Speaker 1 0:06 Hello and welcome to today's autumn webinar, the US bolt term sheet for climate startups. My name is davio Young, and I'm a member of autumn educate team and today's staff hosts. All lines have been muted to ensure a high quality audio and today's session is being recorded. If you have a question for the presenters, we encourage you to use the Q and A feature on your zoom toolbar. Should you need closed captioning during today's presentation, the Zoom live transcript feature is turned on and available on your toolbar. Before we begin, I would like to acknowledge and thanks bottoms online professional development sponsor, Marshall Gerstein, we appreciate your ongoing support. And now I would like to welcome today's session moderator, Kirsten Lu Speaker 2 0:55 thanks so much. Don Bill, thanks everyone for joining us for this webinar focused on the climate tech term sheet. I'm Kirsten loyalto Stage university partners, and I'll be moderating our discussion today first. I would be really remiss and not to say that right off the bat that at the last minute, unfortunately, or Aaron hers COVID could not be here today. But he, along with Sarah Reed of our capital are do a lot of the credit for actually making this term sheet happen. So thanks you guys, in spirit for all of this. I'm going to have our panelists introduce each other first, and then we're going to go into some context regarding this term sheet. So with that, Rose, would you like to introduce yourself? Sure, Speaker 3 1:38 I'm Rose Kaiser and I am in the Technology Transfer Office at Cal Tech. I've been here for about seven years, and before that, I was at a startup doing some climate tech work and some oil and gas work. And at Cal Tech, I do licensing for mainly chemistry and chemical engineering, but I also do it for the Resnick Sustainability Institute and the liquid sunlight Alliance, which is a consortium of universities and national labs that's funded by the doe. Unknown Speaker 2:10 Great. Thank you so much. Rose Kyle, Speaker 4 2:14 thanks, Harrison, so Kyle teamy, I'm with RA Capital Management the planetary health team. So we invest in climate and other areas of sustainability. And as mentioned, Sarah Reed was really important to pulling this all together. And so I'm lucky enough to get to work alongside Sarah. She's on the General Counsel side of things. I'm on the investing side. And so we kind of had different lenses, but complementary in a lot of ways. And just my background, historically, I've, over the last 20 years, I've been on the investing side and the operating side, and tried, as we were developing this, to take both my experience trying to license technology from universities as an entrepreneur and trying to invest in companies that were in the licensing process, or, you know, advise as a board member, and just bring in some of that experience and and as a compliment to my colleagues and friends and associates here from the university, transfer tech transfer offices. Speaker 2 3:22 Great. Thanks, Kyle, thanks for all your work on this too, John. Speaker 5 3:28 John gortan, I'm the director of licensing and strategic alliances for the Physical Sciences here at Stanford. Been here just, I guess, a year and a half almost now, but been doing tech transfer about 20 years, and really here I manage the physical sciences licensing team, which has a lot of clean tech in it, a lot of AI. And then we also have the Stanford or school for sustainability. So this really fits nicely into some of the up and coming things going on at Stanford University. It's been great to work with everybody and get to know everybody a lot more during this process of developing this term sheet as well, which I think is a a side effect that I didn't expect at the outset. Speaker 2 4:10 Yeah, it really, it really was a fantastic process. And I think I was looking at it earlier today. I think actually the process started less than a year ago, like we really did a lot in a very short time. So just to give people kind of idea, this was something that started through. It was born out of a process that many of us went through, first for the US bolt Life Sciences term sheet, which actually now also has a full license agreement associated with that effort, the idea behind that, which was spearheaded by Oren and by Sarah, was to get VCs University tech transfer offices and attorneys to work with university life science startups together to create a representative term sheet that an investor at an academic institution might use to begin discussions around launching a life sciences startup. The objective was to create a reasonable approach with terms and clauses that most parties could use in most situations situations, while significantly reducing the time spent negotiating deals across the whole early stage Life Science life science industry. The hope on the life sciences term sheet was that those could lead to therapeutics, diagnostics and medical devices to reach the market earlier, months earlier, hopefully with the results then benefiting everyone worldwide. So the same thread of thought was used then to on the climate tech side, is there a way to expedite negotiations on these technologies that can improve our planetary health. I love looking at Kyle's slide here and just seeing that planetary health right up front there. That's what this is about. As you're likely to wear it. The White House is also very interested in climate, the climate tech area, and worked with our group to advance this term sheet. You can find all the parties who were involved in the document itself in the links that are going to be put in the chat right now. John's going to kindly put those in put those in. So there were a lot of groups that we had work on this, and like with the life sciences term sheet, we consider this term sheet that we came up with that you're looking at through these links to be representative, representative, as we talked about, because the great majority of the terms here in would be considered reasonable by parties on both sides, and therefore we anticipate in that many situations, the term sheet can be just used as it is, without significant further edits. Again, this is the way to expedite this. But we did want to note that any given institution or investor may have certain preferred appropriate approaches or policies on which they feel strongly. For instance, some institutions