A123Systems IPO Could Bring $10M-Plus Windfall for Boston University, Sources Say. (MIT’s Stake Likely Not Too Shabby, Either.)

In early 2002, a little startup named A123Systems was looking for a place to, well, start up. Even though the company had been formed to commercialize technology invented at MIT, the lithium-ion battery developer found just the space it needed across the river at Boston University, inside what’s now called the Photonics Center Incubator. The incubator occupied one floor of the 10-story BU Photonics Center, and held enough room to house up to 14 startups, which shared access to labs and equipment. A123Systems moved in with a handful of workers that March, according to a Harvard Business School case study on the company’s early history.

As best as I can determine, the company didn’t pay much (or any) rent in those early days. But now, nearly eight years later, the landlord is sure poised to collect. It looks like, according to several sources, that rather than collecting rent or fees from the young company, BU took equity. While school officials are not speaking publicly about the amount of stock the university now holds, sources at BU tell me that in the wake of A123Systems’s spectacular IPO on September 25—share prices climbed 50 percent the first day—the value of the university’s stake reached $10 million early this week or late last week.

Just guessing from the share price history, that would mean the school has approximately 500,000 shares. That’s less than one percent of A123’s stock, so it wouldn’t be enough to dictate that Boston University be listed by name in the SEC filings as a top shareholder. But it’s pretty good for any landlord. What’s more, given the rise in A123’s stock this week—which is at just over $26 per share as of this writing—the BU stock could be worth closer to $13 million today.

Ashley Stevens, executive director for technology transfer at BU, would not speak in detail about A123, but he did not deny that the university holds stock in the company. He did say, however, that the school previously took stock in at least some companies it housed, but has since stopped that practice. “We’ve moved away from that model of letting incubatee companies pay their initial fees in stock,” he says. “It was a controversial decision at the time.”

It also seems that BU isn’t the only university poised to reap the benefits of … Next Page »

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5 responses to “A123Systems IPO Could Bring $10M-Plus Windfall for Boston University, Sources Say. (MIT’s Stake Likely Not Too Shabby, Either.)”

  1. Doug says:

    Not sure why BU has 500,000 shares and MIT only has 200,000. That’s expensive rent and cheap IP!

  2. Wilbur Stelios says:

    Obviously BU didn’t get 500,000 shares for just rent. Actually both BU and MIT purchased most of their shares in A123. At least BU and MIT will try to do something worthwhile with the money.

  3. Doug and Wilbur

    You both raise good points. I have not been able to confirm how BU got its shares, or even how much it has–the 500K is just an informed guess, but I think it is very close. A university presumed to be MIT got 200,000 for the licensing–that is in the SEC document. But MIT might also have purchased more, as per Lita Nelsen’s comments. Both have under 5 percent of company stock, or their holdings would have to be listed.