If you’re talking to a corporate venture partner on the other side of the Atlantic and are worried about protecting your intellectual property (IP), then maybe you shouldn’t be having that conversation in the first place. That at least was the message from IBM’s Claudia Fan Munce when asked what safeguards her Venture Capital Group could provide to small partners concerned about “opening the kimono” and sharing their IP secrets.
“If people come and say they can’t tell us anything unless we sign our life away, my response is don’t show us then,” she said in a recent web seminar on partnerships between corporates and venture-backed start-ups, run by the US National Venture Capital Association. “It might be arrogant, but if there is concern or mistrust then we would prefer not to engage with a company at that stage.”
She added that a start-up that was primarily concerned with commercialising its innovation – rather than incorporating it into a broader solution that IBM could bring to market – would not be a suitable partner anyway. “If your only asset is IP then I don’t think you would make a very interesting partner for us. We are looking to build solution partners.”
Many smaller companies do operate successfully in the ecosystems that exist around larger vendors – and the vendors themselves realise the importance of cultivating such ecosystems to plug gaps in their offerings. And in fact, Fan Munce argues that organisations like the VC Group she heads are designed to insulate everyone involved from the prying eyes of rivals. “We’ve had seven years of bringing thousands of companies into revenue-sharing partnerships and we’ve acquired 28 of them,” she says. “We’ve never had a case where there’s been a violation of IP and when you look at the wording of our IP contracts, that tends to shut down the situation. You should see the venture capital group as a ‘firewall’ so to speak.”
But since all large corporates talk to thousands more companies than they eventually buddy up with, what happens to the secrets of the ones that don’t make it to partnership status? The reality is that in some cases, the corporate may already be working on similar products to yours in its own labs: the attraction of a partner might simply be that they could get to market quicker, or they have a specific vertical market twist. In other cases, if you’re not a good fit, it’s probably safe to assume that a large company isn’t going to spend time reinventing a wheel it doesn’t need. The bottom line is that any time you have to open the lid on your IP, there’s an element of risk: the question is, how far is it outweighed by the potential reward?
By David Longworth, Webster Buchanan Research
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Monday, March 24, 2008
Tuesday, January 22, 2008
When to Cut Your Losses
Do you really need all the funds you're asking for - or would you take less in exchange for a quick deal? It's the kind of dilemma you might have to square up to when you're seeking VC investment
Imagine the scenario. You're standing in front of a VC you've never dealt with before, you've presented your business plan, and you've concluded with a detailed explanation of why you need ₤2m funding. The VC thanks you, pauses - and asks what you could do with a quarter of that amount if it was with you by the end of the week. Would you take the bait?
It's worth thinking through the answer, because it really could happen. Among other people, it's a technique favoured by Howard Hartenbaum, general partner at San Francisco-based VC firm Draper Richards. And it works. According to Hartenbaum, some entrepreneurs quickly concede that they'd asked for more than they really need and go on to explain just what they could do with a fraction of the funding. If he and his colleagues like the answers, they'll offer a deal on the spot and secure their stake. As he points out with just a hint of exaggeration, entrepreneurs sometimes leave his meetings unsure whether they've been 'blessed or screwed'.
Hartenbaum's story was just one example of the deal-maker's mentality that emerged during a panel discussion at IBF's 18th Annual Venture Capital Investing Conference in San Francisco earlier this month. From the merits of receiving investment in tranches to the steps entrepreneurs need to take to ensure they don't end up losing their shirt, dealing with VCs can get pretty complex. As Vince Occhipinti, managing director of Woodside Fund, wryly pointed out: 'If you could get manna from heaven and not deal with a VC, you probably would choose that option.'
Not surprisingly, trust was a recurrent theme among the panellists - and VCs acknowledged that it works both ways. While most of the focus during fund-raising cycles is on how companies can impress potential investors, entrepreneurs also need to do a little due diligence of their own. Panellists advised companies to check out VCs' references, for example, calling their portfolio companies to see what it's like to work with them and getting the inside view on how they respond when things go wrong. Some VCs, in fact, actively encourage you to find out the worst about them. George Ugras, general partner at Adams Capital Management, tends to work with first time entrepreneurs and is blunt about the difficulties of growing a relationship from scratch: 'How can you build trust with someone who's on a boat with you and never sailed before?' he asked. That's why his firm specifically puts new CEOs in touch with entrepreneurs from previous deals that didn't go well. 'We tell them our mistakes first. We have never lost a deal in ten years where those calls are made - we really expose everything about ourselves,' he said.
