TTO Express License for AUC Spin-Outs
Express License Agreement is a new mechanism meant to speed up the process of spinning out technologies for cases that are ready for spinning out.
Innovations developed using AUC resources, or during the course of faculty’s institutional commitments for educational research are subject to the intellectual property policies of The American University in Cairo. Whether AUC licenses these technologies to existing companies or to new start-ups, its objective remains the same: to transfer and commercialize AUC innovations into accessible technologies, products and services for the good of society.
The Technology Transfer Office (TTO) continues to support AUC faculty and researchers who are aiming to start companies based upon intellectual property coming from University research. As part of these efforts, the TTO has created an Express Startup License to help fast-track the licensing process for faculty start-up companies and reduce legal costs on AUC researchers.
This license is meant to significantly accelerate and simplify the licensing process. The express license is focused on offering all AUC entrepreneurs equal and fair terms, with an emphasis on openness and transparency. This license has been designed with the attorneys at AUC’s legal office thus allowing AUC entrepreneurs to sign without the need to go back to the legal office for approval. By saving time to get a license done, AUC researchers can concentrate their efforts on developing their technologies or companies. Alternatively, researchers can opt for signing an Option Agreement for the technology, thus delaying the need to sign a license agreement until they are able to accept the obligations of a licensee.
AUC’s Financial Return/Equity
As we appreciate that cash and equity are critical and precious in the early stages of a startup's journey, AUC has adopted a new approach. We have swapped the typical upfront “payment” in licenses with a “liquidity event” payment, due only in cases such as when the company sells substantial or all its shares or IPOs. AUC takes no cash or equity at the moment of signing the license.
The license agreement includes a flat rate royalty based on net sales, this means the University only expects to receive a payment if the startup is realizing sales. The agreement also includes milestones and milestone payments that are fine-tuned and agreed upon before signing, which are targets that AUC expects the startups to achieve to keep the license to the technology.
Express License Process
AUC researchers that have demonstrated a solid effort to start a company based on AUC technologies that have either been validated in the proof of concept fund or have demonstrated significant industry applicability can receive an option to the technology. This option means that AUC will not place efforts to license the technology for anyone for a period of time. During this time the research team will be required to work on developing a business model with the help of the TTO or external business/market consultants. The business plan development and review process is intended to partially substitute for the more rigorous commercial due diligence obligations in typical license agreements. Once a mutually agreed-upon plan is in place, the option will be updated to include a promise to provide the license under the Express License terms. Researchers may then execute the Startup License immediately, or, if still in the formative stage, extend their option as they seek to raise financing or other sources of cash that will allow them to make the payments required once the license is executed.