Input on funding request to support graduate students from start up company

[kerprof]

I am working with a founder of startup technology company in silicon valley (that I know of and has recently got a very good funding from investors) requesting to support a couple of graduate students (possibly at PhD level with good programming skills) in Computer Science.

The startup company founder  says he can find summer internships for these students when they are working at their company but
says that he needs to figure out how they can pay when the students are at school during the Spring and Fall semesters.

He says in general, if they are not present at their company, they might have difficulties absorbing the cost but he is open to try to find some way and means.

Please advise if  you know of some models that have worked in the past with requesting funding from technology companies to support the graduate students during Spring and Fall Semesters.

[polly_mer]

My non-academic employer has a specific program called something like Graduate Research Assistants at Universities that has a standard contract template.  Minor details are worked out with the individual universities to ensure the contract aligns with the university's internal requirements.

I was on one of these kinds of contracts for my master's work with one external institution and a different external institution for my doctoral work; both times, I spent my academic year at the university, but was fully funded by the external institution to do specific research.  Again, it was a standard program both times with contracts signed by both the external sponsor and the university.

Your office of research and contracts should know how to set up one of these arrangements based on similar contracts they have.  The start-up may not have any standard process yet, but your university will.

[ciao_yall]

I am working with a founder of startup technology company in silicon valley (that I know of and has recently got a very good funding from investors) requesting to support a couple of graduate students (possibly at PhD level with good programming skills) in Computer Science.

The startup company founder  says he can find summer internships for these students when they are working at their company but
says that he needs to figure out how they can pay when the students are at school during the Spring and Fall semesters.

He says in general, if they are not present at their company, they might have difficulties absorbing the cost but he is open to try to find some way and means.

Please advise if  you know of some models that have worked in the past with requesting funding from technology companies to support the graduate students during Spring and Fall Semesters.

If they are a "startup" they need to be putting all their investor funding, time, and energy into getting their first product out the door and achieving profitability.

Unless those grad students are working toward that short-term goal, the startup should not be funding them.

[Beebee]

They would need to basically give your university a grant/contract to do research in your lab. This means paying not only the students but also overhead. Some start-ups are willing to do it, though it's rare. But maybe you can convince them?

Other federally funded options:
- Look into SBIR/STTR programs. These programs (Small Business Innovation Research, and Small business Technology Transfer Research) exist in every funding agency, as they are mandated. They are grants for small businesses to do R&D they would find too risky otherwise. The only difference between the two is the % money that can go to an academic co-PI (higher for STTR; I think ~50% max). Phase I is 1 year-long, Phase II is longer and bigger but harder to incorporate academic researchers. The company would need to be the lead; university would be the subcontractor. In any case, these proposals are differently structured, but can be written well IF you have a true collaboration with a start-up. If written well, they have really good success rates. I have done some panels, and while I don't know the exact success rate, good proposals mostly get funded. There are a lot of really bad ones or proposals that are not really a good fit (i.e. a basic research proposal funneled through the PI's phantom start-up on paper). For the company, this is non-dilutive cash. It is not a lot for Phase I, and it comes with annoying accounting/paperwork strings attached. But it can be a good avenue.
- Look into NSF's INTERN supplement program if you already have a semi-related NSF grant. I got the email for it today; it essentially gets NSF to pay for a grad student to do an inetrnship and work on a collaborative project. Again, I believe if you have the right fit, this is a high success rate program.

Good luck.

[mamselle]

I think MIT teaches courses in this. They might even have summer offerings.

Can't look up the site now...will try to do so later.

M.

[Hibush]

Ciao_yall is absolutely right from the company and investor perspective.

If, on the other hand, this is some crazy idea that makes sense only in Silicon Valley, then they are going to waste all that VC funding anyway. You might as well take some of it.

YMMV.

[fizzycist]

I'm not in CS, but I am skeptical if this is something I would even want to promote for my program's PhD students. A summer internship is one thing, but this sounds like they want a longer-term commitment.

So what I would be asking:
-would the students really be doing original, publishable scholarship in this position at the start-up company?
-would the students receive quality mentorship or is this startup just looking for a source of cheap labor?
-you mentioned that you are "working with" this startup. If this is in an academic capacity then why can't the student just work with you on mutual projects of interest? If you need funding urgently, the startup can give your research group a gift through your university's foundation if they are willing. And if nothing is urgent then the STTR route may be a nice way to fund such a collaboration.

[kerprof]

The founder of the startup got back and one of the main concern about the startup founder is the IP issues for the students on the products/projects that the student is working on. They would like to hold IP for the work they fund.

The start up founder is not against any publication of material coming out of this work... He just wants to avoid the legal people from the university and their company discussing on what the ownership model is.

Please advise if this is something that is worth pursuing and if so who is the right person to talk to in regards to checking on the IP issues and the feasibility of moving forward with this proposal.

[polly_mer]

The founder of the startup got back and one of the main concern about the startup founder is the IP issues for the students on the products/projects that the student is working on. They would like to hold IP for the work they fund.

The start up founder is not against any publication of material coming out of this work... He just wants to avoid the legal people from the university and their company discussing on what the ownership model is.

