRACTICES

are deeply ingrained in U of T’s culture, and we have benefited greatly from it. FOR START-UPS

U of T is supportive of students becoming inventors and starting companies—

whether or not these companies are based on technology that is bound by
U of T’s Inventions Policy.
FOR STUDENTS:
BEST PRACTICES
FOR START-UPS

Student inventors must:

• Describe how they will separate and distinguish their on-going activities as students
(e.g., thesis research) from work being conducted at the company.
• Implement measures that will allow them to avoid the use of U of T facilities and personnel APPENDIX 1:
RESOURCES GUIDE
for company purposes (e.g., availability of off-campus resources and support personnel).
• Consult with the advisors overseeing their academic progress.

Some university facilities can be used by any U of T affiliated companies without ceding intellectual property rights.
For example, access to office space for U of T entrepreneurs is available through ONRamp. Students also have access
to U of T Entrepreneurship programs, some of which provide R&D space. For more information, please contact IPO. APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 23

Appendix 1: INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

Resources Guide
GETTING THE
BUSINESS TO
TAKE OFF

TECHNOLOGY
TRANSFER AT
A GLANCE FOR
START-UPS

FREQUENTLY
ASKED QUESTIONS

U OF T POLICIES
AND CONFLICT OF
INTEREST

FOR FACULTY:

U of T has a wealth of entrepreneurial history and knowledge. Some entrepreneurs BEST PRACTICES
FOR START-UPS

are already aware of the various organizations, classes and websites that are
available to them. Below is a list of resources, both on- and off-campus, that can
educate and guide U of T entrepreneurs through the start-up process or help them
network and gain feedback for their new company. IPO is well connected with these FOR STUDENTS:

organizations. Come to IPO for guidance.

BEST PRACTICES
FOR START-UPS

Organizations and Programs at U of T

U of T Entrepreneurship is the hub of the entrepreneurial ecosystem at U of T.

APPENDIX 1:
RESOURCES GUIDE
Find out about:

• Workspace and networking opportunities through ONRamp

• Entrepreneurial courses and programs
• Accelerators and incubators
APPENDIX 2:
• Funding opportunities IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 24

INNOVATION AND
ENTREPRENEURSHIP
AT U OF T
Outside Resources

Centres of Excellence in the Commercialization of Research (CECR’s) help bridge the gap between
innovation and commercialization. The centres adopt different models to best serve the
commercialization needs of their sector; acting as investors, incubators or service providers.
GETTING THE
Regional Innovation Centres (RICs) provide specialized assistance in 18 regions across the province BUSINESS TO
TAKE OFF
to accelerate start-up and growth of entrepreneurial talent and globally competitive, innovative
companies with value-added advice, access to capital, market intelligence, mentoring, and peer-
networking programs. U of T entrepreneurs often access the resources of our local RICs.

• MaRS: In addition to their Start, Growth and Scale Programs, MaRS has a variety of online
courses and resources that are accessible to all; please visit the MaRS Library TECHNOLOGY

• Communitech: is an innovation hub located in Waterloo Region that provides support and TRANSFER AT
A GLANCE FOR

collaboration to +1400 technology entrepreneurs. START-UPS

• RIC Centre: is Mississauga, Brampton and Caledon’s innovation hub, providing free support
services to entrepreneurs focused on IT, Clean Tech, and Advanced Material manufacturing sectors.
• VentureLAB: operates out of York Region to help technology entrepreneurs build scalable,
high-growth tech businesses.
FREQUENTLY
Oneeleven is North America’s largest scale-up innovation hub focused on helping the most ASKED QUESTIONS

promising, high-growth start-ups build their businesses and scale their operations.

Next36 is a program that accelerates the growth of Canada’s top entrepreneurs by providing
mentorship, capital, and founder development.

Entrepreneurship.org was formed as a free, online international resource designed to help build U OF T POLICIES
AND CONFLICT OF
entrepreneurial economies. This site features a vast array of content and resources to assist INTEREST

entrepreneurs, business mentors, policymakers, academics and investors through each phase
of the entrepreneurial process.

How to Build a Startup is a course designed to introduce the basics of building a successful start-up.
The core idea of the course involves learning how to rapidly develop and test ideas by gathering
massive amounts of customer and marketplace feedback. Many start-ups fail by not validating their FOR FACULTY:
BEST PRACTICES
ideas early on with real-life customers. Students will learn how to get out of the building and search FOR START-UPS

for the real pain points and unmet needs of customers. Only with these can the entrepreneur find
a proper solution and establish a suitable business model.

innovation DAILY is an electronic newsletter with selected innovation-related articles from around
the world. The articles are related to innovation, funding for innovative companies, and best practices
for innovation-based economic development. Users can access articles at the website or register to FOR STUDENTS:
BEST PRACTICES

receive the free newsletter daily. FOR START-UPS

There are many VCs and Angel Investor Networks who have worked with U of T start-up companies.
To find the right fit, ask IPO.

APPENDIX 1:
RESOURCES GUIDE

APPENDIX 2:
IPO INNOVATION
TEAM CONTACTS
START– UP G U I D E BOOK 25

Appendix 2: INNOVATION AND

ENTREPRENEURSHIP
AT U OF T

IPO Innovation
Team Contacts GETTING THE
BUSINESS TO
TAKE OFF

A full contact list can be found at the Research and Innovation website.
TECHNOLOGY
TRANSFER AT
A GLANCE FOR

Director, Innovations Jennifer Fraser START-UPS

jen.fraser@utoronto.ca
(416) 946-5515

Intellectual Property Patents: Intellectual Property Officer:

Stephane Levesque Grettell Atahue FREQUENTLY

stephane.levesque@utoronto.ca ip.officer@utoronto.ca ASKED QUESTIONS

(416) 946-0452 (416) 978-7833

Tamara O’Connell
tamara.oconnell@utoronto.ca
(416) 946-5435
U OF T POLICIES
AND CONFLICT OF
Commercialization Life Sciences: INTEREST

and Entrepreneurship Marilee Krinsky Ian Stewart

marilee.krinsky@utoronto.ca iani.stewart@utoronto.ca
(416) 978-2514 (416) 978-3471

Jae-Ho Yoo Rohan Alvares

jaeho.yoo@utoronto.ca rohan.alvares@utoronto.ca FOR FACULTY:
(416) 946-7158 (416) 946-0041 BEST PRACTICES
FOR START-UPS

Physical Sciences and Engineering:

Fabio Almeida Karen Temple
fabio.almeida@utoronto.ca karen.temple@utoronto.ca
(416) 946-7248 (416) 978-3548

Information and FOR STUDENTS:

Communications Technology: BEST PRACTICES

FOR START-UPS

Laurent Moreno Donna Shukaris

laurent.moreno@utoronto.ca donna.shukaris@utoronto.ca
(416) 946-0594 (416) 946-7247

Michael DiPaul
michael.dipaul@utoronto.ca
APPENDIX 1:
416 946-3627 RESOURCES GUIDE

Industry Licensing Elizabeth Tharakan

Officer (all disciplines) elizabeth.tharakan@utoronto.ca
(416) 978-5730

APPENDIX 2:
General Innovations inquiries: Disclosure process and UT policies: IPO INNOVATION

innovations@utoronto.ca ip.officer@utoronto.ca TEAM CONTACTS