Posts Tagged: "funding innovation"

What if your startup is a university startup based on university developed and patented technology? The goal is not only to create a domestic corporation, but also to create a local corporation that leverages university technology. Moving to China isn’t an option for a university startup, regardless of the technology and likelihood of attracting funding from venture capitalists. Fortunately it is not as difficult to find investors as you may think. Equity crowdfunding is on the path to surpass venture capital as the preferred way for startups and small businesses to raise capital. In a nutshell, equity crowdfunding is the sale of equity (or debt) in your business directly to investors using an online platform instead of a stock brokerage firm.

An unfounded belief persists that entrepreneurs are the primary innovators. However, in a study of the top 30 innovations of the last 30 years up through 2009, as judged by Wharton professors, shows innovations that most affected society were conceived by company workers, not entrepreneurs, according to Dr. Kaihan Krippendorff, a Wharton alum and self-described study author… So in order to encourage innovation, these characteristics of employee-innovators should be developed early on, according to Krippendorff. Logically, not only would that increase the level of innovation but also ease the task of innovation management.

BlueIron’s non-dilutive financing for startups pays all of the patent costs, including filing fees and attorney’s fees, using a conventional commercial “lease-back” arrangement. This model has been gaining traction since its first release in the fall of 2014. After financing professional poker player Phil Gordon’s patent for his new software startup, Chatbox, BlueIron has made investments in startup companies in software, hardware, biotechnology, medical devices, financial services, and agriculture.

The first mover storyline also provides a false narrative because it is flat wrong from the customer perspective as well. Simply stated, the first mover myth ignores the very real concerns facing customers in the marketplace for expensive enterprise solutions. An innovative solution provider with a complicated enterprise software product must show an established and growing customer base or big money behind them, or more likely both, in order to pass the first step of a sales process, which itself can take a year or more. Then there may be large upfront costs until the system is integrated and running before it becomes profitable. This all means an enterprise software startup must have substantial funding if they are to have any chance to succeed. This, of course, requires strong patent rights.

EDWARD JUNG: ”At the other end of that value chain you now have some of the most valuable companies in the entire world in places like China. What stops them from taking all of the value they’ve been able to derive from their over one billion population base, which well capitalizes them, and coming in and competing in the US? The US has not seen so many threats to their industry come from outside the US as opposed to within the US so in that sense I think that’s a whole new set of interesting problems to think about. I’ve actually had encounters with Chinese companies asking if there was some kind of, you know, hidden trick in the way we appear to be opening our market for them to freely come in without any IP barriers. For example, in pairing software and IP and so on and so forth.”

While the startup probably had an initial 100% market share due to a temporary de facto monopoly, such share rapidly decreases as soon as others start selling to the same customers. Worse, many times, one of those fast followers is a large entrenched company that has deep R&D teams, seemingly unlimited budgets, well-known brands and established distribution channels in many key geographies that took decades to build. They can play catchup really fast. In other words, the only thing going for the startup at that point (assuming it could not possibly achieve this scaling up over such a short period of time) is the uniqueness of its technology and its ability to out innovate others. This in turn is only true if the new technology it brings to market is adequately protected against free riders; otherwise one is simply doing others’ bidding and subsidizing their R&D… In short, innovation without protection is simply a form of philanthropy!

Drugs for the treatment of late-stage cancers are less expensive to develop, in part because late-stage drugs extend patients’ lives for a shorter period of time such that clinical trials are concluded more quickly. This means that such drugs require less time to research, develop, test and bring to market than drugs that treat earlier stage cancers, providing the innovator with a longer effective patent life. In essence, less research and development investment is directed toward drugs that treat patient groups requiring lengthy clinical trials, those with longer commercialization lags… It’s worthwhile to ask whether a ‘one-size-fits-all’ patent policy is optimal. How we can think creatively about patent protection in an effort to incentivize the innovation we want and push the frontiers of modern medicine.

In what can only be characterized as a bizarre, rambling, and intellectually dishonest article, ‘The Economist’ has inexplicably taken the position that patents are not necessary for innovation. The complexity of innovation today and the required investment necessary to innovate, as well as the highly speculative nature of innovation, seems lost on the author. It is surprising, and disappointing, that a publication like The Economist would turn a blind-eye to the underlying financial realities of innovation. Truthfully, The Economist owes its readers a sincere apology for this entire article. Some could, and probably should, call into question the motivations for building an anti-patent argument upon such a rotten foundation.

One of the Patent Examiners was surprised that I was there by myself and asked why I didn’t have an “army” of attorneys with me, as I was from Silicon Valley. I noted that not all startups are well funded like Facebook or Google. I went on to explain that well-funded startups and large companies were copying our ideas, cloning our products, selling to our customers and costing us revenue. Because of the increasing competition in NFC mobile payments, I was also having problems getting funding. I even explained how we had to downsize and put product development on hold. That was a new revelation for the patent Examiner, who was surprised.