Technology Commercialization

Why are we faced with a situation of “me-too” venture deals and “too much money chasing too few deals ”? Too much money is a question I will not ponder. Venture funds raised it because they could. But why are there too few deals?

There is plenty of technology out there. Universities, national labs, contract research organizations, and corporations produce plenty of high quality intellectual property. So why is it not being commercialized? What’s missing?

Two things are missing, I think. The first is management. Even in our highly entrepreneurial society, it is difficult to match quality management teams to the best IP. Without good management, companies that are based on quality technology will struggle. They do not find the right market, the correct business model, the best financial plan, or a business plan worthy of investment dollars.

The second thing missing is the right amount of capital. It seems as though there is either too little or too much. Too little is evidenced by state or federal programs which grant as little as $50K up to $200K. This is enough to launch the company, but not enough to do much else. What I mean by too much money is that so called “early stage” venture capital firms want to invest $5-10 million per company. This is because they have raised funds that are $150-400 million in size. At that size, they simply will not invest $500K to $1 million to get a company started. They can’t—because they can’t manage hundreds of deals.

This is why I am excited about the opportunity for ANGLE. What we do is different. We try to find IP that we think has real market potential and then we commercialize it. We start the company. We negotiate the license arrangement with the university or lab. We put in the management team, write the business plan, determine the optimal market and business model. And we put in the $500K - $2 million needed to launch the company.

It is a different approach, one that many folks think is flat wrong. A long held position in venture capital is to let the market drive your technology development. It is taboo to have “technology in search of a problem” but that is exactly what we have, all the time. We just have to be smart enough to find the right problem and to reject lots of opportunities that don’t meet a market need.

The other long standing VC maxim is to invest with the best management teams, to “invest in the jockey, not the horse.” In our case, there is no jockey. There is no management at all—we have to provide it.

It will be fun to see if we can be successful while turning these maxims on their head.

The Democratization of Technology

Technology used to be for geeks and IT managers in big companies looking to save money or drive enterprise productivity. The entire technology industry grew up trying to satisfy the computing and productivity needs of enterprises. Big companies, and entire sectors, formed around their needs.

But in the 90s, a funny thing happened. Actually it was a whole set of things. The Web emerged as a distribution channel for information, media, and entertainment. Email became the dominant mechanism of communication, the proverbial killer app. Cell phones became small enough, light enough, and cheap enough for virtually everyone to carry one. Mobile phone usage exploded. Laptops and WiFi became prevalent. Digital camera usage similarly exploded. Massive adoption of technology by consumers continued even as the tech bubble burst in 2001-2003. In fact it accelerated.

However, it wasn’t just adoption, it was participation. Consumers didn’t just accept technology, they didn’t even embrace it, they pushed it. This democratization of technology involved active participation in the technology industry. You could even call it a movement. Massive file sharing of MP3s, illegal at first, occurred because consumers wanted it, and interacted with each other to create it. This spawned the iPod and iTunes. Apple created these because record companies could not get their act together to work out a legal system for music downloads. But it wasn’t enough just to get your music mobile, the iPod wave spawned podcasting, another method of participating with technology and interacting.

This wave of democratization, of participation, is just beginning.

Proliferation:

Email
Cell phones
Laptops
WiFi
Blackberry, Treo
Online Banking, bill pay, insurance, mortgages
Digital cameras

Democratization:

Tivo- the ability to time shift, to interact, with your television programming
eBay- the ultimate participatory marketplace
Paypal- really grew from people using eBay
MP3s, iPods
Photo sharing
IMing
Blogs- "listen to what I have to say"
podcasts- "I am a DJ or a commentator"

Open Source Software- the ultimate example, the geeks version of democratization. Worldwide contribution to software development for a number of reasons, none of them monetary. The most important of which seem to be an expression of creativity and a desire for belonging to something larger.