Does The University Take Equity In Startups?

Sometimes, Yale may accept a small equity share as part of the financial terms of the license. Because most startup companies have limited cash, equity is sometimes substituted for some of the cash consideration.

Equity is also a way for the University to share some of the risk associated with the startups. A decision to take equity must make sense for both the University and the company. In addition, when OCR enters into an exclusive license agreement with a privately-held company (such as a startup), the standard contract allows Yale (or its designee) to participate as a co-investor to purchase additional equity in the company’s private financing rounds prior to initial public offering (IPO).

Startup Guide Section: