The Value of Technology Transfer

Tom Hockaday, Managing Director, Isis Innovation Ltd
January 2009

A successful TTO brings many and varied returns to the university and to wider society in economic, social and policy terms.

Returns to the University

The returns to the university can be divided into financial and non-financial returns. The financial returns can be cash returns or accumulated asset value.

Financial Returns - Cash

Royalty income: the TTO licenses out technologies and receives royalty payments in return. These royalties are then distributed to: the researcher inventors, the host department(s), the university central reserves, and the TTO.

Research funding from spin-outs: the TTO establishes new spin-out companies which raise investment finance from business angels, seed and venture capitalists. Often the company spends this capital on developing the early-stage technology by funding research back in the university.

Research funding from Translation Awards: the TTO helps the university win later-stage research funding in three ways: managing the patents on which the on-going research is based, providing input to commercialisation plans, and supporting researchers’ translational activities.

Government funding: the UK government provides funding to universities to support their third stream activities (the third stream is identified as additional to the main university purposes of teaching and research). The TTO is at the core of the university’s third stream programmes, managing and delivering activities with government funding.

Sale of spin-out shares: the TTO will help establish new spin-out companies in which the university holds shares. As the companies in the portfolio grow, the university will receive cash from the share sale upon exit/flotation and from dividend payments.

Financial Returns - Assets

Spin-out shareholdings: over time the university will build up a portfolio of shareholdings in its spin-out companies, andthese shareholdings have an asset value to the university.

New patents: the TTO will file new patent applications and over time build a considerable portfolio of these patent applications and granted patents, which have an asset value to the university.

Non-Financial Returns

In addition to the financial returns, there are non-financial benefits to the university from having a successful TTO. The TTO’s activities help promote the university within the wider business, industrial and professional communities, and helps the university demonstrate to research funders its commitment to transferring technology from its research activities. Research funders put increasingly high emphasis on this.

University researchers expect the university they work for, or are thinking of moving to, of having a competent TTO, with skilled staff, sufficient patent budget resources, access to proof of concept funds, and attractive revenue sharing arrangements. In this way, the TTO can help with university research staff recruitment and retention.

Returns to Wider Society

The returns to wider society are of greater importance and substance than the returns to the university. The purpose of university technology transfer is to use commercial routes to transfer technologies out from the university for benefit of the health and wealth of society.

Technology lies behind almost every aspect of human activity; indeed it is difficult to think of any area of modern life where one can find complete sanctuary from the impact of technology. Technology transfer is an important mechanism by which businesses acquire new technologies in which they can invest and grow into new products and services for consumers, including medicines for patients.