particularly have strong feelings around sub licensing income, reservations of rights or access to future improvements, and some investors likewise have equally strong feelings about equity success, fee development, milestone payments or board observer seats. And so we couldn't create one document that incorporated everyone's preferences. So some of the contributing entities and other parties as well have signed on to this may need to use alternative approaches to those that are actually in this term sheet template, even if they have approved the general approach that we've talked about in it. So nothing in these documents should be seen as binding by anyone who signed on to them, but rather as a reasonable approach overall for most situations. So I wanted to set that context and provide people these links as we get into our discussion about what is actually contained in this, why we did it, and some of the sticking points that we encountered along the way. One other thing that I'll note before we get into talking with our panel here is that we are also hopefully working on a full license agreement template as well for the climate tech side, just as we did on the life sciences side. So with that, the next question that I'm going to ask about is actually also context setting and and that is the question of, what is climate tech? So what actually were we trying to address here with, what areas of technologies were we trying to address here with this particular term sheet? And so rose, I'm going to send this to you first, but this was obviously a huge discussion our group had right off the bat, like, what falls under this, Speaker 3 8:22 yeah. So climate tech, as you might define it extremely broadly, is technologies that are focused on reducing greenhouse emissions or really addressing planetary health and impacts of global warming. And there are many, many ways of doing this. And so one of the first approaches that we took was actually putting together a spreadsheet that would encompass some of the different technologies. I guess it was a Word document, not a spreadsheet, but, you know, things that people came up or the the more commonly thought of ones such as carbon capture, whether it's direct air capture, Point Source Capture, green hydrogen, but it also ranges to batteries, agricultural and energy distribution, and even like green cement, industrial processes, energy storage. There are many different technologies, and so having one approach in a term sheet for all of these different technologies which are going to have different regulatory requirements, was a big challenge. And so we focused a lot on trying to keep this general to climate tech, because we all want we're going to need many approaches in order to solve the problems we're facing in the climate and we wanted to make this applicable to a wide range of technologies. Unknown Speaker 9:45 Thanks. Kyle, John, anything you'd add there, Speaker 5 9:49 I think the biggest challenge was trying to be broad yet specific when we're developing this term sheet. You know, if I come up with the pillars of different. Areas of climate tech, technology, I could think of six or seven offhand. You know, renewable energy, energy efficiency, sustainable transportation, carbon capture, as rose mentioned, agriculture and food systems and food supply in general, water management, waste management and then resilience and adaptation of the climate as well. So those are just some of the broad areas, in addition to very specific technologies within each space so it's just to provide some context of how difficult this was to put a box around it, and that's what we tried to do. And we spent a good amount of time discussing what it does and what it doesn't cover, Speaker 4 10:48 yeah, and the only thing I would add is, as John was walking through all those different things, and we were trying to pull out commonalities, it really came down to, how are things a lot different than what's commonly licensed or more commonly licensed, right? And so that got us really thinking about commodities and commodity markets, which are, you know, quite a bit different than, than biotech life sciences, type, type licensing situations. And even though you're going to have very different market dynamics, and, you know, expectations of royalties and stuff from agriculture to, like carbon capture, there's still, generally speaking, you're touching on these commodity markets. And so that was a common thread that pulled through Speaker 2 11:36 Kyle. I'm going to start off with you at the next question, then leaning and just following up on that. Why? Then, as a climate tech, you know, we just talked about the fact that there's so many different types of technologies that fall under climate tech. Why is a climate tech term sheet needed and talk about this from the investor perspective, and then John, I'm going to follow up and ask you from the university perspective, Speaker 4 11:55 yeah. So I think a couple of things I mean. So I one is that you're dealing with situations that are quite a bit different than what is commonly done on the licensing side, at least from my perspective and and we'll get other viewpoints here in a moment, but like not as commonly seeing licensing deals being done in some of these markets, and now there's increasing increasing attention, increasing startups, increasing desire to do these things. And so creating something that was could streamline efforts is helpful for all these new and emerging companies. That was one piece, and then the other piece is, there's a lot of universities in the United States. There's a lot of IP generated, and not every school has, you know, a highly sophisticated tech transfer office that, you know, does tons of deals a year and, you know, has a really good understanding of how to do all this stuff. And I experienced this on the entrepreneur side many years ago. You know, we, we did a couple of a couple of in licensing deals into a startup, and one of them was with a university that had a tech transfer office. But we were doing something in carbon utilization, which they've never done anything in that net that took some time to figure out. We spent months really figuring out what made sense and how to fit in their construct and make it work for the company. So that's the one side I started with, and then the other side of not having a tech transfer office at all. We ran into