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Startups

The Texas A&M Engineering Experiment Station (TEES) Office of Commercialization & Entrepreneurship strongly supports the commercial development of research results. It enhances TEES’ and The Texas A&M University System’s education, research and public service missions, as well as protects the academic freedom of faculty pursuing research. We encourage the creation and development of faculty-led companies to bring about technology transfer from the laboratory to the marketplace.

Why Start a Company?

Sometimes called the “valley of death,” the phase between discovery and commercialization can be the most critical for academic innovations. Ideas with market potential might not be able to reach customers for several reasons, including being a high technical risk; lack of a clear proof of concept; and unavailability of the gap capital at the right time.

The Texas A&M New Ventures Competition helps researchers address these issues and identify the right strategy to spin out faculty-led companies around new ideas or technologies created in their labs. A new company then enables further development and technology risk mitigation by seeking funding from non-dilutive sources like federal agencies and foundations or from dilutive sources like private investors. The funding helps bridge the gap between the researcher’s laboratory and a corporation’s willingness to adopt a product for the marketplace. The spin-out company can complete product development outside the university or becomes a sponsor for new research and development within the A&M System to advance the product development involving students and researchers at all levels.

Funding Resources for Startups

Issues to Consider When Starting a Company

Our office evaluates each invention for its commercial potential. We do this in collaboration with inventors and other stakeholders in the research program that supported the innovation’s development. This process results in some technologies being closed due to limited commercial potential and/or limitations on the ability to obtain meaningful intellectual property protection. In cases in which we pursue commercialization, we encourage the founding team to think about the questions below and discuss with us.

  • Is there a commercial application for your invention or technology?
  • What applications can benefit from your invention/technology?
  • How long will it take to commercialize your discovery? What is present (technology readiness level or validation -- assembled prototype, proof of concept, software code, process defined)?
  • What is the risk associated with commercializing your invention/technology?
  • What is the market or markets and competition for your discovery?
  • Who owns the intellectual property related to your discovery?  Do you have an understanding of overall patent landscape? Do you plan to option or license it?
  • What level of participation do you wish to have in the company? Who will be the person inside the company that will qualify the full-time requirements for non-dilutive grants?
  • What should the company strive to accomplish in 24, 48 or 60 months (key milestones)?
  • How much capital would you need from grants or private investors for the company to advance your product development?
  • What is the potential exit strategy?

Key Steps for Creating Startup Companies

We have developed a generalized chronology for academic entrepreneurs to familiarize themselves with the steps needed to create a spinoff company based on their research work at TEES and with partners across the A&M System. The steps below are provided in an order in which many new ventures are created, but these might vary in their sequence depending on the urgency and needs of the new venture.

Disclose your fully conceived invention or work with an invention disclosure - Submit a disclosure form to TEES for all the inventions and copyrightable works that may solve a significant problem and/or have significant commercial value. The disclosure form documents the circumstances under which your invention occurred or the details of the completion of your copyrightable work and provides the information necessary to evaluate patentability, inventor/authorship issues, commercial potential and any obligations to research sponsors.

If government funds were used for the research, you must file a prompt disclosure so the A&M System can meet its reporting requirements to the sponsoring agency. Similar requirements might exist for other sponsored projects.

Explore the path to commercialization - Following or before the submittal of the invention disclosure, we strongly encourage you to participate in National Science Foundation (NSF) Innovation Corps (I-Corps) or I-Corps Sites program. Our staff will gladly help explain the process and eligibility.

Map a path to commercialization - Following submission of the invention disclosure, our staff will help you determine the next steps for commercialization. At this stage, you can also decide to form your own spinoff company, or if TEES decides not to pursue IP protection, the A&M System will release the invention to you, and you are then free to pursue its commercialization on your own.

Identify the initial team, a potential CEO or advisor -  We can help you identify your management team. The CEO is key to the success of a new venture company. This person provides vital knowledge when it comes to license negotiation, intellectual property issues, fundraising, writing business plans, negotiating leases for facilities, managing employees, purchasing, financial management, regulatory affairs issues, manufacturing, and sales and marketing functions. This person should also be skilled at raising capital to build startups from an early stage.

Develop a business plan - Once a business team or CEO is identified, you and the team/CEO will develop a basic business plan for the new company. This will help define strategies to advance the IP to be licensed to the company. These strategies will address the following areas:

  • Market analysis – The characteristics of the target market (demographic, geographic, etc.) and existing competition in the product area.
  • The company – The needs your company will satisfy and the specific products/services your company will offer to satisfy those needs.
  • Marketing and sales activities – Marketing and sales strategies, which will be key to success in your competitive environment.
  • Product development plan – Major commercialization milestones and timeline, ongoing efforts and IP strategy.
  • Organization and personnel – Key managers, owners and operations employees.
  • Financial planning – Funds required and their use.
  • IP, regulatory and reimbursement (if applicable) strategy
  • Exit strategy – Long-term goals of the company and options for venture capitalists to recover their investment. 

Incorporate - To proceed with licensing, your new company needs to become a legal entity as a limited liability corporation (LLC), C corporation (C-Corp) or S corporation (S-Corp). At this stage, you should designate a business person to initiate licensing negotiations with TEES on your behalf.

Negotiate the option or license agreement - The new company will need to license the technology from the A&M System to gain the rights to develop and commercialize it. Once incorporated, the designated company representative or CEO will work with TEES to negotiate an IP licensing agreement. This can happen in two principal ways: 

  • Option agreements give a company the right to review a technology for a period of time to determine its viability and value to the company. During the option period, Texas A&M maintains the technology's availability, should the company wish to exercise its option to license the technology. A one-time fee is charged for such rights.
  • License agreements vary in terms and conditions, depending on the technology being licensed, but there are similarities in structure.

Sign a conflict of interest disclosure - In all activities related to new companies, Texas A&M System employees must disclose/manage potential and actual conflicts of interest and conflicts of commitment in compliance with federal and state requirements and applicable system policies and regulations. Example policies include System Policies 07.01; 07.03; 07.04, Benefits, Gifts and Honoraria; 31.05; 33.03, Nepotism; 33.04, Use of System Resources; and System Regulations 15.01.03; 31.05.01; and 33.04.01, Use of System Resources for External Employment.

Consult with your department chair - to lay out plans and receive feedback as soon as you're ready to form a new company. A conflict of interest exists when an individual’s personal interests (such as equity holdings in a startup company) are perceived to influence that person’s judgment when exercising his or her academic employment duties. We will help identify the appropriate contact within your college for conducting this disclosure process.

Secure Board of Regents approval - In accordance with Texas Education Code, Section 51.912, a creator of IP who wishes to participate as an employee, officer or member of the governing board or authority of a business entity that has agreements with the A&M System relating to the research, development, licensing or exploitation of the creator’s IP, must obtain approval from the Texas A&M System Board of Regents.

You can initiate this approval process by submitting a Board of Regents approval memo, which is initiated at the department level. The process moves up through the department head, TEES CEO to the Board of Regents for approval. We will help identify the appropriate contact within your college for beginning the approval process.