Engaging Advisors From Universities and Research Institutes: What You Should Know

Engaging an expert with ties to a university or research institute to serve as an advisor to your startup can add a ton of value. This is especially so in industries such as life sciences, where many experts with specialized knowledge and experience are involved in cutting-edge research at these institutions. By bringing on such an expert in an advising role, a startup can both benefit from the advisor’s insight and bolster its own credibility. Advisors – for their part – can benefit from these arrangements by receiving options or other equity interests in a promising company (as discussed in this Cooley GO article), or by contributing to a company doing important work that the advisor cares about.

While many startups find their advisors to be invaluable assets to their business, engaging advisors who work at universities or research institutes (which we’ll collectively refer to as “institutions” for purposes of this article) can be slightly more complicated and time-consuming than arrangements with other advisors and consultants. This is because not only the company and the advisor, but also the institution itself, may be involved in setting the terms. This article aims to help companies understand this dynamic and key points to keep in mind.

Many institutions have standard policies for their personnel taking outside advisory positions. These often involve a special set of the institution’s terms that must be included in the advisor’s agreement with the startup to ensure the institution’s interests are protected. These terms vary from institution to institution, but often include IP-related terms, restrictions on use of the institution’s facilities, resources, funding and research, limitations on the amount of time the advisor can devote to the engagement, and rules as to how the company may refer to the advisor and the institution on its website and in other promotional materials, among other things.

Importantly, the institution’s policies and terms with its personnel typically include provisions related to IP that the company should carefully consider. For example, such policies could purport to give the institution ownership of, or other rights in, IP developed by the advisor in the course of their advisory services to the company, or in IP developed using the institution’s facilities, resources, funding or equipment. The advisor’s responsibilities to their institution also could mean there are practical limits on the types of services that an advisor may provide to your company. In some cases, the effect of the institution’s policies is that companies may limit the advisor’s engagement to certain services, such as high-level discussions regarding the underlying science and strategy, providing general feedback on experiment design and results, and the like.

If you want to negotiate changes to the institution’s terms, be aware that the proposed changes may need to be reviewed by different offices and stakeholders within the institution, which may result in longer review cycles than small, fast-moving startups are used to. In some cases, an institution could take the position that their standard terms are not negotiable.

Your attorney can provide guidance on the institution’s terms – including advising on what’s market, evaluating which terms (if any) are worth negotiating on, and providing guidance on how you can structure your relationship with the advisor to avoid harmful breaches of the final terms – so you can move forward with bringing quality advisors on board.