Don't shop my deal around...

It would be fun to see how many people in AUTM (the Association of University Technology Mangers....one of my professional associations) have had the following situation happen.

1). Meet entrepreneur.  Hear about their plans to start business with a university technology.
2). They need a deal FAST.  None of that slow shit!  FAST dammit!
3). Out of professional pride you move heaven and the university counsel's office to rapidly get a term sheet or a option/license agreement in the hands of the entrepreneur that "the university is willing to sign".
4). You return to the other work that was unceremoniously shoved aside to accommodate this FAST deal.
5). Weeks pass and still you don't have your signed deal back from the entrepreneur.
6). Reports trickle in about the entrepreneur attending meetings and business plan competitions talking about their "near deal" with the university.   And you wonder, "Where's my deal?"

So, what's going on?  The entrepreneur is shopping your deal around to investors and other knowledgeable people to see if it is good enough.  From a negotiating standpoint, it's pretty smart: I am committed to the deal as written, but THEY can come back and ask for the royalty to be 5% because a venture capitalist frowned when the entrepreneur mentioned that the royalty was 6% in the current "draft".

In what world is this a good business practice?  This is the kind of behavior you expect when you're buying a used car, not what you want from someone who is going to be a business partner for ~20 years (the life of a patent).

What is further astonishing is that the entrepreneurs have no shame when they come back to you asking for changes to what they committed to just a few weeks earlier!  Sometimes I want to ask these jokers if it might be easier if I just negotiated directly with their "friend from college who says that 6% is too high".  Whatever happened to honoring your word?  How can they run a company when they can't even run a deal?

Of course, you can also imagine the hue and cry if universities did the same thing!  What if we had a deal that  was ready for signatures and we THEN took months to ask around about whether it was a good deal and came back with a bunch of changes that we hadn't thought of in the first place?  In fact, we often DO learn about new tweeks to license agreements in the midst of negotiations, but we are decent enough to realize that it would be poor form to force those into an ongoing negotiation.  Those things are saved for "next time".

The most frustrating aspect of this problem is that our country and economy really needs more university innovation to enter the marketplace.  For that to happen smoothly, universities and entrepreneurs need to be on the same page and pulling together.  Those relationships won't always be perfect, but it would help if one side stopped doing things that were intentionally hostile to a good partnership.

They could do a lot better!

- Dean Stell