IP Ownership, Spinout Structure, and the Case of University of Pannonia

Across European university venture capital, one institutional variable reliably determines whether a spinout attracts external investment: who holds equity in the operating company, and at what percentage.

When a university retains an ownership stake in a spinout, it introduces a shareholder type that creates structural problems at every subsequent funding stage. Most universities cannot follow on in future rounds without running into legal and financial constraints that most institutions are not equipped to manage. They cannot provide the governance and operational commitment required by active ownership. Institutional investors, when they examine a cap table that includes a university, frequently decline, regardless of the quality of the underlying research.

The data from European ecosystems reflects this. Drawing on three years of conversations with university leaders across Europe and the United States, I have found that only around 25% of spinouts successfully attract venture capital. Ownership structure is a primary factor. The Netherlands and Denmark have addressed this at the policy level in recent years. The University of Pannonia addressed it from the inside.

The Structure

Chancellor Zsolt Csillag and researcher Dr Gabor Jarvas developed an IP licensing framework that resolves the ownership problem without removing the university's long-term financial interest in the spinout's success.
The model rests on three structural decisions. The university retains full ownership of the intellectual property until the spinout makes meaningful progress. The researchers own and manage the spinout company. The company receives an exclusive licence to develop, further develop, and commercialise the IP, and pays the university a royalty based on net revenue.
The university does not hold an equity stake in the operating company. This structural decision makes the model workable in the early stages of the spinout. Most venture capital investors require the IP to be fully owned by the company they invest in. University of Pannonia addresses this directly: the spinout can acquire the IP from the university as it grows and investor expectations evolve.

Csillag is precise about why. A Hungarian university operating under standard institutional governance cannot risk assets in equity positions without exposing its leadership to legal liability for negligent management. It cannot commit to the capital requirements of follow-on funding rounds. And it cannot perform the functions that a shareholder at an early-stage company is expected to perform. Attempting to do so anyway produces what Csillag observed across Hungarian universities in earlier years: companies incorporated to satisfy a grant indicator, unable to attract external capital, dissolving within two years as both funding and researcher motivation disappeared.

Utilisation is the goal. A royalty structure tied to net revenue achieves the same long-term institutional interest in the research's commercial success without the structural conflicts that equity creates. The university's interest is protected. The cap table remains clean for investors. The researchers retain the ownership and management authority that early-stage investors require from founding teams.

Why the Researcher Cannot Be Written Out

The second structural decision, researcher ownership of the spinout, is as significant as the first.
Jarvas describes this from direct experience. The prostate cancer diagnostic method that his group developed at the University of Pannonia emerged from research begun in 2013. Over a decade, sub-projects that appeared disconnected began to converge. The decision to commercialise came from the researchers themselves, recognising that a practically applicable method has a different kind of value than a publication with a strong impact factor.

An investor committing capital to an early-stage company needs owners who will carry the project through the difficulties that capital alone cannot resolve. The researcher who holds the technical knowledge, the experimental intuition, and the professional network built over a decade of work in a specific field cannot be substituted. Writing that person out of the ownership structure, as some early Hungarian R&D grant frameworks explicitly required, removes the component that makes the IP commercially viable. A registered company without a motivated researcher at its centre has limited commercial value.

Csillag frames this as a team game. The university and the researcher are on the same flight. First class and economy class do not crash separately. The structure must keep both parties motivated throughout the company's development, including the stages when external capital enters and ownership dilution occurs.

The Technology Transfer Company as a Cost Centre

University of Pannonia's approach to its Technology Transfer Company follows the same structural logic.
Many European universities have built TTCs as revenue-generating entities, expecting them to become financially self-sustaining through commercial fees and deal commissions. Pannonia took a different position. The TTC operates as a cost centre. The university pays the TTC to support utilisation processes. Revenue from those processes flows to the university, which operates under a more favourable tax position for its core activities than a separate commercial entity would.

In Csillag's description, the TTC functions as a sales house or matchmaker. Its purpose is to connect university research to market partners and support the commercialisation process. The profit centre is the university itself. This keeps professional resources inside the institution and avoids the incentive misalignment that arises when a TTC is measured on its own commercial performance before the deal flow required to sustain that performance has been established.

