While knowledge-intensive societies rely heavily on universities for the creation of knowledge, its translation into economic value is typically performed by firms in the market. Since universities increasingly depend on additional funds for new and expensive research, current policies urge them to interact proactively with the market. The authors analyse how an entrepreneurial university creates, delivers and captures value by characterizing its business model. They develop a business model of the university as a research and teaching institution, with which they contrast purely private and purely public universities as two business model archetypes to show how these archetypes determine incentive and governance structures. They examine how the inclusion of commercial transfer as the "third mission" affects the university's income structure and thereby its objective and incentive structure. Within their business model framework, the authors derive strategic implications for the implementation of commercial transfer and the transition to the new business model.