Archive for licensing

Sep
10

Fighting Past Fatigue, Venture Capitalist Style

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I was reviewing some information from one Venture Capital firm that described their annual efforts. Far from the laid-back lifestyle that some people imagine, this successful VC firm spent much of their year traveling to meet with over 6,000 companies. A few hundred would be selected and screened more carefully, and then a dozen or so might be selected for funding. Whew, what an exhausting funnel. But they are looking for gems in the rubble of entrepreneurial activity, most of which is bound for failure.

The experience of skilled venture capitalists points to a few key issues that all of us can apply to increase the odds of success in our entrepreneurial efforts and help us be more selective and less fatigued in filling the limited funnels of our own innovation efforts. Mike Alder, one of my favorite gurus of start-up success, now head of the Technology Transfer Office at Brigham Young University, once told me that the most important thing in his experience was the management team. Great technology with a dysfunctional or incompetent team will go nowhere. It takes a good team and especially a good leader to have a serious chance of success. That’s been our experience also at Innovationedge, where we have worked with a number of start-ups to assist them in commercialization (though most of our focus is on helping larger companies with their new product and innovation efforts).

Inc. Magazine has a valuable little piece, “6 Thoughts Inside the Mind of a Venture Capitalist” by John Warrillow. Read the whole article, but here are the six key questions that many VC people consider when they hear a pitch. Even if you never deal with the VC community, you should be using most of these questions as you evaluate your own entrepreneurial activities and plans.

1. “Why you?” (Are you uniquely qualified to play in this space? Do you have the expertise it takes to have credibility and a chance to succeed?)

2. “Should your concept really be its own product?” (Or is it just a new feature for an existing product? If it’s the latter, you should be licensing your product to the existing players in the market, not launching a new one.)

3. “How much will it cost to get someone to buy your product?” (I’m often amazed at how many start-ups haven’t carefully considered this. Details of distributing the product, for example, are often neglected. Demand for the product is almost always wildly exaggerated.)

4. “Can I protect your idea?” (If you want to sell your company or license your invention and lack means to prevent direct copying, you’ve got an uphill battle. One VC leader told me that they are simply much more interested in technology with a patent, even if the patent isn’t rock solid. Of course, sometimes know-how from proprietary research can give you a hard-to-imitate-lead without a patent. Sometimes.)

5. “How much money do I need to invest before your company will be worth more than it is today?”

6. “Can I fill the holes on your management team?” (A related question: Are you located in a place that high-powered business leaders would never move to? Can I relocate you to a more interesting area?)

The questions begin and end with consideration of the qualifications of the team and its leader. If you sink in that area, the business isn’t going to float.

Screen your projects with the VC lens, and you’ll be less likely to plunge into futile innovation fatigue.

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I just returned from an adventure in innovation and culture in one of the world’s most delightful and innovative nations, Singapore, where I spoke about innovation during Innovation and Enterprise Week 2009 sponsored by A*STAR, the government’s large program for the advancement of scientific technology and research. What remarkable vision is at play in this effort!

Singapore is an example of what can be achieved in a nation with a bold vision of economic progress and long-term growth. One consistently gets the impression that officials there, whether university leaders, team leaders, or high-ranking politicians, have a strong desire to advance the welfare of the nation and its people by giving people the resources and opportunities to work hard and succeed through innovation and entrepreneurial activity. There is a culture of cooperation and vision that seems to permeate the activities of leaders and influencers far more than you might see in other parts of the world. The nation is not without its problems, and no individual is without human flaws, but what I saw impressed and surprised me.

The nation decided years ago that it wanted to be a place for world-class research and development. They boldly recruited leading talent and ramped up education for its own citizens. They crafted beautiful complexes for interdisciplinary research to pursue targeted areas. This resulted in a large science park, and then the One North complex with Biopolis, a collection of large buildings for R&D in the life sciences, and Fusionopolis, a massive edifice intended to bring together numerous disciplines in other areas. They invested huge amounts of money to support R&D. While other companies and nations are cutting back, they are increasing their R&D spending from what was about 2.5% of the GDP recently to 3% in 2010. Many billions of dollars are being committed to achieve their vision.

