Tom Snyder: Why UNC System should ditch the 'tollbooth' mindset for statewide innovation

Last week, I had the good fortune to attend the NC IDEA Ecosystem Summit.

Every year, this event gathers the most committed minds in entrepreneurial economic development, including foundations, universities, accelerators, policymakers, and scrappy startup builders who are grinding it out in communities from Asheville to Elizabeth City.

This year’s theme had a strong and overdue emphasis on rural entrepreneurship: How do we create job engines in every corner of North Carolina, not just the familiar gravitational centers of Charlotte and the Research Triangle?

One panel in particular stuck with me. Leaders from Virginia (VIPC), Maryland (TEDCO) and South Carolina (SCRA) took the stage to share how their states are thinking about startup-driven economic development. I’ve written previously in Datafication Nation about these organizations and how North Carolina stacks up against our neighbor states. The short version? We’re the No. 1 state in the U.S. for business – if you’re a big enterprise. But in terms of startup support, North Carolina is decades behind in our strategic posture and millions behind in our public investment.

I am hopeful that our posture is changing. We do have one major, differentiating bright spot - NCInnovation. NCInnovation operates a bit like a state-enabled foundation, investing the annual earnings off an endowment of past taxes into commercialization projects with a goal to spin new companies out of university research. This model provides a means to fund startup creation across our entire state in perpetuity.

But to understand just how catalytic this approach could be, we have to zoom out and look at how the world of university research commercialization is evolving. Because if NCInnovation’s mission is to succeed – to create innovation engines around every UNC System institution, not just UNC-Chapel Hill and NC State – then North Carolina has a generational opportunity to leapfrog other states by rethinking how university IP becomes new companies. We have an opportunity to reshape technology transfer around a fresh lens of statewide economic development and job creation.

How do we do this? To understand, we need to understand and then rethink how our university system approaches intellectual property and licensing.

The tollbooth mindset

When the Bayh–Dole Act passed in 1980, universities were suddenly allowed to patent inventions developed from federally funded research. That triggered a wave of tech transfer offices (TTOs) across the country. Their mandate, whether direct or implied, was simple. Patent everything. License aggressively. Generate revenue.

Tech transfer offices acted like tollbooths at the exit ramp of campus research.

On paper, this looked like a smart fiscal strategy. But the math has never held up. AUTM, the association that tracks tech transfer metrics, has shown for years that:

● Only a small minority of tech transfer offices ever generate enough licensing revenue to pay for themselves.

● Even the “successful” shops typically bring in licensing income equal to only 1–3% of their research expenditures.

● Most patents never earn a dollar of licensing revenue at all.

Yet incentive structures told TTOs to maximize royalties like their budgets depended on it because often, they did. A university licensing agent felt pressure that if they didn’t bring in enough immediate revenue, their own paycheck was at risk. They had to drive a hard bargain. While at the same time, a pre-revenue startup piling limited cash into a licensing deal dramatically reduced their runway to reach profitability.

Negotiating every license as if it were a pharmaceutical blockbuster meant:

1. Founders often felt like tenants negotiating rent on their own ideas;

2. Universities strained or even soured relationships with researchers who were otherwise primed to become long-term partners, donors, sponsors and ecosystem builders;

3. The probability of long-term startup success was dramatically diminished.

In economic development, we obsess over multipliers. For the majority of years since Bayh-Dole, university tech transfer has been optimized for the smallest multiplier. Direct, near-term cash return to the TTO office itself. And it limited the upside for everyone.

Creating a launchpad

The last decade has quietly rewritten the script. Across the U.S. and Europe, universities have realized that licensing revenue is the least valuable form of return they get from research commercialization. The real value shows up downstream:

● Successful spinouts sign sponsored research agreements that pour millions back into university labs.

● Their founders become donors, mentors, board members, visiting faculty and talent magnets.

● Their growth creates local jobs, local suppliers, and the regional clusters policymakers dream about.

As a result, leading universities now aim for friendly, predictable, startup-centric terms that maximize the chance a young company survives long enough to pay dividends back into the system. I’ll provide a few examples:

● Stanford and MIT routinely take single-digit equity stakes in spinouts, focusing on long-term relationships rather than front-loaded royalties.

● Oxford flipped its model in 2021: founders get 80–90% of the equity, the university takes 10–20%, and there’s no anti-dilution protection. [For context - universities historically negotiated for preferred stock holdings would not dilute ownership percentage as other investors come on board, making startups toxic to VC investment].

● The Easy Access IP movement—Glasgow, Bristol, King’s College London—literally gives away large portions of their lower-value IP for free, betting the reputational and ecosystem ROI will outweigh any minor licensing revenue they might have captured.

The trend line is clear. Take less now, grow more later. Universities that play for relationship ROI—founder success, alumni wealth, industry partnerships—are becoming global leaders in innovation performance. This matters for North Carolina, because NCInnovation is trying to build this exact kind of culture at scale.

The Carolina opportunity

NCInnovation’s mission is bold. Turn every UNC System university into an economic engine for its region. Not just Chapel Hill and Raleigh. Not just the big research campuses. All 16. That requires something other states don’t have: a statewide commercialization strategy that works even on campuses without formal tech transfer offices.

Many UNC System campuses, especially the regional and rural-serving institutions, do not have the traditional infrastructure for IP management, patent prosecution or startup licensing. For some schools, they have a single general counsel attorney that has found themselves suddenly in the role of tech transfer officer as faculty for the first time have begun to work to build startups based on their research outcomes. The lack of specialized expertise and infrastructure creates friction.

● Researchers don’t always know how to disclose IP.

● Licensing conversations get bottlenecked.

● Deals take too long or die entirely.

● Deals may be terribly out of alignment with the economic development mission.

This lack of infrastructure creates an opportunity. Because most of the UNC system schools don’t have legacy tech-transfer policies, these campuses are not burdened by decades of paperwork, negotiation habits or revenue-maximizing norms. They can start fresh. They can design founder-friendly IP policies from day one.

They can skip the tollbooth era entirely and create launchpads for new companies.

North Carolina can build the most startup-friendly university IP environment in the country—if we choose to. Imagine that:

● A researcher at UNC Pembroke can secure a clean, investor-friendly IP license in weeks.

● A team at Elizabeth City State can launch a venture around coastal resilience tech without wading through a year of negotiation.

● A grad student at UNC Asheville gets an express-style license modeled after the best practices of Stanford, Oxford, and Glasgow.

● Regionally anchored startups send sponsored research dollars back into local labs, creating job engines in communities that have long been left out of the innovation economy.

This is how North Carolina catches up with Virginia, South Carolina, and Maryland. Not by spending more than they do (though we should also do that), but by out-innovating them on policy. NCInnovation gives us differentiation through commercialization grants that extend into perpetuity due to its novel funding mechanism. The UNC System has the opportunity to further build the bridge that enables university researchers to cross the “valley of death” through world-leading IP policies.

What we need is the courage to rewrite the rules of tech transfer so the entire state benefits. Done right, we become the leading state to attract commercialization-minded researchers and grad students and to strengthen our rural communities through innovation and tech startup job creation.

North Carolina is on the cusp of something big. We have a once-in-a-generation chance to build a statewide commercialization engine that includes rural communities, regional universities and underrepresented researchers. To unlock that promise, we need a UNC System that meets the moment with startup-friendly, relationship-first, equity-light IP policies that give every founder in our state a fair shot.

The world is moving from tollbooths to launchpads. North Carolina shouldn’t follow that trend. We should lead it