that situation as well, and that we spent like a year trying to figure out, and eventually gave up. We couldn't figure it out. And so having some sort of starting point is hopefully going to help schools that have smaller transfer offices, or no transfer office at all, or just very rarely run into this space, be able to get something done. Speaker 5 13:57 Yeah, I think from the university perspective, it's useful in many ways. One, it just provides that level playing ground you can clarify key terms, not only between the university and the startup or university and outside council, but also as a tool with your faculty and mentors, when you're talking them through who you're going to be licensing to, or the partners that you're going to have, having something that's at a high level, that easy to digest and easy to understand is really helpful for faculty management. And then also, I would say, even when you're talking to your administrators, who are asking, Well, what kind of deals are you doing? What do these things look like? Most of those folks are not going to take the time to read a 2030, page license agreement. But if you have a concise term sheet and said, well, here are the, you know, basic outline of things we look for in every deal, and we try to capture it on behalf of the university, this is a much more digestible tool for for work with your administrators as well. And the biggest thing for, for most schools, I think. Is the time and cost efficiency that you're saving. If you have an outline, you can definitely change every term you need to based on your individual situations. But as Kyle alluded to, you know, even at Stanford, we don't have an expert in every area. It's just not possible. There's not enough people in a tech transfer office to have expertise in every area, from every invention that's going to come into your office. I can't count the number of times I receive something like, Huh? I've never heard of that before. Never seen that before. It's a regular occurrence. So anything that can help reduce the amount of time that your staff can use when they're already pressed for time with the number of invention disclosures that are coming in, reporting requirements, everything that goes along with tech transfer. So having something like this is really helpful to benefit your staff, I think, from a general basis. So that's what I would add from in addition to Kyle's points, Speaker 2 15:58 thanks you both. So getting into the term sheet itself rose. Could you provide a brief overview of the provisions of the term sheet, and maybe what you see different about this term sheet overall than perhaps term sheet that you regularly see out of institutions? Yeah. Speaker 3 16:15 So when I think of a term sheet that I might append to an option agreement, I'm thinking about all of the financial terms involved. So I think what I'm going to start with here is actually what's not in the agreement or in the term sheet or template, and that is the financials itself. So there are not ranges. There are no specifics. As far as numbers you should expect X percent. It's just sort of X percent equity or but licensing, etc. So when using it, one is still going to have to find out what those appropriate financial terms are going to be. But what is in the document are a number of the terms you're going to see in pretty much any license agreement. So define terms and look for this at the end of the document, not at the beginning. Our financials or our definition are usually in the beginning. So in this case, it's at the end, but it has standard definitions that one can use, affiliates, change of control, definition of net sales, what's included in that? And one important difference in this will be in net sales from the life sciences term sheet, which has a number of more medically related deductions that are not applicable here. And then it also has standard language for grant of light rights, sub licensing, equity and anti dilution. And the anti dilution is based on the raise amount. In this case, it has some development milestones and diligent milestone diligence milestones, but once again, those will have to be developed for the specific technology, which can range quite a bit and language for know how royalty on ballot claims. What is also not included is some more institution specific language, such as that for insurance or indemnification, governing law and jurisdiction is going to depend on your specific institution, and you should connect with your general counsel for language if you don't already have it on that. So that's that's generally what's in and what's not in the template. Speaker 2 18:28 Anything else you two want to add? Sean and Kyle? No. One of the things that I would comment on with regards to the term sheet is that this is for me, considering my my past in licensing far more extensive as a term sheet than what I would have negotiated when I was previously negotiating license term sheets. Because not only does it have a lot more provisions in it than what I typically negotiate my term sheet, but it has full language for the particular terms. So just keep that in mind when you're looking at this term sheet, that it is very extensive. And the good thing is, I guess you know if in the interim where we don't have a full license agreement, you can cut, cut and just cut and paste those into your license agreement, which actually can be very useful as well if you've already agreed upon it the language, yeah, Speaker 3 19:30 or if you're using your own university template and you're in discussions with a licensee about, you know, the definition of Sub licensee, then you can go look into this and really get ideas for other ways to define it, yes or commonly used definitions. Yeah, it's Speaker 5 19:49 very useful to talk with your if you have to go through your OGC for negotiating a license agreement and say, well, here's some of the standard terms that other folks have said as a common. Starting ground. What can we do versus where we are now in our template versus other folks? And so that's a good data point to have in your back pocket as well. Speaker 2 20:12 Just a reminder that for both the life sciences discussion as well as this climate tech discussion for the term sheets, there were not just University tech transfer people involved, but there were VCs from a lot of firms involved in this, and there were attorneys from a number