VCs also warned that an efficient investment model often depends on them bringing in new senior people. That doesn't necessarily mean a new CEO - although entrepreneurs whose passion is more in the technology than building a business shouldn't be too surprised if their investors want a change of leadership. As Ugras pointed out, part of the VC's role is to reduce the risk of their investment, so if the technology team looks a little shaky or the company's struggling to set up an effective sales channel, that's where talent has to be brought in. 'Upgrading the management team is always something you've got to do,' he argued. Ajit Nazre, general partner at Kleiner Perkins Caufield & Byers, agreed: 'We will find the best person, no matter what it costs, even for Series A [funding] - it doesn't matter.'
Where VCs were split, however, was on the controversial practice of handing over investment in tranches, usually built around milestones. A perennial topic at VC conferences and one that frequently divides panellists, tranching is preferred by some investors as a way of drip-feeding funds to minimise their exposure. Occhipinti at Woodside Fund does it if the right syndicate is in place, where all the partners agree on the business goals and there's no danger of anyone losing patience mid-cycle. 'Having an extra $5m in the bank - believe me, there is a tendency to spend it,' he pointed out. For his part, Nazre argued that if he could, he'd tranche every month. 'It gives the company an internal goal to accomplish something,' he said. 'It's not a question of trust - it's discipline, for the entrepreneur and us.'
But not everyone agrees with that philosophy. Hartenbaum at Draper Richards said the firm rarely takes the tranching route unless there's a disagreement over valuations. 'In my experience, it's generally been a negative for the company - it causes a lot of stress and a lot of angst,' he said. He believes that tranching can actually make it harder for a company to hire new people - if you have less cash in the bank, you offer less security to a new recruit. Just as important, to his mind it's not a good reflection of the VC's role.
'We're a service provider,' he concludes. 'The entrepreneur provides the blood, sweat and tears - and we put in the money.'
By Keith Rodgers, Webster Buchanan Research
Imagine the scenario. You're standing in front of a VC you've never dealt with before, you've presented your business plan, and you've concluded with a detailed explanation of why you need ₤2m funding. The VC thanks you, pauses - and asks what you could do with a quarter of that amount if it was with you by the end of the week. Would you take the bait?
It's worth thinking through the answer, because it really could happen. Among other people, it's a technique favoured by Howard Hartenbaum, general partner at San Francisco-based VC firm Draper Richards. And it works. According to Hartenbaum, some entrepreneurs quickly concede that they'd asked for more than they really need and go on to explain just what they could do with a fraction of the funding. If he and his colleagues like the answers, they'll offer a deal on the spot and secure their stake. As he points out with just a hint of exaggeration, entrepreneurs sometimes leave his meetings unsure whether they've been 'blessed or screwed'.
Hartenbaum's story was just one example of the deal-maker's mentality that emerged during a panel discussion at IBF's 18th Annual Venture Capital Investing Conference in San Francisco earlier this month. From the merits of receiving investment in tranches to the steps entrepreneurs need to take to ensure they don't end up losing their shirt, dealing with VCs can get pretty complex. As Vince Occhipinti, managing director of Woodside Fund, wryly pointed out: 'If you could get manna from heaven and not deal with a VC, you probably would choose that option.'
Not surprisingly, trust was a recurrent theme among the panellists - and VCs acknowledged that it works both ways. While most of the focus during fund-raising cycles is on how companies can impress potential investors, entrepreneurs also need to do a little due diligence of their own. Panellists advised companies to check out VCs' references, for example, calling their portfolio companies to see what it's like to work with them and getting the inside view on how they respond when things go wrong. Some VCs, in fact, actively encourage you to find out the worst about them. George Ugras, general partner at Adams Capital Management, tends to work with first time entrepreneurs and is blunt about the difficulties of growing a relationship from scratch: 'How can you build trust with someone who's on a boat with you and never sailed before?' he asked. That's why his firm specifically puts new CEOs in touch with entrepreneurs from previous deals that didn't go well. 'We tell them our mistakes first. We have never lost a deal in ten years where those calls are made - we really expose everything about ourselves,' he said.