Performance metrics for the TTC follow a staged approach. In the early years, activity-based indicators measure how many processes were supported and how many market connections were made. Revenue indicators are introduced gradually, as deal flow matures. University of Pannonia recently secured a grant to operate a Proof of Concept fund specifically for projects defined in partnership with an external market player, anchoring the PoC process in demonstrating commercial interest from the outset rather than waiting until the TTC takes over.

Common Sense Over Imported Models

Rather than adapting an existing international model, Csillag and Jarvas mapped the interests of every stakeholder and built a framework suited to their specific legal and institutional context. Csillag's assessment of why is direct: institutions operating under different legal systems and different funding logic produce models that do not transfer one-to-one. The underlying ownership logic transfers. The specific contract architecture does not.

What Pannonia did was map the interests of every stakeholder, identify the structural dead ends from prior Hungarian experience, consult the venture capital side on what makes a project fundable, and build a model that keeps every interest aligned through each stage of development. Jarvas notes that early input from two venture capital practitioners shaped the structure in ways that would not have emerged from an internal process alone.

The investors confirmed what Csillag had already concluded from the institutional side: a university shareholder on the cap table is a structural problem, not a governance preference.
The contract went through 56 drafts. The final model is straightforward. The university retains the IP. The researchers own the company. The royalty flows back to the institution. Csillag describes this as the beauty of the outcome: the structure that went through 56 iterations follows directly from the starting premises.

The Asset Class Implication

The University of Pannonia model has implications that extend beyond a single institution or a single country.
For LPs evaluating UVC as an allocation, spinout investability is a variable that affects fund performance in ways that can be challenging to assess across the segment. Institutional IP policy varies substantially across European universities. It is one of several reasons the segment can be difficult to read as an asset class from the outside. The information required for LPs to assess the segment is held within individual institutions. Connecting these structural variables across the segment would improve the information available for capital allocation decisions.

University of Pannonia offers a working reference point. The specific contract structures will vary across legal systems. The underlying ownership principle, that the university's long-term financial interest in a spinout's success is better served by a royalty on IP than by equity in the operating company, transfers across institutional contexts.
Hungarian national policy is moving toward measuring UVC success by the market capital spinouts attract rather than by the number of companies incorporated. That shift in policy logic is consistent with what IP structures aligned with market expectations at institutions like the University of Pannonia already reflect.

My conversation with Zsolt Csillag and Gabor Jarvas examines structural decisions that sit at the centre of most institutional discussions of university IP strategy: who owns the company, who manages it, how the TTC is designed, and why these choices determine whether external capital can enter.

Three decisions define the University of Pannonia model: the university retains the IP, the researchers own the company, and the TTC functions as a cost centre. Each decision reflects the same principle: build the structure around what every stakeholder actually needs at each stage, and resist the institutional habits that produce incorporated companies without the conditions required to develop them.

For a segment where spinout investability remains inconsistent, and IP policy is among the least standardised variables, the University of Pannonia offers a model that arrives at conclusions aligned with market expectations through institutional common sense rather than external best practice. That path is replicable.

Timecode:

00:00 Introduction and topic
02:47 University KPIs and funding
07:47 IP and spinout metrics
11:08 Researcher entrepreneurial motivation
14:12 Why not university ownership
24:13 iPsy research and lessons learned
28:14 Royalty-based IP model
33:16 Investor perspective and trends
48:41 TTC and the university toolkit
01:02:59 International connections and capital network
01:10:04 Closing messages and goodbye

Links:

Karoly Szanto LinkedIn: https://www.linkedin.com/in/karolyszanto1/

Karoly Szanto Personal Website: https://www.karolyszanto.com/

University Venture Capital Coalition: https://univccoalition.org/

Guests:

Chancellor Zsolt Csillag: https://www.linkedin.com/in/csillag-zsolt-a1649142/

Dr. Gábor Járvás: https://www.linkedin.com/in/gabor-jarvas/

Transcript:

Károly Szántó: Hello everyone! A warm welcome to our guests from the University of Pannonia: Chancellor Zsolt Csillag and Dr. Gábor Járvás, researcher and spin-off founder. Today we are going to discuss the IP strategy developed by the university, how it benefits researchers and spin-offs, and what kind of example it sets for other universities. But first, please briefly introduce yourselves to provide some professional background on where you come from and how you reached your current positions.