of firms involved in this as well. So it has been reviewed ad nauseam, by the different constituents associated with these areas. Okay, so obviously it we're kind of making this sound out as I would like. It was all just roses, you know, going along the entire process. But it was, there were actually a number of areas that were very difficult discussions. We took what we ended up doing was we all got together, we use the life sciences term sheet is kind of our starting point, because it had already been negotiated between investors, universities and and attorney firms who work with not only those two parties, but also large pharmas, etc, industry. We took that as our starting template, but we knew we're gonna have to change a lot, right? Because you're dealing with very different technologies here, and there's different products at the end that you need to have different stipulations for in the license agreement along the way. So we talked about a number of those. We had a just to let you know about our profits process. We had a Google document that we were all marking up and talking about and putting comments in, and some of the comments got really long, and then we'd have discussions. We get to the point of like, okay, here are the areas that we see us all honing in on that we need to probably discuss as a full group. And then when we had those discussions, we identified certain areas that we thought were particular issues that we had subgroups on and that we had subgroups meet on. So we're planning on talking about those few areas, but as we're talking about these and as you're looking at the term sheet. If there are other things that you have questions about, please just put them in the Q amp a tool, and we'll do our best of our ability to answer those. If you're looking at the term sheets like, oh, well, why did you guys, you know, do this in particular in the term sheet? We're happy to talk about that if we if we can remember. So right now, we're going to talk about three main issue areas that we did address between all these constituents on the areas for the term sheet, and the first one we're going to start off is, was milestones. So John, do you want to start talking about milestones and the discussion around those and what the issues were around it, and where we ended up? Speaker 5 23:00 Yeah. So I think here we largely got a lot of the university folks together and kind of put our heads together around what milestones we ask for in a license agreement in this space. And I broadly generalize it to four or five Main Categories, milestones related to product milestones, related to revenue, related to the management team or key members of the startup at hand. And then I lumped the last two together around financing or investor milestones. And it was really quite interesting to see the differences and the similarities between institutions and what they look for in terms of milestones. And I don't think we put together an exhaustive list, but we put together an example list of things that we thought were all reasonable between the I think it was rose. Was it five of us? Five of Speaker 3 23:55 us? Yeah. How many folks were involved from different universities? So, Speaker 5 24:00 yeah, different universities across the country, just trying to come to a common point of things that one, we'd like to have in our license agreements, and two, that had generally been accepted by both VCs and law firms from from those respective agreements. And so that's really where we kind of got together and developed that list that you probably see in the term sheet now, and rose you want to add anything to that? Speaker 3 24:26 Yeah. I think one of the things about this, once again, is the very the broadness of the technologies makes a uniform set of recommended milestones, whether it's for milestone payments or diligence milestones very challenging, like so, for example, if you were to do like a carbon capture plant size, that's going, which is one we have done in the past as milestone it's going to be very different than something for battery technology or agricultural technology. Another thing that. That I think is important to say is that milestones in the tech sector are less traditional than milestones in the life science Yes, life science milestones are fairly standardized. And, you know, are pretty much expected in every single license. People in the tech sector are newer to milestones, but I think we found that, I personally have found that it's actually been very helpful to have milestones in these climate tech licenses where there may be much lower margins and other things that have made traditional royalty payments and things a tougher negotiation. I'm going to say that generally, Speaker 5 25:50 yeah. And the other thing I would say too is being good stewards of the technology and getting out to the public, even having diligence milestones to keep the company on the track towards productization and getting technologies from your universities to market. That's also another critical one, and I see less resistance from for those from the investors, because investors also want to see their money being deployed efficiently and getting getting to products quicker. But still important to know that you should have a good number of those in your agreements. And I think we all know that if there's anything that's going to change and be your first amendment, it's those milestones when something changes so Speaker 3 26:32 and there's actually recommended language for Diligent milestones, if we want there's an extension as required. Yeah. Speaker 2 26:39 And I think that was really important. That was a very, very important point to the to the investor side, was having that ability. Because, as we all know, nothing ever goes according to plan. Kyle. Do you have any comments on milestones, or do you want to move on to combination products? I Unknown Speaker 26:58 agree with everything that was said. Speaker 2 27:02 Yeah, all right, well, then let's move on to combination products. So there was another subgroup that talked about combination products. And it started out in part, like, as I recall Kyle, was that we had a combination products clause in there that was totally focused on how farmer works and and and then we started discussing it and realizing, well, actually, there's a lot here that has to do that is analogous to climate tech just looked at