Inclusion of equity in such agreements may be in the best interest of technology transfer. Young companies often do not have the requisite cash reserves to compete with an established company for rights to University technology. An offering of equity is a means of enabling otherwise qualified small companies to license University 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. Equity has considerable potential for creating conflicts of interest for inventors and the University because equity holders are part owners of the company. Owners stand to gain considerably if the company does well, and therefore there may be incentive to take actions and make decisions that favor the interests of the company over the academic missions of the University. This Policy reduces the potential for real or perceived conflicts of interest by virtue of the fact that inventors, departments, schools, and OTD are all removed from the management and sale of University equity. This Policy enables The University of North Carolina at Chapel Hill to receive a benefit from acquiring equity while addressing potential inventor and institutional conflicts of interest issues.