High stakes: How Australian universities' demands are stifling startups
Australian universities routinely demand around 30% of any company founded based on research conducted on campus. That will need to change if the country's new economy is to reach its potential.
A quick thought experiment. Would you rather have 10% of a startup that could be the next Canva, or 30%? The answer sounds obvious. But what if, by taking 30%, there's a much greater chance it never gets off the ground?
Australian universities too often opt for the latter equity stake, according to startup leaders, venture capitalists and even some within universities themselves. Many are calling for reform that would put Australian universities closer in-line to world leaders like America’s Stanford or MIT.
Australia is home to cutting-edge research, but has a patchy record of translating that into thriving businesses. In stymieing founders’ abilities to spin out “deep tech” startups – those on the cutting edge of science or technology – the policies of universities matters for the economy at large too.
Students and academics hoping to use their research as the basis for a new startup are often forced to forfeit as much as 30% of the prospective company’s equity in exchange for intellectual property rights. That makes it almost impossible to raise capital by selling equity to other investors, many people in the industry say.