in a different sense. So why don't you take away that, that discussion? Speaker 4 27:35 Yeah, so, so combination products, you know, for folks who aren't familiar, it's, it's pulling different components together to make a thing. And so, like, just to put things in, simplify it down to my level, like, let's just say that the startup wants to make bicycles, and they need to license the technology for for wheels, and they need to technology the the to license the axle technology, if this was, if we're on the drug side, you might be able to say, Hey, I combine these two drugs, and it's 15% better now. So I'm going to be able to divvy up the actual value of the addition of this one drug to the other drug. And you can actually come up with numerical sort of approaches on some of these on a bicycle. I don't know how you say how wheels are more important than axles, or axles than wheels, so we kind of went in circles of, how do you figure out the relative value of each of these things to an overall product, particularly in the case where the company is not selling wheels, they're not selling axles, or selling bicycles. So it's really the combined product. So in the end, I would say what we and what we have in in the document is really just identifying this as a thing, defining, you know, there's a definition there. There's an allusion to needing to to discuss with various parties. But in practice, this can get quite complicated. There was no way to put numbers on any of this, just because, again, it's not really with a lot of these climate oriented things. You can't really define which part of a full system is the most important, because you usually need all of them. And it also gets further complex. If the startup, let's say, ends up licensing from three different schools, you know, that just makes things even, even harder. So it usually is, the way we felt it was would play out is you're going to have to probably define what made sense at the product level, with regard to different payments and royalties and so on and so forth, and then figure out an equitable, equitable way amongst the parties to split for each component. I don't know if I captured that accurately so rose or John. Feel free to jump in. Unknown Speaker 30:02 I think that's seems accurate to me. Yeah, Speaker 5 30:05 yeah. I think that's accurate. And I think you also need to keep in keep in mind, much like with diligence milestones, things are going to change over time. You might think that you have the everything you need, and then two years later, you're like, oh, we need these other eight components from six other places to make this into a product, and then all of a sudden, each one has a 3% royalty, and you're at a 25% royalty on something that's low value. So it just doesn't make sense from anybody's perspective at that point. So just be mindful of, you know, what's actually going in. And I think this, this really goes to you need to have transparent communication around combination products between your potential licensee, whoever's representing them, the investors and the institutions that you're involved with, so you can kind of get comfortable with the fact that you're going to have this combination product, and get comfortable with the fact that that Royalty calculation is going to be really difficult. So early, early and open, honest communication is really critical. Yeah, totally agree. Speaker 2 31:11 All right, so the other area that we addressed, that we had, we had a subgroup that met, was about royalties, and there was a lot of discussion around royalties and how they work earned royalties and how they work in these licenses and overall, and looking at climate tech earned royalties as a part of the license from academic institutions to these startups is the norm. But there, as we talked about at the beginning, climate tech is so encompassing of many different areas, and the products are so diverse that earned royalties may not always be the most appropriate mechanism for value capture for the universities, although it is most often the mechanism. And so what we ended up doing in the term sheet is we have, we have our, you know what? It's probably a very typical earned royalties clause in there. And then there is a footnote to talk about, the fact that, you know, these products sometimes are very different, diverse from each other. Some products take an incredible amount high cost to initially produce, or you're having to additionally produce, actually a plant to produce these products. Or it's the plant itself that is the product, etc. And they may be taken at a huge loss initially, which may either be a delay of onset of royalties, or shifting of how the value is captured by the university. So the there's a there is a clause in there a footnote that talks about alternative structures as well. And so that was where we ended up with this. It was very hard again. We talked about this early. It was very hard to find something that was a one size fits all in this particular area. So we felt that that having this particular footnote, talking about the alternative ways to do it, which may be fixed annual fees, or based on total sales, increasing those fees. Also we talked about the fact that a business strategy could change over time. You may have to revisit earned royalties. All of that is going to be a part of this. And so I think a lot of what, again, when we were all talking with each other, that we were learning was flexibility is the name of the game here. Is that you you think it is going to go a certain way right now, but industry, technology, what you need to bring in, etc, changes. And therefore there are changes that are likely going to need to be made. And I know that, you know all people who are participating this webinar are very well aware of that. I'm sure you've all negotiated many, many amendments over time, because things do change. But this was one of the areas that we felt that there likely needed to be flexibility, especially over time, as people leaned into more what their products were going to be. So anything that you guys wanted to add on that on earned royalties? Speaker 3 34:23 Yeah, I would say that this was, oh, sorry, Jen, are you gonna start? This was maybe one of the more tense discussions that we had between us. But I think it's important and where we came to to keep in mind that we all really do want the success of the startup in