Royalty v equity agreements in tech transfer

Concluding that equity arrangements are useful tools when patents available for technology transfer are weak, an article in the Intellectual Property & Technology Forum & Journal at Boston College Law School offers a model to TTOs:

“Equity arrangements are economically preferable to royally agreements when:

r_eV_c > r_lV_p

Where r_e is the equity stake as a percentage, V_c is the value of the company, r_l is the royalty rate and V_p is the commercial value of the product.”

Knowing the path to a good analysis is helpful, but inherent in the formula is the critical need in technology transfer for valuation skill sets and information.  What is the value of an early stage company? What is the appropriate royalty rate? What are the risks to commercialization of the product?  Etc.