VCs also warned that an efficient investment model often depends on them bringing in new senior people. That doesn't necessarily mean a new CEO - although entrepreneurs whose passion is more in the technology than building a business shouldn't be too surprised if their investors want a change of leadership. As Ugras pointed out, part of the VC's role is to reduce the risk of their investment, so if the technology team looks a little shaky or the company's struggling to set up an effective sales channel, that's where talent has to be brought in. 'Upgrading the management team is always something you've got to do,' he argued. Ajit Nazre, general partner at Kleiner Perkins Caufield & Byers, agreed: 'We will find the best person, no matter what it costs, even for Series A [funding] - it doesn't matter.'
Where VCs were split, however, was on the controversial practice of handing over investment in tranches, usually built around milestones. A perennial topic at VC conferences and one that frequently divides panellists, tranching is preferred by some investors as a way of drip-feeding funds to minimise their exposure. Occhipinti at Woodside Fund does it if the right syndicate is in place, where all the partners agree on the business goals and there's no danger of anyone losing patience mid-cycle. 'Having an extra $5m in the bank - believe me, there is a tendency to spend it,' he pointed out. For his part, Nazre argued that if he could, he'd tranche every month. 'It gives the company an internal goal to accomplish something,' he said. 'It's not a question of trust - it's discipline, for the entrepreneur and us.'
But not everyone agrees with that philosophy. Hartenbaum at Draper Richards said the firm rarely takes the tranching route unless there's a disagreement over valuations. 'In my experience, it's generally been a negative for the company - it causes a lot of stress and a lot of angst,' he said. He believes that tranching can actually make it harder for a company to hire new people - if you have less cash in the bank, you offer less security to a new recruit. Just as important, to his mind it's not a good reflection of the VC's role.
'We're a service provider,' he concludes. 'The entrepreneur provides the blood, sweat and tears - and we put in the money.'
By Keith Rodgers, Webster Buchanan Research
Friday, November 30, 2007
Aiming for the top
Are you on your way to building the next Google or Genentech? A new listing of the fastest-growing private companies in the US gives a little insight into what makes an entrepreneur successful
What does it take to build a business that works? Well, if you bolster your immune system with a mix of 17 herbs and nutrients, process credit card payments quickly and flog some add-ons for the iPod, you stand a pretty good chance of making it.
That, at least, is one conclusion you can draw from the 2006 'Inc. 500' List, a ranking of the fastest-growing private companies in the US just released by the magazine of the same name (www.inc.com). Topping this year's list is Litle & Co., which provides credit card processing services and has grown at a staggering 5629 per cent over the last three years to reach a turnover of $35m. Second was Airborne Health, maker of a snazzy health tablet, and third was Digital Lifestyle Outfitters, which provides accessories for portable devices (including, incidentally, a rather fetching pink case for your iPod nano with a 'workout-ready' armband). DLO was only founded five years ago and now turns over $84 million with 72 employees, which just goes to show what you can achieve if you really work out how to tap into mass market chic.
For the rest of us, labouring in the less flamboyant corners of the tech community, the Inc. 500 list provides some kind of insight into the things that help make businesses succeed. The companies that populate the Top 25 demonstrate that you don't necessarily need to have a great idea - in fact, one or two are terminally dull - but you do need to be tapping into a real need.
So while issues like security will always be a hot topic, it's how useful your security offering is that matters. PatchLink, which pulls together security patches for different types of software and then updates all your computers, seems to have found a sales pitch that combines fear of attack with a way to ease day-to-day IT aggravation, good enough to land it 14th place. Similarly, fear of attack from regulators appears to have propelled OpenPages into 22nd place, based on sales of its corporate governance software. One place behind it - and playing in a somewhat more interesting space - is digital marketing company Booyah Networks, which does search engine marketing for websites and provides an online marketplace for video advertising.
