How Should Incubators and Accelerators Structure IP Ownership with Portfolio Companies?

1. Definitions:

a. Incubator: A business incubator offers a variety of services, which include management training for members, access to office spaces, funding opportunities, mentorship, networking, and guidance in essential business operations like accounting and marketing. A business incubator provides a hub or a workspace designed to assist startup companies and individual entrepreneurs in their journey toward growth and success. Like, for example, startup studios, venture capital incubators, etc. (GeekforGeeks, 2025)

b. Accelerators: A business accelerator is a program that helps established startups to scale their businesses by growing them as quickly as possible. They provide funding in exchange for equity in the businesses. These accelerators often require startups to already have a minimum viable product or a fixed team before they can apply for funding. Once admitted, these startups have to go through an intense period of growth and development. During this period of time, these startups receive mentorship and guidance from experienced entrepreneurs and investors. (Hubspot for Startups, 2023)

c. Portfolio Companies: Suppose there are three companies in which a private equity firm is holding some interest. Now the purpose of this private equity firm is to gain on its investment into these companies by increasing their value through investment, which will further attract other investors to invest their funds into these companies. Later this private equity company gets a good return on their investment by subsequent sale of this interest. A portfolio company is a company, which may be public or private, that a venture capital firm, buyout firm, or holding company owns equity in. (Corporate Finance Institute Team, n.d.)

2. Startups and IPs

The whole idea of a startup is dependent on the fact that the startup created a new product or service, resolves an issue, or eases the difficulties of their users.

The startup, when it receives investment, becomes part of the portfolio of companies. The incubators and accelerators (hereinafter to be referred to as ‘I&As’) invest their resources in the potential that a startup has. They want to know about all forms of IP you own and how these assets cover your core product and services. (Matthew Colvin, 2025)

At the inception of the startup, all parties in a startup must clearly define and document IP ownership rights from the outset of the relationship to prevent future disputes. The startups should make sure that all the IP belongs to the company itself and only a license or assignment is granted.

The I&As are likely to be interested in owning an equity in the IPs. The incubators, i.e., may take a smaller equity stake (e.g., 3% to 5%) or even less, being non-profit organizations like universities, etc. Whereas the accelerators typically take a standard stake (e.g., 5% to 10%) in exchange for seed funding, mentorship, and resources.

3. Ownership Principles (FasterCapital, 2025)

The ownership between startups and I&As can be categorized in two categories:

a. Default Startup Ownership

· Includes IP created by founders and employees before joining the incubator or accelerator, should remain under the startup only.

b. IP created during engagements with I&As:

· IP developed during participation in the I&As, especially using program resources, warrants explicit agreements.

· This can further be categorized in the following structure:

i. Startup Retains Ownership: I&As provides resources but does not claim equity in IP.

ii. Shared or Option-Based Ownership: I&As may claim rights to portions of IP or an option to acquire rights contingent on future investment or licensing.

iii. Assignment or Licensing Agreements: Startups assign IP rights to the incubator temporarily or grant an exclusive or non-exclusive license for commercialization support.

4. Legal Mechanisms for IP Assignments (FasterCapital, 2025):

The assignment of a license or agreement for use can be asserted in the following ways:

a. IP Assignment clauses: It defines clearly which IP is owned by the startup and which is assigned to I&As. It should cover the patents, trademarks, copyrights, designs, and trade secrets.

b. Licensing Agreements: I&As may receive a royalty-free or low-cost license to use startup IP internally for demonstration and research purposes.

c. Equity for IP considerations: Accelerators often take equity stakes in exchange for mentoring, funding, and access to resources. Equity agreements may implicitly include IP usage rights but should not transfer IP ownership wholesale.

5. Strategic Considerations while documenting:

While doing the documentation for IP policy, it is advisable to avoid conflicting terms and conditions and clearly state the regional policies that will administer the IPs so generated, e.g., for compliance in India, the Copyright Act 1957, the Patents Act 1970, and the Trademarks Act 1999 are to be followed. It is also advisable to get help from experienced legal counsel while drafting such agreements and get an independent review of the agreements so created so as to minimize any possibility of future conflicts. A structured IP mentorship program helps innovators and startup founders to detect their patentable innovations and protect the trade secrets.

Conclusion:

The key to a good IP ownership structure lies in the documentation that has been done between the startup's founder, its employees, and the I&As. The assignment of limited licenses to I&As protects the rights of the startup from intellectual bankruptcy. The patents, copyrights, trademarks, and trade secrets are the property of a startup, which keeps it lucrative to attract new investment and VCs. The NDAs and secrecy agreements protect the innovations from future disputes and infringements. It is necessary for the startup founders to rule out the clear path for the continuation of mutual cooperation between the startup and the I&As.