Originally publish in Law360, New York (May 15, 2012, 1:01 PM ET)

Many of the most successful and profitable technologies being developed and commercialized by technology-based companies, particularly in the areas of life sciences and clean technology, were initially developed by universities and other nonprofit institutions. Since these technologies are frequently out-licensed by the nonprofit institutions at early stages of development, most of the responsibility for developing and commercializing these technologies will be assumed by commercial entities.

In most cases, the ability of a company to succeed in producing a commercial product based on licensed technology will largely depend on how successful the company is in obtaining funding from the investment community. The process of obtaining such funding will involve the conduct of a significant amount of diligence by the entity’s existing and/or potential investors and will include, among other things, a review of the terms of all in-license agreements.