Zsolt Csillag: Hello! I’ve been at the University of Pannonia for quite a while; I was a student there. During my time in the student self-government, I learned how to work in a team and gained insight into the operations of larger organizations. When I graduated, I started on the project management path. I was a project assistant, then a project manager, and eventually the head of the institution's project directorate. Later, I was the chairman of the board for what was then a university startup, but I have been the Chancellor of the University of Pannonia for seven years now. Many things could be said about this role, but essentially, I am responsible for the finances, operations, and management. Since asset management is part of finances, and IP (Intellectual Property) and economic entities are part of those assets, this area also falls under my responsibility.

Gábor Járvás: Hello Károly! Thank you for the invitation. I graduated as a chemical engineer, also from the University of Pannonia, so we are essentially speaking "from home." After graduating, I started a PhD program under Professor András Dallos, focusing on the evaporation of perfumes. Later, following the trends of the time, I worked on the design of integrated biorefineries. In 2013, there was a major shift; I’ve been working with András Gutmann since then on bioanalytical developments. I spent time as a postdoc in the United States and was a Visiting Scientist at CEITEC in Brno (Central European Institute of Technology), where I also focused on bioanalysis. However, I always returned to Veszprém to continue my research—though I don’t particularly like that term because I think it masks the fact that research is, in many ways, just ordinary work.

Károly Szántó: Thank you. I’m very interested—before we dive into IP—in a question I ask every university leader: what are the university's top three KPIs? How do you measure whether the University of Pannonia is successful?

Zsolt Csillag: This seems like a simple question, but it’s much more complicated, especially for a Hungarian university today. It’s perhaps easier to approach from the funding side. Generally, every higher education institution has roughly three main funding pillars, regardless of the country. One is some form of state support or contracts. Wherever state-funded higher education exists, this is one pillar. Every institution also strives to have classic market-based revenues. These can come from various activities: market-based education, training, consulting, engineering work, or innovation development. Essentially, any revenue generated through a B2B relationship. Then there is the third pillar, which is also significant: what we in Hungary call "grant funding." This exists just as much at Anglo-Saxon universities or in America, though they might call it a "state fund" rather than "EU support."

So, essentially, these are the three main pillars. If I look at the institutions from a funding perspective, in Hungary, there is a very serious public task financing contract which currently contains 31 financing titles, and these titles have about 14-16 KPIs attached to them. To simplify it, a major KPI in the domestic market is how many students you have. Connected to student numbers is a KPI regarding efficiency: how effectively can you ensure these students acquire knowledge and earn a diploma? To put it plainly, this measures the dropout rate. The state now views higher education institutions as service providers; it buys a service and expects a certain efficiency. If it pays for one hundred places, it expects at least 80-85 graduated engineers, teachers, or economists at the end. So, there are KPIs related to the quality and timeline of training. There is also a very serious group of KPIs that matter for funding, international reputation, and rankings: scientometric metrics. These have "softened" over the past decades. 15-20 years ago, we talked about citation indexes and multiplicative impact factors. These still matter, but the focus has shifted from quantity to quality—publications and the impact they trigger. There are many international rankings—there are over 25,000 higher education institutions on the planet—but perhaps the "Big Three" are QS, Times Higher Education, and Shanghai. These rankings categorize institutions based on complex numbers, much of which refers to the impact you achieve. Where did your results appear in the economy? How many people in society reference them? To what extent does the current government or local government take your results into account? They are trying to capture this global impact.

Naturally, there are countless smaller indicators. These are large organizations; when we say "university," the person on the street probably doesn't realize the scale. In Hungary, the University of Pannonia is considered a medium-sized institution with an annual total revenue of around 20 billion HUF. If I compared that to a business, it wouldn't be small. If I look at the largest Hungarian university including its healthcare branch, that’s nearly 500 billion HUF per year. We are talking about thousands of employees and tens of thousands of students; these are essentially large enterprises. Their main product is knowledge transfer and ensuring that the bright minds and locally created results can be taken to market effectively to generate social or economic impact.

