Much of the research and development that goes into new technologies occurs in academic and research institutions and laboratories. But this does not in itself create the new products and processes that change the world. Rather, the technologies are transferred from these academic institutions to the companies that will develop marketable applications.
In Israel, the middlemen for this process are special Tech Transfer Organizations (TTOs) that are incorporated by the academic research facilities in order to ‘transform’ theory into practice. As Israel continues to churn out new scientific breakthroughs, TTOs play a critical role in converting new science into continued economic growth.
Bringing Science to the Market
TTOs are not a new development in Israel. From the establishment of the first transfer organization in the country, Yeda Research and Development Co., the nation has depended on these organizations to bring science to the market.
Today, tech transfers are a big business in Israel. Every year, TTOs in the country generate $1.5 billion in royalties and lead to the creation of 15 new companies. Indeed, their existence improves the efficiency of the market by allowing everyone else to do what they do best.
A research institution benefits from being able to focus on scientific inquiry and development. In turn, TTOs can identify potential applications for the resulting science and help connect the research to companies that can best apply it to marketable inventions. The result – an efficient economic approach that continues to foster powerful growth year after year.
Engagement with TTOs
The engagement with the TTOs are non-standard. The TTO does not invest in the company or sell the technology, but rather provides the license needed in order to commercialize the technology. Usually, these types of engagement require a “three way” agreement between the TTO, the startup company that will commercialize the technology and a ‘grown’ company that expects to use this technology in order to implement it into its own products or services. These complex engagement structures can in some cases result in uncertainties and disputes relating to the rights in the technology and its implementation.
Barnea & Co. has experience helping TTOs, commercialization companies and technology purchasers navigate the difficulties involved in the process of structuring such complex engagement and assist in managing the continued drive of the country’s technology boom with the TTOs in its forefront.