Other companies appear to have got where they are by taking a tried and tested idea and applying it to a new market. San Francisco-based StubHub, number eight in the list, is an online exchange where you can buy tickets for sporting events, theatres and concerts - a sort of eBay for the entertainment business. Sixteenth-placed Bandwidth.com provides Voice over IP, Internet services and managed network services - nothing new in itself, but it makes its money by specialising in selling to small and medium sized businesses.
And then there are the guys who tried something different in sales or marketing. In sixth place is United Bank Card, another player in the credit card processing game. According to Inc., the company broke the mould in the industry by giving away its terminals to customers rather than forcing them to buy or lease. At number 24 meanwhile, is IT consultancy LanceSoft: Inc. quotes its founder crediting its success to the high rewards its salespeople earn for bringing in customers, suppliers and employees, effectively turning each of them into entrepreneurs.
The list goes on, but it's a fair bet that the messages from companies in slots 26 onwards won't be radically different. All of them have dipped into the melting pot of products, services, market awareness and execution, and somehow managed to pull out the right ingredients to make it work.
What would be just as interesting, of course, would be the list of the bottom 500 performers in the US - the ones whose sales plummeted by record percentages to send them crashing into oblivion. How many people simply gambled on the wrong technologies? How many failed to keep control of their costs? How many had a great idea, threw everything into it, got some early successes and just ran out of time and money? How many hired the wrong people? And how many were just plain unlucky? The top 500 performers have clearly done a spectacular job - but that doesn't necessarily mean there's a huge gulf between them and some of the others who never quite made it.
*Details of the Top 25 performers in the Inc 500 are available at www.inc.com. The full list is available to subscribers
By Keith Rodgers, Webster Buchanan Research
What does it take to build a business that works? Well, if you bolster your immune system with a mix of 17 herbs and nutrients, process credit card payments quickly and flog some add-ons for the iPod, you stand a pretty good chance of making it.
That, at least, is one conclusion you can draw from the 2006 'Inc. 500' List, a ranking of the fastest-growing private companies in the US just released by the magazine of the same name (www.inc.com). Topping this year's list is Litle & Co., which provides credit card processing services and has grown at a staggering 5629 per cent over the last three years to reach a turnover of $35m. Second was Airborne Health, maker of a snazzy health tablet, and third was Digital Lifestyle Outfitters, which provides accessories for portable devices (including, incidentally, a rather fetching pink case for your iPod nano with a 'workout-ready' armband). DLO was only founded five years ago and now turns over $84 million with 72 employees, which just goes to show what you can achieve if you really work out how to tap into mass market chic.
For the rest of us, labouring in the less flamboyant corners of the tech community, the Inc. 500 list provides some kind of insight into the things that help make businesses succeed. The companies that populate the Top 25 demonstrate that you don't necessarily need to have a great idea - in fact, one or two are terminally dull - but you do need to be tapping into a real need.
So while issues like security will always be a hot topic, it's how useful your security offering is that matters. PatchLink, which pulls together security patches for different types of software and then updates all your computers, seems to have found a sales pitch that combines fear of attack with a way to ease day-to-day IT aggravation, good enough to land it 14th place. Similarly, fear of attack from regulators appears to have propelled OpenPages into 22nd place, based on sales of its corporate governance software. One place behind it - and playing in a somewhat more interesting space - is digital marketing company Booyah Networks, which does search engine marketing for websites and provides an online marketplace for video advertising.
Other companies appear to have got where they are by taking a tried and tested idea and applying it to a new market. San Francisco-based StubHub, number eight in the list, is an online exchange where you can buy tickets for sporting events, theatres and concerts - a sort of eBay for the entertainment business. Sixteenth-placed Bandwidth.com provides Voice over IP, Internet services and managed network services - nothing new in itself, but it makes its money by specialising in selling to small and medium sized businesses.