Károly Szántó: If we extract from this complex KPI system what pertains to spin-offs and IP—specifically the creation and commercialization of IP—how does that affect the indicators? Does it matter how many spin-offs there are or how much investment they received? Do you measure this?

Zsolt Csillag: Certainly. In fact, at a lower level, we track how many results appear in the system that we record or protect in some way—be it a patent, a trademark, or know-how. Some things aren't necessarily classifiable but have relevance in a market environment. This is a metric: how many can we produce and where is it worth protecting them? The next level is whether we can generate revenue from them. Not necessarily from Monday to Tuesday, but can we start them on a path where, through capital investment or further development, a market product appears that someone will buy?

The highest level from our perspective is when we have physically identified a result, it exists on the books, and we have found the best way to utilize it. This brings me to spin-offs. A spin-off is one possible way to utilize a piece of IP. Our view is that one must not confuse the goal with the tools. Multiple tools can achieve the same goal. Success lies in choosing the right tool for the specific parameters. It’s a bad approach to hold a hammer and treat everything like a nail. But back to your question: we definitely want to see what revenue a protected result can bring to the owner of the property right and the stakeholders. I say "stakeholders" deliberately. One could approach this by saying that people employed by the university produced a right using the university's infrastructure, so how much revenue will the university get? But if we leave out the crucial component of who produced it—whose personal knowledge, network, and insights were required—it won't work. If I don't empower the researcher simultaneously, the whole thing fails. It is a team game.

Károly Szántó: This is a good transition to Gábor. As a researcher, you have your own spin-off startup and hold key positions in other university startups. Where did this entrepreneurial spirit come from? It’s not characteristic of every researcher to be this ambitious. Is it based on international examples or is it just your personality?

Gábor Járvás: I have no idea, and I have no magic recipe. I can't say my family has been entrepreneurs for 500 years. I have no specific role model. I’m an engineer, and engineers are essentially "lazy," so I’ll give a "lazy" answer: it's about money. At some point, you want to earn money with your knowledge. If the university teaches us that we are skilled professionals, and you believe that, then if something has value, it should be exchangeable—practically, for money. Of course, there are other motivating forces, and a startup especially isn't about how much money you have at the beginning, but how much you put in. My colleagues often say that what we do is a form of "intellectual pleasure." Most engineers and researchers are driven by the feeling of "I solved something," much like the feeling of opening a box as a child.

Károly Szántó: Absolutely. How did the conversation start regarding the IP strategy or contract for the spin-off led by you? I heard there were many consultations; clearly, you tried to handle this as a systematic procedure rather than an isolated case.

Zsolt Csillag: If I may start: we wanted to create something that could be applied as a model with minor modifications, so it wouldn't be just a one-off case. Interestingly, it started with what we didn't want to do. Over the last few years, "spin-off" and "startup" have become very fashionable terms. Everyone is a "startupper." We were joking on the way here about which company was a startup 650 years ago.

Gábor Járvás: Stella Artois advertised themselves a few years ago saying "we were startups too—650 years ago."

Zsolt Csillag: There are always waves of fashion which can be good, but they are often over-pushed. For every complex question, there is usually a simple, easily understood, wrong answer. In Hungary, many people suggest a single approach: the university should create its own company, be the owner, and that company will save the world. You don't have to be an expert to realize that you'd either need infinite money to make that work, or it just won't happen.

Gábor Járvás: That's not the university's job, is it?

Zsolt Csillag: Universities are not investment banks; they have neither the legal nor the financial means to act as such. If I think classically about what my interests are: I want what I put in to eventually bring me money, and I want to protect my investment. These two interests—as a classic owner—simply don't work here. The moment capital needs to be brought in for further development or serial production, serious capital is required. If I, as the owner, don't want to lose my ownership share, I would be subject to the same capital requirements as a venture capital investor. A Hungarian university simply does not have the funds or the legal possibility for that.

