Ohio's ethics laws, providing a mechanism to reduce conflicts of interest for public officials, limit the amount of equity that faculty or research scientists at public institutions may own in a technology start-up to no more than 5 percent. But venture capitalists and others who form new technology companies are looking for more participation on the part of faculty and staff inventors of the technologies behind entrepreneurial companies. It is not uncommon for venture capitalists to create an initial ownership incentive of up to 20 percent, or occasionally higher, for key faculty, staff or student researchers involved in transferring the technology from the lab to the company. The current limits to that participation ultimately threaten Ohio's competitiveness in the high-tech business and research environment, which in turn can impede faculty recruitment and economic development, Allen and O'Brien argue. The ambiguity and apparent conflicts between different statutory elements present a dampening effect overall, and particularly with investors.
Venture capitalists look at Ohio as stuck in the past.
Whenever they see uncertainty where, ideally, it shouldn't exist, they go to the next opportunity. Under the proposed revisions, university boards of trustees in Ohio would be responsible for developing policies to oversee activities concerning employees holding equity interests and participating in commercialization of their inventions. The law already grants universities ownership of intellectual property, and delegates authority to trustees to direct and control the rights to inventions developed at their respective institutions. An enforcement mechanism would be built into the policies. Ohio State has prepared a white paper to argue the case to legislators and other educational leaders in which it spells out the ramifications of not improving the entrepreneurial business environment in the technology arena.