And then there are the guys who tried something different in sales or marketing. In sixth place is United Bank Card, another player in the credit card processing game. According to Inc., the company broke the mould in the industry by giving away its terminals to customers rather than forcing them to buy or lease. At number 24 meanwhile, is IT consultancy LanceSoft: Inc. quotes its founder crediting its success to the high rewards its salespeople earn for bringing in customers, suppliers and employees, effectively turning each of them into entrepreneurs.
The list goes on, but it's a fair bet that the messages from companies in slots 26 onwards won't be radically different. All of them have dipped into the melting pot of products, services, market awareness and execution, and somehow managed to pull out the right ingredients to make it work.
What would be just as interesting, of course, would be the list of the bottom 500 performers in the US - the ones whose sales plummeted by record percentages to send them crashing into oblivion. How many people simply gambled on the wrong technologies? How many failed to keep control of their costs? How many had a great idea, threw everything into it, got some early successes and just ran out of time and money? How many hired the wrong people? And how many were just plain unlucky? The top 500 performers have clearly done a spectacular job - but that doesn't necessarily mean there's a huge gulf between them and some of the others who never quite made it.
*Details of the Top 25 performers in the Inc 500 are available at www.inc.com. The full list is available to subscribers
By Keith Rodgers, Webster Buchanan Research
Saturday, November 24, 2007
The Importance of Business Location
Are Los Angeles, San Diego and other cities starting to steal Silicon Valley's thunder in the tech world? And does your choice of location - whether it's San Francisco or London - really matter?
Is Silicon Valley in danger of losing its position as California's technology centre? Sacrilegious as the thought may be, it could just happen. Southern California - better known for Hollywood glamour, the naval centre of San Diego, the fruit fields of the Central Valley and an unhealthy obsession with surfing - now employs almost as many techies as its Northern counterpart.
That's the conclusion of a report* last month from AeA, the national trade association formerly known as the American Electronics Association. Studying official data from 2004, it concluded that there were 214,900 high-tech jobs in San Jose and the rest of Silicon Valley in 2004, with the San Francisco-Oakland axis a few miles further north adding another 156,700. Once you take into account less fashionable cities like Sacramento, the state capital and official residence of Arnold Schwarzenegger, northern California is home to a grand total of 439,000 technology workers.
Surprisingly, the southern half of the state is just 21,000 jobs short of that figure. Hidden in the smog of the great parking lot we know as Los Angeles, some 165,700 tech workers flood the freeways each morning. Further south near the Mexico border, San Diego ranks as the fourth largest tech hub with almost 100,000 jobs, while Orange County follows closely behind.
Why does this matter? Because location, whether it's downtown San Francisco or the London suburbs, will always be a big influence on corporate success. Michael Porter, professor at Harvard Business School, has famously argued that clusters of industries and supporting institutions help improve the productivity of the companies within them and provide significant competitive advantages, from closer relationships to better information. And John Preston, associate director of the Entrepreneurship Center at Massachusetts Institute of Technology, points out that if you want to build a semiconductor business, you're better off doing it in Silicon Valley than Cleveland, for the simple reason that it'll be easier to find the employees and supporting infrastructure that you need. There are also soft benefits that rub off, as anyone from a British university town will testify. Just because your biotech office is a ten minute walk from a top-tier college doesn't automatically endow you a PhD, but mentioning Oxford or Cambridge University on the international circuit will immediately earn you kudos.
To an extent, this is a counter-intuitive concept for an industry that has made the real-time global economy possible through its own information management and communications technologies. If aircraft manufacturers can design planes using virtual teams located around the world, you'd think that US and UK tech developers would be able to telework from around the country. Yes, many start-ups require access to labs, high-performance systems and other research facilities - but you can do a lot of software programming on your laptop on a beach in Bournemouth with a simple remote connection to your central servers.
San Francisco, however, is a great example of why location really matters. If you set up a business here, you have an extraordinary choice of support partners on your doorstep, from high-tech public relations specialists to experts in patent law. If you're looking for funding, there are numerous angel networks to call on, and the home of the technology venture capital community is just forty-five minutes down the road. Similar arguments apply to London, of course. There are enormous benefits to operating in a financial capital because of the quality of companies it attracts, the physical infrastructure that grows up around it, and the support network that has evolved to help take London start-ups forward.