So, I was sure at the beginning about what wouldn't work. We approached it by defining the goal versus the tool. The goal is the utilization of knowledge. It should reach the market. We need to bring in private or institutional capital in the simplest way possible, because a market player investing money validates that the project has value. It’s also vital to maintain the researcher's motivation; they are not interchangeable. You can't just swap "Béla" for "Józsi" and expect it to work. Finally, I want the university to have a predictable, calculable interest in the product that is well-protected. From these premises, we looked for a model where every light turns green.

Károly Szántó: Let me reflect on that. I’ve spoken with many university leaders across Europe and the USA over the last three years. This pragmatic attitude and the admission that the university is not an investment body is quite rare.

Gábor Járvás: It's simple: after the word "Pannonia," the word isn't "Investment Company," it's "University."

Károly Szántó: Exactly. Yet many universities have run into a dead end by taking on an investor role for which they lacked the legal or professional resources. As Zsolt said, when a university acts as an investor without a dedicated division or entity, it becomes problematic. It’s only worth creating such an entity if there is a deal flow—say, twenty projects a year. Only then can you give it a structured operation, perhaps through a tech transfer office or a small investment firm, so that incentives are in the right place. So, congratulations, because it’s rare to put it so clearly on the table. Was this structured thinking accelerated by a specific project?

Zsolt Csillag: It was needed. We had to do something with this task group because there was pressure from the state to increase the number of university-founded businesses. Many institutions chose "the number of companies owned" as their metric. To that, I said in my simple way: I can create as many tax ID numbers as I want, but that has no added value. Simultaneously, Gábor’s group achieved real, useful research results that appeared valuable in the real world. The need arose to move forward, but in a way that kept everyone’s interests aligned. I told Gábor that I hope they are driving Bentleys in seven or eight years, because that would mean the university also gained significant revenue and it was a great success. This is the mindset required. It was a learning process. We built it step by step: what they needed for efficiency, what the university needed for IP protection, and how the university could support them as an incubator (infrastructure, equipment). It’s a shared flight; the first class and the economy class cannot crash separately. We either work together or we don't work at all.

Gábor Járvás: I’ve mentioned before that we signed version number 56 of the draft contract.

Károly Szántó: There was clearly work in that.

Gábor Járvás: From an engineering perspective, you can see we were trying. We didn't just sit down and sketch out reality instantly. We dared to undertake the task of making it good for everyone so that everyone remained motivated. We considered that there would eventually be an investor who might want to invest in multiple rounds. That’s why it seems to be working currently. It’s about approaching it with humility—not thinking we’ve invented the ultimate solution, but trying to bring different interests under one roof.

Károly Szántó: Could you describe the research area and how it’s forming into a company? At what point did you realize you needed to settle IP matters with the university?

Gábor Járvás: We started developing a prostate cancer diagnostic method. The research group has been operating since 2013. We don't consciously focus on just one topic; we do many sub-researches or sub-projects. Over time, these pieces started to point in one direction—like four puzzle pieces—and we saw it could work. We then started thinking that if we had put something together this cleverly, it should be used. Anyone in R&D knows the term "impact factor." You can't really "realize" things with an impact factor alone. It won't help a patient. But a practical method that can be used is exactly what people need. That's when we started thinking about how to do this.

Károly Szántó: Did you do any desktop research on how other universities do this? Were there best practices or consultants?

Gábor Járvás: I didn't do any.

Csillag Zsolt: We used common sense. In my opinion, there weren't many working examples at domestic universities. Internationally, it depends heavily on the product or idea. I concluded that instead of trying to implement a specific pre-existing model, we should map out the needs, the points where resources (professional or financial) are required, and the interests.

Gábor Járvás: And...

Zsolt Csillag: Then a matrix emerges on how to model this within the Hungarian legal system, for this specific product, at this stage of development. I don't think picking one specific international example would have helped much. If we can interpret the mindset—that everyone must remain interested—and we know which "dead-end streets" to avoid, we can put together a relatively good system. We believe the path we’ve started on is good, though we haven't reached the end yet.