the end. And so just keeping that in mind when you're doing the license that we want to see the startup succeed, and the university does need to be represented in some way, in in any benefit, but it doesn't help the university if you. Things are so egregious that the startup can't succeed. So we don't want that to be the case either. So we all have a common interest in that. Yeah, I Speaker 5 35:10 was going to say almost exactly the same thing. The most spirited discussion probably we had as a group, and everybody had very strong opinions about why their way was the highway and everybody else's wasn't. But I think at the end, it's really technology dependent, because this is not a one size fits all. This is even harder. And one thing I wanted to mention in general that we didn't talk about yet was that this term sheet was intended for technologies that have patents associated with them. So this wasn't for software only technologies, or know how technologies, those type of things. So this had to have a patent at some point involved. That was kind of the the bar, the bare minimum. When you're thinking about what we're licensing here, there had to be a licensed patent involved. It's one thing I don't think came up yet. So yeah, that was the other thing I was going to Speaker 4 36:06 add in, and I'll just kind of foot stomp something rose and John have both said, which is the importance of communication. So particularly on this spot, the term sheet calls out all the different ways that a university could be paid. You know, there's milestone payments of royalties and on and on and on. All these different things are called out. And so you can think of it as kind of like a parameter space has been defined. And you then can sit down and say, Okay, here's all the different ways that we can make sure the university is is getting paid, like through equity or through cash or through royalties or what have you, what is actually going to fit for this company in their market, and so you need to have that clear and open communication to define the set that will actually work for that particular situation. Speaker 2 36:59 Melanie, all right, we don't have any questions yet about the issues that we were encountering and creating this, but we do have a question on the broader agreement and when that might be done. And I think it's still very much a we have, not that we we just came out with the term sheet. What was it? A couple of months ago, it was officially released. I can't remember. Was April? Okay? A few months, few months ago. So there is not a timeline yet for the full license template, but we'll get back to you on that once we know more. All right. Another thing was we were just going to mention really briefly, was some differences between the process of creating the life sciences term sheet and now the full agreement and this particular term sheet. One of those is that this was in some ways, much easier than than the life sciences just because we had a template to work from. And so there were some discussions that people wanted to rehash, that those of us who were able to who worked on both term sheets. So OUP was one of those. Ra capital was one of those, obviously Columbia was there were some people who had worked on both, and they said, You know what, we already went through this entire discussion on this particular piece, and we don't actually think there's a difference between life sciences and climate tech, and we're going to stay with this, because we went into it for so many hours, etc, and this is where we we ended up. So that, in some ways, made this process easier, but there was so much that we did need to change, as I mentioned, to make this customize for the climate tech area, that there was still a lot of a lot of work that went into this particular term sheet as well. I don't think there's anything else in particular I was going to mention on the differences for this particular one, but maybe something will come up as we answer our remaining questions here. So I throwing it back to each of you on the process developing this term sheet. I would love to hear from you, especially because you know, there may be ways that we can do this in the future where we get industry, universities, attorneys, investors, etc, working together to make these processes, processes go smoother and get to a better, winning solution. At the end, just if you could comment on the process of developing this term sheet, what worked well, what was problematic? You know? What would you do different next time? And Kyle, maybe I'll start with Speaker 4 39:43 you. Yeah, I mean, I think the the best thing was that everybody came into it like open minded and willing to to disagree in a professional manner. So we had some, some heated discussions. But you. They never got personal. They never got stupid. No one, no fist fights. Everyone, everyone's friends afterwards. So I think that was a pretty critical aspect that everybody came in, as mentioned earlier, with the intention and the understanding that we all have the same goal here. We want to we want to have excellent businesses, delivering amazing products and services. And if we do that, everybody wins. And so it's, it was just a matter of figuring out, you know, where different stakeholders sat, and, you know, who, how we could create benefit for everybody involved. So that was, I think, really, the key piece overall, as we went through it. I mean, it's a fun process, and in terms of what we could do better, I think it took us a while to arrive at sort of farming out pieces of it to subgroups. We were kind of doing everything together for a little while, and that was not super efficient. But once we got into the subgroups, things kind of moved a little bit quicker, and then we could bring it back to the larger group, and so on and so forth. Don Speaker 5 41:12 Yeah, I think for for me, what worked well, just a testament to term sheets, actually working is right, the life science one took three years, and we did this one in about seven months, so we already did a reduction in time of like 80% which is a testament to how term sheets can actually work. So I think that worked really well. As far as being problematic, I think just making sure that you have an open mind and your level set, that this is going to be general and not specific to your technology that you're working on right now and your institution, I think