Technology Licensing Office, Licensing
IP Commercialization at SFU: Deciding Between Licensing and Spin-Outs
SFU’s creator-owned IP policy (Policy 30-03) empowers creators with full ownership of their inventions, except where a separate agreement provides otherwise. This autonomy allows creators to decide how their IP is applied. That is, whether to use it to advance scholarly research, disseminate knowledge openly, or pursue commercialization independently or in partnership with SFU’s Technology Licensing Office (“TLO”).
This article explores the key pathways to commercialization, the factors that shape the choice between them, and the support available through the TLO in helping SFU innovators bring their innovation to market.
I. Licensing & Spin-Out Formation: Defining the Pathways
When it comes to commercialization, creators generally have two main pathways: licensing their invention to an existing company or forming a spin-out to bring the technology to market themselves.
Licensing is a contractual arrangement in which the licensor (the IP owner) grants the licensee defined rights to use and commercialize the invention. The licensor retains ownership of the IP but permits the licensee to make, use, sell, or further develop it within the limits set by the agreement. In exchange, the licensee may provide financial consideration in the form of monetary payments and/or equity.
A spin-out is a new company that the creator establishes to commercialize an invention developed within the university. In this model, the creator may assign or licenses the IP to the new venture, which then raises funding, builds a team, and develops the technology into a market-ready product.
II. Licensing or Spin-Out? Core Considerations
Deciding between the licensing and spin-out path should flow from the creators commercialization goals. The factors below can guide that decision.
Time to Market. Licensing often accelerates market entry because the IP is integrated into an established company’s manufacturing, regulatory, and distribution systems. The licensee can validate, integrate, and launch without the creator building those functions from scratch. At SFU, many licensing opportunities arise from industry collaborations, where a company and researcher work together from the outset. When that collaboration matures into a license, the technology benefits from the existing relationship. A spin-out, on the other hand, takes more time up front. It begins with building a team, securing funding, and refining the product for market. But once those foundations are in place, a spin-out can move swiftly.
Technology Readiness. Another key consideration is how developed the technology is for market entry. Licensing can be suitable at nearly any stage of technology readiness. In the early stages, a company’s R&D team may license the technology to continue developing and validating it for commercial use. When the invention is more mature, licensing enables an external partner to integrate it directly into their existing products, processes, or services and bring it to market. A spin-out, by contrast, is often chosen when the technology needs additional validation or refinement before it can attract industry partners. Creating a spin-out allows the creator to guide this development within a focused venture.
Capital and Economics. Licensing is a capital-efficient route. Once terms are finalized, the licensee assumes the financial burden of development and commercialization, while the licensor receives compensation through the agreed payment structure. A spin-out demands a greater investment of both time and capital. It often draws on non-dilutive grants, angel investors, or venture capital to support early growth. Yet with that commitment comes the potential for greater returns as the creator retains equity in a company that can expand in value over time.
Control and Governance. A licensing model hands operational control to the licensee but anchors it with diligence obligations so the IP is advanced, not parked, and the licensor retains the ability to re-license if development lags. A spinout puts the creators in control while making them responsible for corporate governance and company operations.
Team and Time Commitment. A spin-out succeeds when it has a champion - someone who believes in the technology deeply enough to drive it forward. Commitment levels may vary as some founders remain hands-on for years, while others pass on operations as the company grows. But every spin-out needs someone to push it from idea to enterprise. Licensing, by comparison, demands less day-to-day involvement. Once the agreement is in place, the creator’s role centers on relationship management, and this then gives them more time to focus on research, teaching, and new discoveries.
Long-Term Value. Creators commercialize their IP for many reasons: to see a discovery used in the world, to generate income, to build industry partnerships, or to grow talent and regional innovation. Licensing and spin-outs accomplish these in different ways; the better choice turns on whether predictable near-term income and broad reach (licensing) or control and equity-driven upside with ecosystem building (spin-out) best fit the creator’s goals.
III. IP Commercialization through the TLO
The TLO serves as both a commercialization partner and a bridge between creators and industry. At the outset, the TLO helps creators identify the most suitable intellectual property protection strategies for their work, ensuring that patents, copyrights, trademarks, or trade secrets are pursued where they add the most value. Alongside protection, the TLO conducts market assessments to evaluate the commercial potential of the IP - both within local markets and on a global scale - so that creators have a clear sense of where their innovation is most likely to succeed. With this foundation in place, the TLO works closely with creators to design a tailored commercialization roadmap that reflects not only the technology’s readiness and market opportunities, but also the creator’s long-term objectives. Once these plans are in place, the TLO supports execution: prosecuting IP filings with outside counsel, identifying and approaching potential licensees, and negotiating agreements that capture value for the creator.
IV. Takeaway
For SFU creators, the decision between licensing and forming a spin-out is less about choosing the “better” model and more about selecting the pathway that best aligns with their invention, commercialization goals, and market opportunities. Licensing offers speed, lower risk, and predictable returns, while spin-outs demand greater effort and resources but hold the potential for significant growth and control.
Whatever the path, creators do not have to navigate it alone. The TLO is here to evaluate opportunities, protect intellectual property, assess markets, and design a commercialization strategy tailored to both the technology and the vision of its creator. With the right strategy and support, innovations developed at SFU can move beyond the lab to create real-world impact and lasting value.