Károly Szántó: Let’s talk about the specifics. What exactly is the model of the IP collaboration? Ownership share versus royalty or license—how does it look?

Zsolt Csillag: There is nothing complicated in it; that’s the beauty of it. There is a utilization enterprise which must receive the rights to utilize the product. The fundamental difference compared to the method many people force is that the University of Pannonia, as the owner of the property rights, is not an owner of the utilization enterprise. The ownership shares in the enterprise are held by the researchers themselves. They have the management because they are the ones who understand it and want to carry the process through. When there are capital investment points, the ownership share given in exchange appears in that company. The university authorizes the company to use, further develop, and sell the IP, and in return, there is a royalty based on net revenue. The model isn't complicated.

Gábor Járvás: From the university's perspective, it’s a comfortable position: "I did my main activity. Now you go ahead, and I’ll hold out my palm." In hindsight, it seems simple.

Zsolt Csillag: We know we are not venture capitalists. We don't have the knowledge or the free capital required. Legally, we don't necessarily even have the titles to do it. Therefore, we don't want to behave like venture capitalists.

Károly Szántó: Clear. So, the university remains the owner of the intellectual property, gives an exclusive right of use to the company (the spin-off), and if/when the company generates a profit, a percentage is paid annually to the university?

Zsolt Csillag: Exactly. I didn't want to navigate the university into a position where we have a good idea that might eventually bring revenue, but requires us to put in, say, 5 billion HUF first. There is no 100% guarantee it would come back. Legally, I couldn't even risk that kind of money; as a university, that would fall under "unfaithful or negligent management." The simplest way to avoid this is to have an interest in the property right rather than the capital. The ownership stays, but the company gets the rights to develop and sell. We don't risk the loss of university assets.

Károly Szántó: Is it conceivable from the university's side that during successful growth, if a venture capital investor wants the intellectual property to be owned by the company, they could buy the university out?

Zsolt Csillag: Of course. We treated this as an open regulation. Since we don't know every future situation, we know our premises. Within those, any exit is conceivable for the university. For example, if this product reaches a level of serious value—say 30-40 billion HUF—I don't think there would be much opposition from any stakeholder to sell the project, let the owners get their due, and then we'll go and create four more.

Károly Szántó: It's very interesting that you didn't come from the venture capital side and didn't consult much with them, yet this is so market-conform.

Gábor Járvás: We did consult when we were making the contract. We listened to the venture capital side to see what would make it "sexy" for them.

Károly Szántó: Okay, I was missing that part.

Gábor Járvás: We used "peasant logic" to see who the stakeholders were: the university, the company, and the eventually appearing investor.

Károly Szántó: What did you hear from the investor side? What was the expectation?

Gábor Járvás: Essentially what we just described: that the university should not have an ownership share. If you think with the company’s hat on, you want owners who are willing to "die" for the project. You can't expect that from a university. But the person doing it can step out of the university framework and is willing to put in the sleepless nights and everything else. Once you realize everyone should be used for what they are meant for, it’s not "devilish." The university did its part by taking it to the IP stage. Now, it's the company's turn. It’s also good that we didn't decide everything in advance; we created options. I don't know what will happen in three years, but I can prepare for different scenarios.

Károly Szántó: Absolutely. I met with some of the top researchers in Europe in January. The traditional practice is that the university asks for 20-40% ownership. When an investor looks at that, no matter how good the project is, they say "Sorry, no." This is because you get an owner who is not suitable for what is needed from that point on. Statistics show that of research that reaches the spin-off phase, only 25% can attract venture capital because of this. Consequently, there have been big changes in European ecosystems lately—the Netherlands and Denmark have strong new regulations. The trend is clearly to keep the university interested in the long term without occupying a percentage among the owners. This keeps the researcher and the investor motivated. You bypassed the whole field by doing this three years ago. I was at a policymaking workshop with the European Commission in January, and few have achieved this.