it's not necessarily problematic. It's just something they really have to keep in mind and keep a broad framework when you're approaching something like this, because it's not going to work well otherwise. And second, Kyle's point of, you know, everybody walked away from this friends when it had potential to go off the rails at certain times, certainly heated discussions, I think, if I think about it, from an outsider's perspective of someone who wasn't in the group, but if you were a fly on the wall, I think you would be surprised at the amount of thought put into the other side's perspective from everybody. So from the from my university colleagues. You know, what do investors in law firms think about? And the same thing for for the investors, what do universities think about and care about. So everybody really had that balanced perspective. And I think that was one of the more surprising things for me going into this, because I didn't know what to expect myself. So Unknown Speaker 42:51 I'll leave it there. Speaker 2 42:53 Yeah, one of the just, I want to just build on that comment, is that one of the things that I heard, particularly in this process. And I heard it in the previous process as well, was hearing people who weren't from my perspective, espousing my perspective and and that was really nice to hear like, Oh, I really like, I felt like they heard me and they understood it, and they're like saying, but here's, you know, and I'm going to say, like, I'm talking about the university perspective here, just because so much of my background was in that hearing people who weren't from the university side, but saying, but this is what's important to the university, so we need to consider this. And so that was very that is really helpful as part of the process of, like, Oh, you're understanding a lot more the perspective of the other of the other side. You know, in a licensed negotiation, you're always licensed negotiation. You're always trying to do that, but having a room full of people from each of the different areas talking about it really does help you gain a much broader appreciation of everyone's perspectives on why they why some things are particularly important to them? Yeah, it Speaker 3 44:01 was definitely a great group of people working together on this. And so I'll just, you know, reiterate what all of you just said. It was nice to see people look at look at everything from a different point of view. Speaker 2 44:17 Great. So next question is, Can you give any advice to our audience on how the document could be used, and again, emphasizing that it doesn't necessarily need to be used as is exactly as it is written. Rose, do you want to start us off on that Sure? Speaker 3 44:35 You know, from Cal Tech's perspective, we have a template that we typically start with and I do customize this template per licensee. This document is a great place to look to when I am putting together different components that are going to be specific to, you know, climate tech license. So it's a good place to look for those. Things that might be more specific. A second place where I've seen this come up is actually when working on an IA with another institution who is the lead of the technology and they were coming to us to look for ideas on how to rephrase things in their template. So it's it actually can be a great starting point to work with another university. And I would actually encourage people to reach out if they're interested in talking about any of the specific terms, because I love talking about specific terms of licensing, and this is kind of like what we do. And if I could be of help, that would be great. Anyone Unknown Speaker 45:41 else want to comment on that? On that? Speaker 5 45:44 Yeah, I would just emphasize this is not meant to be used as is. This is meant as a guidance document, as a reasonable starting point, from the perspective of an attorney, from the perspective of the university, from the perspective of a VC, by no means this is meant to be an end all, be all to whatever you have in your license template. Speaker 4 46:05 And I mean, my viewpoint as non lawyer is, is, it feels almost like a checklist, right? It's, it's a list of things that we could use as terms or not, right? But it's, it gives you that list to start with, and you can go through and kind of check the block on what makes sense for that deal and what doesn't, and it gives you that framework for the discussion. Speaker 2 46:31 Thank you all. We do have a question from the audience, and I will try to address it first, but love your comments as well. And the question was, can you speak at all to the discussion around the license to improvements language, and how you landed on what is included in the term sheet and the suggested time frame of one to three years? And so I'm going to start off this, answering this question by saying this language, I think, almost perfectly mirrors what is in the life sciences term sheet, and this is one of the areas where we felt that this, and I will tell you, I cannot tell you how many hours we talked about this. This language, obviously, originally when we had the life sciences discussion, but also when we had this particular discussion, because we know it's always, this is always an area of of tension between, typically, the universities and the licensees of what, what could be, what, what, as far as improvements could fall under the license. And so this is what we felt was going back to the term reasonable, a reasonable approach with regards to improvements, as we mentioned at the very beginning of this webinar. We know that certain institutions This is not something that this may be language that they don't necessarily can use under their guidelines or policies, but a number of the institutions, when we were talking about this, were comfortable with this particular language, but it's going to come back down to what an institution's guidelines and policies are with regards to improvements. So that's what I will initially say about this. Anything you guys want to add on? Rose, Speaker 3 48:20 there is a footnote on that section, basically saying what Kirsten has just said that, you know, it's very institution specific. And even for Cal Tech, while we do grant improvements, we do it on a case by case basis. So we, we don't unilaterally, unilaterally grant improvements to licensees. It really has to be the right