As an addition to the post, dated May 4, 2010, I’d like to add a few slides which describe visually the balance between royalties and equity (with some possible antidilution). If you did not have the previous pdf slides, you should check my previous post first. What these new slides show are linear variations of the equity-royalty (possible) balance.

It may not be universally accepted, but in a way more royalty induces less equity and more equity induces less royalty. Also there may be an anti-dilution mechanism:
– many universities state the equity level will stay the same up to a given amount of money invested or up to the 1st round of funding. Given the habit of investors of taking 30-50% of the company after the 1st round, you can compute back how much equity it would have been at incorporation.
– one university, UNC, and I mentioned that in the comment to my post, asks for antidilution until exit at the 0.75% level. Interesting!

What is also interesting is that globally, Stanford, Caltech, Carnegie Mellon and UNC are very similar (small royalties) and MIT may appear as similar for equity but higher for royalties. All this should be handled with care but is probably not too far from a good summary…

So my visuals are not perfect, neither my comments above, but if I am not clear, just contact me! You can download the pdf slides or click on the picture that follows.