Once institutional investment has been attracted to the company, the natural source of further funding should be these same institutions. However, to ensure that current investors will commit further funding requires management/investor relations to be sound and investors to have confidence in the management and board of the companies in which they have invested.
From my experience this is an area where academic managers of spinouts fall short. The differences in business and academic cultures that Lambert mentions become more apparent the longer the relationship persists, often leading to a breakdown in trust. This makes it very difficult for spinout managers to attract repeat funding from their investors, particularly when times are tough (and when they most need it!).
The first part of this question is complex and in the hands of the Patent Office rather than the directors of the spinout company. However, as the case of the researchers into monoclonal antibodies (lead by Cesar Milstein at Cambridge University) shows, the second can be very much influenced by the actions of its inventors. Milstein’s team developed the artificial version of natural monoclonal antibodies and were awarded the Nobel Prize in 1984 for their work. Before they patented their research they decided to publish their findings and by this action made it impossible to take out a patent. Once in the public domain, research findings cannot be protected by patent and all the potential commercial advantage of the research was lost.
An MBO is a business sale where the buyers are the management of the business. Contrary to common belief, an MBO is an exit option available to any private business and not just the larger ones; nor is it necessary to have Venture Capitalists (VCs), corporate finance specialists, or banks involved, but as MBOs usually need outside funding, financiers of one sort or another usually play a part in the process.
An ‘earn-out’ is different from a retention in that it refers to the circumstance where the ultimate purchase consideration is based strictly on a multiple of future earnings achieved by the business (and can go up or down); whereas with a retention the price is set beforehand, but the full amount is only paid when and if profit or turnover targets are met.