Archive for 'Venture capital.'
Michael D. Moberly March 16, 2010
While in London recently where I served as one of the keynote speakers for the European Information Asset Protection Conference, I secured a meeting with officials of the British Venture Capital Association (BVCA) which serves as UK’s public policy advocate for the private equity and venture capital industry.
A significant percentage of my discussion with BVCA officials evolved around comparing and contrasting UK’s VC industry with the US, and the so-called ‘silicon valley’ model which my hosts did not advocate tyring to replicate in the UK.
Our discussion also explored possible differences between US and UK entrepreneurs. One such difference expressed by BVCA was that some would be UK entrepreneurs may be more reluctant to start an entrepreneurial business compared to their US counterparts due to stronger personal concerns about the consequences of (business) failure. It was said that a contributing factor to this perception lie in UK bankruptcy laws that are not considered particularly entrpreneur friendly. That is, company and personal bankruptcies in the UK are generally considered indistinguishable, therefore a combination of business failure and bankruptcy may discourage, in a entry barrier context, more entrepreneurial activities because it elevates-carries a sense (probability) of personal failure.
While UK’s VC industry is generally considered to be the most advanced in the EU, BVCA officials suggested there are relatively few (UK-based) investors with the financial capability to fund promising (innovative) companies through each stage of their development. If reality, this contributes to the perception that UK’s VC industry focuses more on later stage and more established companies vs. start-ups and early stage companies.
In that regard, the BVCA concedes there may be structural problems (within UK’s VC industry) that need to be addressed to ease the flow of equity capital into early stage and innovation intensive companies particularly. With that, the BVCA is exploring-seeking ‘the most suitable type and/or correct mixture of interventions.
June 1st, 2009. Published under Analysis & Commentary: Studies, Research, White Pap, Fiduciary Responsibility, Venture capital.. No Comments.
Michael D. Moberly June 1, 2009
In the high stakes – high risk arena of investing in early stage, know how (research) intensive companies, the obligatory question ’what’s your IP position?’ is still very much in evidence as is the routineness of the response by the know how developers and/or IP holders, i.e., “a patent application has been filed”, or “a patent has been issued”. While the ‘what’s your IP position’ question still has some relevance, albeit less than it used to, prudent investors must have an array of follow-up questions at the ready relative to making their ‘invest – don’t invest’ decision.
Given the consistency which both an investor asks the IP position question and the IP holders’ response, it’s evident both parties still believe patents are requisites to investment and eventual commercialization. But, in light of the increasingly predatorial, winner-take-all global business transaction environment and the essentially unfettered expansion of the infringement – counterfeiting, and product piracy industry globally, the IP position question is rapidly being reduced to legal symbolism.
Patents are indeed global necessities (WTO obligations) that underpin intellectual property rights. For TRIPS signatories, patents provide the necessary standing (a legal portal) for commencing - taking action against infringers, misappropriators, and counterfeiters in each country where a company (and its IP) are in play. However, its prudent for both investors and IP holders to acknowledge, quite literally, that patents and most other forms of IP, no longer serve as (a.) stand alone deterrents or (b.) reliable-consistent prognostications of value of the innovation under patent.
Investors are urged then to literally re-phrase the question. Rather than merely asking ’what’s your IP position’ as one of a series of criteria for making ’invest-don’t invest’ decisions and receiving a well-rehearsed response from the company seeking investment capital, there is a more relevant question to be asked. That question is, ‘has the proprietary know how and intellectual capital’ that underlie the innovation (IP which the investment is premised) been adequately and appropriately safeguarded from its inception?
It’s a well acknowledged adage in the information asset protection arena that patents typically start life as trade secrets and proprietary know how. Therefore, if the know how underlying an investment has been treated in a cavalier manner absent (a.) the requisites of trade secrecy, or (b.) best information asset protection practices, prior to patent filing and/or issuance, its essential for prospective investors to ascertain the status, fragility, stability, and sustainability of the assets under investment consideration. Today, the vulnerability, probability, criticality, and speed which those assets could have already been compromised, infringed, misappropriated, or stolen are issues that must be fully explored as they become integral to ‘invest – dont’ invest’ decisions.
Before making an investment in proprietary know how rich – dependant companies, knowing and posing the correct follow-up questions to IP holders and their management teams about the real status of the information-based assets will allow prospective investors to objectively assess whether control, use, ownership, and value of those assets is (a.) sustainable relative to the exit strategy, and (b.) reflective of the assets’ functional-value cycle. Today, with increasing certainty, improperly safeguarded assets will quickly hemorrhage in value and competitive advantage and elevate investor’s vulnerability to costly, time consuming, and momentum stifling challenges, disputes, and certainly, exit strategy headaches!