So what can London learn from California's experiences? Sadly, the challenges facing its different tech centres will be wearily familiar. Transport is still a problem in many parts of the state, from the clogged freeways of LA to the rush-hour congestion that blights the Bay Area's bridges and highways. The cost of housing in many cities is prohibitively expensive. And as Julie Biagini, chair of AeA's Bay Area Council, points out, there are further social challenges ranging from schooling to US immigration policy. 'San Francisco, Silicon Valley, and California have to be seen as friendly places to do business and to live. To this end, our schools need to be institutions of excellence, where all kids learn the necessary skills to compete in the 21st century, particularly in math and science. And to remain competitive, we must press our national leaders to allow the best and brightest from around the world to work for our companies, study in our world-class universities, and start new companies here.'
*California Cybercities 2006, published by the AeA. Visit www.aeanet.org/research
By Keith Rodgers, Webster Buchanan Research
Is Silicon Valley in danger of losing its position as California's technology centre? Sacrilegious as the thought may be, it could just happen. Southern California - better known for Hollywood glamour, the naval centre of San Diego, the fruit fields of the Central Valley and an unhealthy obsession with surfing - now employs almost as many techies as its Northern counterpart.
That's the conclusion of a report* last month from AeA, the national trade association formerly known as the American Electronics Association. Studying official data from 2004, it concluded that there were 214,900 high-tech jobs in San Jose and the rest of Silicon Valley in 2004, with the San Francisco-Oakland axis a few miles further north adding another 156,700. Once you take into account less fashionable cities like Sacramento, the state capital and official residence of Arnold Schwarzenegger, northern California is home to a grand total of 439,000 technology workers.
Surprisingly, the southern half of the state is just 21,000 jobs short of that figure. Hidden in the smog of the great parking lot we know as Los Angeles, some 165,700 tech workers flood the freeways each morning. Further south near the Mexico border, San Diego ranks as the fourth largest tech hub with almost 100,000 jobs, while Orange County follows closely behind.
Why does this matter? Because location, whether it's downtown San Francisco or the London suburbs, will always be a big influence on corporate success. Michael Porter, professor at Harvard Business School, has famously argued that clusters of industries and supporting institutions help improve the productivity of the companies within them and provide significant competitive advantages, from closer relationships to better information. And John Preston, associate director of the Entrepreneurship Center at Massachusetts Institute of Technology, points out that if you want to build a semiconductor business, you're better off doing it in Silicon Valley than Cleveland, for the simple reason that it'll be easier to find the employees and supporting infrastructure that you need. There are also soft benefits that rub off, as anyone from a British university town will testify. Just because your biotech office is a ten minute walk from a top-tier college doesn't automatically endow you a PhD, but mentioning Oxford or Cambridge University on the international circuit will immediately earn you kudos.
To an extent, this is a counter-intuitive concept for an industry that has made the real-time global economy possible through its own information management and communications technologies. If aircraft manufacturers can design planes using virtual teams located around the world, you'd think that US and UK tech developers would be able to telework from around the country. Yes, many start-ups require access to labs, high-performance systems and other research facilities - but you can do a lot of software programming on your laptop on a beach in Bournemouth with a simple remote connection to your central servers.
San Francisco, however, is a great example of why location really matters. If you set up a business here, you have an extraordinary choice of support partners on your doorstep, from high-tech public relations specialists to experts in patent law. If you're looking for funding, there are numerous angel networks to call on, and the home of the technology venture capital community is just forty-five minutes down the road. Similar arguments apply to London, of course. There are enormous benefits to operating in a financial capital because of the quality of companies it attracts, the physical infrastructure that grows up around it, and the support network that has evolved to help take London start-ups forward.
So what can London learn from California's experiences? Sadly, the challenges facing its different tech centres will be wearily familiar. Transport is still a problem in many parts of the state, from the clogged freeways of LA to the rush-hour congestion that blights the Bay Area's bridges and highways. The cost of housing in many cities is prohibitively expensive. And as Julie Biagini, chair of AeA's Bay Area Council, points out, there are further social challenges ranging from schooling to US immigration policy. 'San Francisco, Silicon Valley, and California have to be seen as friendly places to do business and to live. To this end, our schools need to be institutions of excellence, where all kids learn the necessary skills to compete in the 21st century, particularly in math and science. And to remain competitive, we must press our national leaders to allow the best and brightest from around the world to work for our companies, study in our world-class universities, and start new companies here.'