Zsolt Csillag: Thank you. It’s good to hear, especially since we didn't think we were doing anything "extra." Common sense was 90% of the story. I have a guess where it went wrong in Hungary. Years ago, the first R&D innovation grants required the creation of a utilization enterprise as an indicator. That wouldn't have been a problem, but the definition often stated that the beneficiary (the university) had to have majority ownership. Even with my modest investment knowledge, that is nonsense. If I expect a third party to trust their own money to a company over which they have no practical influence, that is not a realistic model. Unsurprisingly, applicants created tax IDs to check the box, and the spin-offs failed within a year or two because they couldn't attract capital. The initial money evaporated and the motivation of the founders vanished. That was one big "no-go." The other was the idea that a researcher is only for creating the result at the beginning, and then you just put the result in a box, put a price tag on it, and find a clever manager. It won't work. The person with the idea in their head is not interchangeable. If you write them out of the equation, you've essentially scrapped the project. We started from these bad experiences.

I was very pleased that two weeks ago I consulted with State Secretary László Bódis. The negotiations for the next six-year financing period are ongoing, and the issue of utilization enterprises is included as a KPI. The State Secretary confirmed that it won't just be the number of companies that matters, but those where you have an interest, whether based on capital or IP. He mentioned the spin-off founded by Gábor's group as a positive example. There is also an indicator now regarding how much capital a spin-off could attract from the market. I think this approach at the Ministry is much closer to reality than just counting tax IDs.

Károly Szántó: I discussed this with László Bódis recently as well. I was pleased with this market-conform approach. As soon as we look at economic success rather than just publications, the logic of venture capital kicks in. If you bring in venture capital, it becomes an exit-oriented business. Everyone wants to make money. The number of businesses created does not correlate with economic success. Many were created just to tick a KPI.

Gábor Járvás: If you look at it from the other side, creating a company is a cost. Why create it if you can't move forward with it? I won't put in one forint if I can't turn that into two.

Károly Szántó: Over the last two years, I spent ten months meeting with the leaders of a top Hungarian university regarding a spin-off we wanted to invest in. I tried to convince them that no one would invest if they wanted a 30-40% ownership share. I failed. There was a strong intent from investors, but we couldn't find a way to connect the university's interest with the market. The result: the spin-off failed, and the researchers lost their drive. It's demotivating for a researcher to be at the "Promised Land" and fail due to bureaucracy. That’s why it’s important for domestic university leaders to know what you’ve created.

Zsolt Csillag: What you say doesn't surprise me. We bring bad habits with us. Someone can be a smart leader but not an expert in everything. This is not an area universities have dealt with for 100 years. As Gábor said, you have to ask the venture capital investor what makes a project "fundable." If you pick a solution they won't put money into, the project ends there.

Gábor Járvás: We just asked. We like to talk over a coffee or a beer, and it worked. I can say it was valuable help we received at the very beginning from Szabolcs Hajdu and Norbert Búzás. They looked at the project from a completely different angle, and it was logical.

Károly Szántó: What tools does the University of Pannonia have now to support businesses forming from research? Proof of concept budgets, tech transfer offices, innovation offices?

Zsolt Csillag: We are on a developmental path. We have an innovation fund and our own yearly Proof of Concept (PoC) budget. We have a Knowledge and Technology Transfer Center, and a year ago we created our own technology transfer company (TTC). We followed a reverse logic here compared to others. The mainstream view was to create TTCs to generate revenue for the company. I think the university doesn't create a TTC so the company becomes rich, but so the university becomes rich. Universities operate in a special legal environment; if I perform my core activities and utilize free capacities, there is no corporate tax liability. If you ask any entrepreneur where revenue should arrive—where it’s taxed or where it isn't—it’s a simple decision. As long as the university utilizes its core activities (education, R&D), we want the revenue to arrive at the university.

Our TTC functions as a "sales house" or "matchmaker." The university pays the TTC to support utilization processes. The revenue goes to the university because the professional resources and infrastructure are there, not in the TTC.

Károly Szántó: So, from an accounting side, it's a cost center.

Zsolt Csillag: Exactly. The profit center is the university itself. This way, I don't move professional resources unnecessarily.

Károly Szántó: Clear. But if revenue or profit isn't a KPI for a tech transfer office, what is?

Zsolt Csillag: The indicator doesn't change. We want to make money. It’s a vital indicator for a "sales house," but I measure it by how much revenue it brings for the University of Pannonia.