One cannot explore Singapore without realizing that its leaders are serious about making Singapore an attractive place for business, for research, and for innovation. They understand the importance of location and co-location. They have worked hard to make Singapore a center for business for many multinational corporations. Currently over 7,000 MNCs have a presence in Singapore. They have worked to bring many disciplines together for targeted purposes by co-locating disciplines in research at One North, which is also near to the National University of Singapore, the Ministry of Education, and other key facilities, not to mention integrating industrial centers such as the Lilly Center for Drug Discovery on the Biopolis campus. Bringing people and institutions together physically creates opportunities for synergy and cross-fertilization that can’t be matched by remote online interactions.

The synergy between business and state-funded R&D is further strengthened by sending researchers into industry for internships or limited engagements to provide firsthand experience into the realities of a start-up or other business.

The planning behind A*STAR has resulted in many fruits. There have been nearly 30 spin-off companies from these recent efforts. A patent estate of over 3,000 applications and patents exists (this number from A*STAR apparently includes filings in multiple nations, so the number of patent families is considerably less, but still healthy). Significant growth in licensing revenues is coming through the efforts of Exploit Technologies, the licensing and commercialization arm of A*STAR. International recognition is being earned for the accomplishments of A*STAR.

How a small nation of four million people has transformed itself into a powerhouse of R&D and excellence in science and business shows what can be done with strong leadership and a commitment to the future. Of course, you can’t overlook one of their secret weapons that help attract and retain so much great talent: some of the best food in the world. Check out the food courts at Biopolis and across this island nation. This is a land that understands the importance of great food. After all, isn’t food ultimately the fuel behind human innovation?

Here is a gallery with a few photos I took while in Singapore. Click on a thumbnail to see more of the respective photo. The first photo shows the famous mascot of Singapore, the mythical Merlion. The building in the 2nd and 3rd photos is Fusionopolis, showing two different views (north and south sides). Then there are some downtown shots and a Buddha in Chinatown.

Aug
15

Transforming Nickel Ideas to Dollar Innovations

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As part of my “Magic and Innovation” series, here is a 3-minute video blog, “Transforming Nickel Ideas to Dollar Innovations: The Danger of Excessive Valuation of an Invention.” In it, I discuss one of the innovation fatigue factors that stem from the innovators or inventors themselves when they think their early-stage invention or embryonic innovation is far more valuable than it really is. This brief lecture includes a sleight-of-hand effect in which a nickel coin is transformed to something more valuable. No trick photography is used.

It’s so easy for a prospective innovator with a great idea, an interesting product, a cool gadget, or a new software concept, to do some calculations and come up with gargantuan valuations. “Let’s see, everybody in the world eats bananas. If as few as 20% of the North America buys my new automatic banana peeler and slicer at $15 each, that’s $1 billion for North America alone! So all I want is $50 million and you can own my provisional patent application. And I’ll toss in my non-functioning plastic prototype for free. ” Inventors and entrepreneurs need to look through the same “Lens of Risk” that potential licensees or acquirers must use. Going from a nifty “nickel” concept to an innovation that succeeds in the market involves numerous risks that must be overcome for the transformation from nickel to dollars to occur. Until you help your prospective partner or licensee have a genuine reason to believe that success will come, the value of your brilliant concept will be painfully low. But there are things you can do to enhance its value and help overcome the hurdles to success. This includes building the diverse intellectual asset estate we discuss in the book, completing your “Circuit of Innovation™,” working with partners to overcome various hurdles, and making iterative changes to address feedback from the market place. It’s not easy, but when done right, you can greatly increase the odds of success and experience the magic of successful innovation.

From YouTube.com/magicinnovation (Jeff Lindsay’s Magic Innovation channel): “Magic and Innovation: Transforming Nickel Ideas to Dollar Innovations,” August 14, 2009. Recorded in Appleton, Wisconsin. All rights reserved.

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InnovationFatigue.com is the official blog for the new book, Conquering Innovation Fatigue. Here we provide supplementary innovation, news, tips, updates, and, when needed, a correction or two, to keep those who are using the big on the inside edge for innovation success.