The more universities claim from the proceeds of an invention, the less researchers invent and the fewer businesses they start. Imagine a professor invents a new drug, patents it, starts a company and sells that company to a pharmaceutical firm for millions a few years later. The professor becomes a millionaire overnight. That may seem unfair. The research was funded by taxpayers, but the professor walks away with the profits. Yet, a country that wants more innovation should welcome precisely this kind of success. Empirical evidence Spin-offs account for only a small share of all new businesses in a country, but they’re disproportionately active in important technology fields. In the Netherlands, one in fourteen startups is a spin-off, compared with one in four deep-tech startups and almost half of biotech startups. In 2025, spin-offs attracted 18 percent of all venture capital investment, despite accounting for just 7 percent of startups. In short, spin-offs are important drivers of innovation. The Dutch government wants more of them and is counting, among other things, on the new standard deal terms agreed upon by universities last November. These govern the agreements between spin-offs and universities. Under the standard terms, spin-offs gain access to university research in exchange for giving the university up to 25 percent of their shares, paying royalties on revenue or a combination of the two. It’s understandable that universities want something in return. After all, under antitrust laws, they aren’t allowed to simply give away their research. And if a company makes money from publicly funded research, it’s reasonable to expect society to benefit as well. Yet, the empirical evidence points in one direction: The more a university claims from the proceeds of an invention, the less researchers invent and the fewer businesses they start. Walk away The clearest evidence comes from countries that fundamentally changed their rules. For many years, researchers in numerous European countries owned the rights to their inventions under the so-called professor’s privilege. Around 2000, however, an increasing number of countries abolished this privilege, reasoning that universities would be better at commercializing inventions than individual researchers. The results were quite different from what policymakers had hoped. In Norway, abolishing the privilege led to a 56 percent decline in the number of spin-offs and a halving of patent applications. The spin-offs that were still established also performed worse: They were less likely to achieve high revenues and less likely to operate in high-tech sectors. The researchers concluded that the reform effectively halved the measured innovation output of university researchers. Patent applications by university researchers also declined in Finland and Germany, by 29 to 46 percent and 18 percent, respectively. Additional funding for the offices responsible for bringing university knowledge to market couldn’t offset these declines. A similar pattern emerges when looking at university equity stakes in spin-offs. In the UK, a larger university stake reduced the likelihood of a spin-off attracting venture capital. Why do university claims discourage innovation? First, researchers get to keep less of the proceeds. Building a company takes years and often ends in failure. Everything the university claims reduces the reward if the venture succeeds, making fewer researchers willing to take the leap. Second, these claims can cost startups money they don’t yet have: Patent expenses and sometimes minimum royalty payments must be covered before the company generates any revenue. Third, negotiations take time, during which investors may walk away. Fourth, a large university claim can deter investors, especially if the university also has veto power over major decisions. If investors pull out, the spin-off may fail, leaving the invention on the shelf for the foreseeable future. Uninvestable That price