The OTL Research and Fellowship Fund, administered by the Vice Provost and Dean of Research and Graduate Policy, will receive the University Share, less any unreimbursed OTL direct expenses. All equity received by the University will be managed by Stanford Management Company. It may be in the best interests of technology transfer to include equity as partial consideration of a license agreement. Young, privately-held companies often do not have the requisite cash reserves to compete with an established company for rights to Stanford technology. An offering of equity is a means of enabling small companies to license Stanford technology.
Risk is an issue because, at the time equity is given, it generally has no value.
Whether or not it will acquire value will depend on the overall success of the company, which is a function of many factors that may not relate to the technology being licensed. Therefore, OTL will always require some cash as part of the upfront license agreement. Equity has considerable potential for creating conflicts of interest for inventors and the University because equity holders are part owners of the company. As owners, they stand to gain considerably if the company does well, and therefore there may be incentives to take actions and make decisions that favor the interests of the company over the academic missions of the University. Stanford's Faculty Policy on Conflict of Commitment and Interest recognizes these potential conflicts and requires disclosure and intervention as necessary to manage them.