TALLINN – The investment company of the University of Tartu, UniTartu Ventures, and the startup UP Catalyst have entered into a contract, the first of its kind in Estonia, whereby the university becomes a shareholder by investing intellectual property in the company, thus accelerating the flow of research results into science- and technology-intensive business.
The intellectual property owned by the university may include, for instance, data, research findings or patents. While enterprises both in Estonia and elsewhere have so far used the intellectual property of the University of Tartu either on the basis of a licensing agreement or a sales transaction, UniTartu Ventures offers the opportunity to invest intellectual property, the university said in a press release.
"We have created a model where the university hands the intellectual property over to UniTartu Ventures, who in turn gives it to a startup and gets a shareholding in the company in return. UniTartu Ventures as an active investor will continue to provide development advice to the company also after the transaction," Mart Maasik, the investment director of UniTartu Ventures, said when explaining the process of investing intellectual property.
Through UniTartu Ventures, the university helps the startup to achieve its long-term objectives while at the same time designing its own investment portfolio. The share can be sold at a suitable moment and the received income may be used to support the technology development of the university’s other spin-offs and to prepare for new intellectual property investments.
Starting a research-based company is often seen as the final destination of research work, but in business terms, it is just the start of a new journey. UniTartu Ventures aims to help ensure that, after the company starts up and raises the initial investment, its collaboration with the university, that is the research and development activities, will continue and business development gets a boost. This is a win-win situation for all the parties involved, and a knowledge-intensive business, the university said.
The startup UP Catalyst converts the CO2 from heavy industry exhaust gases into valuable carbon nanomaterials and graphite, which are used in the production of batteries. In an investment round which ended just recently, investors placed in total more than 2 million euros in the company. According to Gary Urb, the CEO of UP Catalyst, the transaction with UniTartu Ventures will increase the reliability of the company in the eyes of the investors.
"The deal gives us the confidence to vigorously move ahead with the commercialization of the technology, even if its market potential will only be realized in several years’ time. It is also important for us to be a front runner in the development of the science-based entrepreneurship model and in creating the best practices for the university’s future spin-offs," Urb said.
The private limited company UniTartu Ventures was established a year ago with the aim of investing the intellectual property created by researchers in science- and technology-intensive businesses. During its first year of operation, UniTartu Ventures has carried out legal preparations and advised researchers on how to increase the investor readiness of their companies.
"We can guarantee that when intellectual property is transferred to a company in such a transaction, all intellectual property issues have been thoroughly addressed and resolved in a way that works for everyone," Maasik said when explaining the role of UniTartu Ventures in dispelling the doubts and fears of potential co-investors.
The University of Tartu’s participation in science-based startups helps create opportunities for closer links between Estonian economy and science. Through the private limited company UniTartu Ventures, the university can help researchers and also students to start entrepreneurship by directing the university’s intellectual property to the start-ups they establish and by looking for investors.