Gábor Járvás: And you have to distinguish between internal project generation and the utilization of free capacity.

Károly Szántó: For internal projects or spin-offs, it can take years from a PoC to revenue. I see the problem with many tech transfer offices is that in those years without revenue, they might move into "evasion mode" and look successful without actually producing results.

Zsolt Csillag: The truth is between the two. In the first year or two, I can't expect them to bring in 1.5 times their operating costs in revenue. You have to push the ratio gradually—measuring "how much work you did" alongside "how effective you were." You shouldn't start with revenue-heavy indicators but work-based ones, and then slide the scale toward economic sustainability. We don't see the future; if we find that it's more expensive to maintain the TTC than the revenue it brings, we'd need to shift the paradigm.

We must also influence projects at the very beginning to think about market utilization, not just scientific dissemination. Our TTC recently won a grant to provide a PoC fund for small university projects, but only for projects defined jointly with an external market partner. We want to measure if there is at least one market player interested. When an idea reaches the right TRL (Technology Readiness Level), that's when the TTC takes over to support the process.

Károly Szántó: Building this innovation ecosystem also converts into another KPI: student and professor recruitment. It addresses researchers or students for whom this is important.

Zsolt Csillag: Absolutely. There's no better advertisement for a university than saying "a former student started a company and is now a billionaire." That looks good on a poster.

Gábor Járvás: I’ll love it when you point at me on the poster. You'll be paying for the beer from then on.

Károly Szántó: Do you have active connections with foreign tech transfer offices or investment companies? Where would it be useful—data exchange, playbooks, co-investment models?

Zsolt Csillag: We have sporadic project-related connections, but it's hard to implement systems one-to-one. Take the alumni system: American alumni systems work because of the "identity" formed in fraternities (Alpha, Beta, Kappa). That won't work in a Humboldtian higher education system. Also, people often imagine huge sizes when they hear names like Stanford. Stanford only has about 14,600 students. Caltech only has 2,300, of which about 1,000 are undergraduates.

Károly Szántó: That’s staggering.

Zsolt Csillag: A lot doesn't depend on size. I can't just adapt the internal processes of the University of Graz or Imperial College because they operate under different legal systems and funding logic. I’m better off trying to learn the mindset. What can be learned is access to networks. The venture capitalist and the business angel are global. Access to those networks and active relationships with potential investors would provide the real added value. At the end of the day, the investor says what they want to fund. We need to create harmony between the investor and the university.

Károly Szántó: I’m glad you said that because that is my thesis too. I think connecting the domestic university innovation community to European or international capital—specifically capital specialized in university spin-offs—is the biggest opportunity. Often the "diamond" is there at the university, but it lacks international visibility. Is there any sub-topic you’d like to mention before we close?

Zsolt Csillag: I’ve said everything I wanted to. I wanted to advertise the university and show that just because many people say something, it isn't necessarily true. We think a bit differently.

Gábor Járvás: If I think with a university head, my message to colleagues is about the researcher's attitude: you go into the lab, you try an experiment, and most of the time it fails. You have to rise from the ashes the next day with even more enthusiasm because you know that specific direction isn't the right one. The same applies to utilization. You can't be afraid. If something is truly valuable—a diamond—someone will see it and help.

Károly Szántó: Failure is very stigmatized in our culture, but building a startup involves a high frequency of "mini failures" from which you learn and iterate. It requires a similar attitude.

Zsolt Csillag: Finally, the researcher cannot be left out of the equation. In Hungary, if a university buys lab equipment with grant money, it belongs to the institution. In America, many grants go to the researcher, and the equipment they buy becomes theirs. That "ownership consciousness" makes you take better care of it and get the most out of it.

Károly Szántó: In Sweden, the "Professor's Privilege" still exists where the IP belongs to the researcher. That’s the other extreme. Well, thank you very much for coming. When are we having that beer?

Zsolt Csillag: Thank you for the opportunity. Any time!

Károly Szántó: I'll be there. Let's wait for better weather so we can sit on a terrace.

Csillag Zsolt: Agreed. Thank you very much!