situation. And the third party rights have to be important. You know, adequate adequately addressed on that. Speaker 2 48:54 And there was a question that the person had also put in about the one to three year time frame. I do think that that, in part, was thought of because that was kind of the range that most institutions who were comfortable with language would agree to as one to one to three years anyways. And some people would, you know, say like, well, we will agree to one year. What some people say we'd agree to two years. It just became this, well, we'll put in the range, and then it can be part of the discussion. Anything else anyone wants to say with regards to improvements? Because I know this is always an area of a lot of contention. Unknown Speaker 49:32 Just say, proceed with caution. Speaker 2 49:38 All right. Um, so next question. Thank you all. So I would love to hear about any use of the agreement so far, either by yourselves or that you've heard about it, or even if it's just been used as a reference during negotiations. And John, do you want to start this off here? It Speaker 5 49:58 has been used as a reference. Difference during during negotiations. And I've heard some other folks in the tech transfer community talk about it being used as a reference both this and the life science term sheet. So I think that's great. What you definitely need to make sure you're you're educating folks on, again, it's a starting point and the checklist, it's not where you're going to end up, and I think it's particularly useful for for smaller institutions and smaller firms that maybe don't have a lot of licensing transaction volume, quite frankly, and see the number of transactions that are going through on an annual basis. So that's that's what I've heard so far, and I've definitely seen it used as a negotiation tool. Speaker 2 50:46 Kyle, did any? Have you seen anything out of this? I know that, like as an investment firm, you know you're seeing a lot of opportunities in it, but I know all of them, not are out of academic institutions. And of course, we'd love for them, all them to be out of academic institutions. Yeah, Speaker 4 51:02 so we, we haven't. We haven't actually used it yet, but I have. I have sent this to a whole bunch of entrepreneurs who are looking to start things, or planning to start something, or like talking about licensing something. So outside of our immediate investments, I think I've sent this to probably 2030, different folks, is just our immediate portfolio is not currently licensing anything. Speaker 2 51:30 Yeah, that's great. Yeah, it's actually so it's fun. We have another question from the audience, you know, is it helpful to direct interested licensees to read and use the terms of the bolt agreement as a starting point. I think kind of points you just answered that exact question is that, especially those who are perhaps not as familiar, this can be really helpful for them to see. Like this is what you may see in the term sheet that you you know, maybe negotiating down the line. But any more thoughts on this question from the audience? No, great. So definitely a good reference tool, but as we've talked about, it is very new. It's only been out for a few months. I'm sure there will be more stories, and hopefully we can capture some of those and be able to able to talk about those down the line as well. All right. Oh, and then so Kathy just wrote into the chat whether we talked about a yearly fee rather than earned royalties, we kind of talked about that a little bit in the royalties section, that there are maybe some alternatives earned royalties just kind of depends on the product and what is appropriate for those particular products as well. I do not see any other questions at this point. So at this point, if we don't have any other questions, I'd love to get last parting thoughts from our panelists here. So John, maybe I can start with Speaker 5 53:12 you Sure. So I think this was a good experience and a good exercise, and I look forward to using this rose. I hadn't actually thought about using it for IAS, but that's a great idea as well. So I'm gonna, I'm gonna actually implement that pretty quickly here. And I would say to the folks listening in the audience, you know, if something doesn't make sense, feel free to reach out to any of us. We're only an email or a phone call away. As you know, the tech transfer community is pretty small and pretty open, so just, just reach out if you have any questions. That's that's the only part I thought I have Kyle. Speaker 4 53:53 I think we've said it like five times, but I'll repeat again, is it's a starting point and communicate. Yeah, Speaker 3 54:01 great, right? Rose, yeah. I mean, reiterate the communication. That's that's a great point. And with IIA is, I mean, we use the model IIA, but when working with a partner in university on on specific language for the licenses, this can be really helpful. It's a tool for for looking at different language ideas, and I think that we can, if we use it as a tool, not as a not a end all be all. That's where it'll be most successful. And I'm happy to answer any questions that people want to reach out directly, Speaker 2 54:36 likewise, and you know as OUP obviously being on the investor side, but having previously worked on the university sides, things like this, where we see industry and academics working and understanding each other's issues even better, and I think it just creates a much better tomorrow for all of us. So really. Happy to have been able to work on this. And thank you again to all of those who spearheaded this particular project. And thank you to autumn for being a platform for us to talk about this, and also for hosting the term sheets themselves. Yeah, Speaker 1 55:16 thank you. Well, thank you. Thank you all. On behalf of autumn, I would like to thank our panelists for the informative presentation today. And thank you again to our sponsor, Marshall Gerstein. A recording of this webinar will be available for viewing in the autumn Learning Center within a week of this event and is included in your registration. Please be sure to complete the webinar evaluation, which will open immediately when you sign off the session and thank you for being a part of today's presentation. Thank you again to our presenters and have a great afternoon, everyone. Speaker 2 55:48 Thank you. Bye. Transcribed by https://otter.ai