Please advise if this is something that is worth pursuing and if so who is the right person to talk to in regards to checking on the IP issues and the feasibility of moving forward with this proposal.

If I'm reading this correctly, then your start-up founder is being foolish.  You absolutely want to work through the legal issues of intellectual property and ownership before any intellectual property is generated.  The founder should hire a lawyer (should ideally have one on retainer who is an expert in intellectual property if the start-up is likely to generate intellectual property and employs more than just the founder) and have that lawyer work with the relevant office at the university.

At your institution, I would contact an office called intellectual property.  If one doesn't exist, then I would check with grants and contracts (sometimes called sponsored research) to ask about the situation.  If that fails, then try a web search on who at your institution recently obtained a patent and contact them to find out who did the official paperwork for the institution.

The founder not wanting to have a reasonable discussion on IP rights is a red flag to me for working with that company.  That's the kind of thing that ends up in court in 5-10 years when the company is a success and everyone who worked hard at the beginning to make it a success gets peanuts both while working the long hours at the beginning and then even when revenue exists.

[Hibush]

+1 to Polly's comment, and advice to immediately start a conversation with your grant & contracts or IP office.

Don't do anything else until you get the IP details worked out so that they fit your academic intentions, the policy of the school and the needs of the company. There may be no solution that accomplishes all of those, in which case you should not pursue the partnership.

If you go ahead with an unclear understanding, expect to spend a lot of time and money with lawyers in a few years. This is a big hazard. I've seen it destroy careers.

The description of the company person suggests that they either are naive about the importance of documenting who owns each piece of IP, and how it can be licensed, or that they are obfuscating in an effort to cheat you. In the first situation, you really don't want to work with them. If the second is accurate, you really don't want to work with them.

[polly_mer]

One further thought since I had an interesting conversation that is relevant to this thread:

The start up founder is not against any publication of material coming out of this work... He just wants to avoid the legal people from the university and their company discussing on what the ownership model is.

The conversation at work was regarding a newish manager who asked for publications to read before signing off on a form for a formal patent disclosure.  The very experienced-with-patents scientist sighed heavily before explaining that publishing before the patent disclosure was filed means giving up some rights in the intellectual property arena and particularly undercuts the case for later patents.  Thus, all publications related to this work were being held until the patent disclosure paperwork was filed with the U.S. Patent Office.

This particular instance was for a software algorithm and related applications, which seems relevant to a startup being worried about intellectual property concerns.

[Kron3007]

The founder of the startup got back and one of the main concern about the startup founder is the IP issues for the students on the products/projects that the student is working on. They would like to hold IP for the work they fund.

The start up founder is not against any publication of material coming out of this work... He just wants to avoid the legal people from the university and their company discussing on what the ownership model is.

Please advise if this is something that is worth pursuing and if so who is the right person to talk to in regards to checking on the IP issues and the feasibility of moving forward with this proposal.

So they want to benefit form your work and intellectual input, but are not interested in sharing the derived benefits.  This is not overly uncommon, but if that is the arrangement, you should be charging them a heavy premium.

Typically, we would structure this type of thing as a research contract with the university.  The company pays, and you use this to cover costs.  The university charges overhead, and this overhead is much higher if they keep all  IP rights.  Additionally, I would add extra money to the costs of I could not keep any IP so that it is worth my time. 

Long story short, they should pay more if they are not sharing any future benefits. 

It is also important to review your university's student IP regulations. Where I am, students own their IP (really shared ownership) and you need to be careful about signing this away and ensuring the students know this in advance etc.

[kerprof]

I met with the director of the tech transfer office here and they have three options:

Option 1:
In this Non exclusive royalty free license option, company receives a fully paid up, royalty free, non-exclusive license to IP and an option to negotiate an exclusive license. There are no upfront fees or annual minimum royalties and an exclusive license can be negotiated after IP is developed.

Option 2:
Here company retain exclusive rights to the IP created from sponsored research by pre-paying 15% of total sponsored research budget. No initial running royalty, annual minimums, or sublicensing fees are required. However this license requires 1% royalty on licensed product once cumulative sales reach $10M.

Option 3:
In this option, ownership of IP is assigned to sponsor so that they dont need to pay any royalty fees and that they exclusively own the IP. Company prepays an additional fee of 75% of the full cost of the sponsored research project for the ownership of IP.


Tech transfer director in our University thinks that option 2 would be a good one to start and he says he can work/negotiate on the numbers... if they like this option

I am planning to talk to the startup founder to discuss this and undertand if he would still want to move forward.

[Hibush]

The options offered by the tech  transfer office seem very generous to the company. They don't encourage you to make your best discoveries while working on that project.

For option 2, the absence of royalties early encourages the company to try deploying it even if it fizzles. There is only a royalty if it succeeds, and then it is cheap. What is the probability of ?$10 million in sales on the kind of product this could produce? Would the company report sales on the basis you'd want to see them reported?

How much of the royalty would come back to your program, to you personally, and to the tech-transfer office to cover their costs?  Do those number provide the basis for success in this line of research?