*California Cybercities 2006, published by the AeA. Visit www.aeanet.org/research
By Keith Rodgers, Webster Buchanan Research
Wednesday, November 14, 2007
Growth Issues for Google
Susan Wojcicki has first hand experience of what it takes to be a successful start-up - after all, Google was set up in her garage. Ten years on, she's begun to reveal some of its early secrets
Everyone knows you can't be a true Silicon Valley icon unless you started up in a garage. The 12 x 18 foot building at 367 Addison Avenue in Palo Alto, where Bill Hewlett and Dave Packard first started working together, is probably the most famous of them all - so much so that HP recently restored it to its 1939 condition. Almost sixty years later, it was Susan Wojcicki's garage that served as the critical real estate for Google, providing the first office premises for co-founders Larry Page and Sergey Brin.
Wojcicki, who didn't even work for Google at the time, has as good a handle as anyone on what it's like to take a start-up from angel funding through Initial Public Offering - and in Google's case, on to become Silicon Valley's flagship Internet success story. Joining the company as employee number 16 and now vice president of product management, she's been part of a local legend characterized by the founders' insistence on doing things their way. As keynote speaker at a Women's Technology Cluster event in San Francisco earlier this month, she talked through some of the lessons she's picked up on the way.
Google actually spluttered into life at Stanford University in January 1996, when Page and Brin started collaborating on a new search technology known as 'BackRub', reflecting its focus on the 'back links' that connect to a website. The early years were characterised by a lot of R&D and a fair amount of improvisation - the 'data centre', for example, was actually Page's dorm room. Their first big break came when they cornered Andy Bechtolsheim, co-founder of Sun, on an acquaintance's front porch, and after the briefest of product demos landed themselves a $100,000 cheque (remember - this was the dot-com era). With contacts and family taking the start-up funding to $1 million, the two founders formally incorporated the company and hired their first recruit, Craig Silverstein, who's now director of technology. They also took out space in Wojcicki's garage and rented a couple of rooms. In these early days, the Google brand didn't carry a great deal of weight with its landlady - Brin, Page and their clients were forbidden from using Wojcicki's front door.
The challenges Google faced in its early years will be familiar to every start-up. To begin with, their business plan needed a credible revenue stream - but no-one knew for sure where the money would be coming from. They predicted three equal revenue streams - one third from licenses, one third site searches, and one third advertising. For what it's worth, they were wrong: today, advertising accounts for 99 per cent of the company's revenues.
Then there was the marketing, part of Wojcicki's initial remit. When it launched, Google was operating in a competitive market, with companies like Excite and Alta Vista making much of the running. Wojcicki recalls that Alta Vista in particular was spending millions on marketing, but Google took the decision not to splash out, reckoning that doing so would force it to go through more funding rounds than it needed to. Instead, the bulk of the funds were spent on the product, and most marketing was done through public relations and word-of-mouth initiatives.
Like many start-ups, much of the Google story was simply about making things happen. Computing power, for example, was always a problem. In the early days, much of the infrastructure consisted of low budget, cheap systems - at one point, they tried bungee cords and velcro to earthquake-proof the machines. Not surprisingly, they nearly ran into capacity problems when they struck their first deal with AOL/Netscape, which selected Google as its web search service and pushed traffic to three million searches per day.
Despite these hiccups, they also got a lot of things right. Most important, says Wojcicki, they had a clear vision of where the company was going and they focused hard on the product, believing that if they built a great product the users would come. That's not always a successful business philosophy, of course - the early Apple user interface beat Microsoft hands-down, while Betamax lost out when VHS won the video standards war - but it's been one of Google's strengths. Even today, Google engineers spend 20 per cent of their working time on their own chosen projects, helping to sustain a culture of innovation.
That unwavering focus demonstrated itself in Google's relations with its VCs, where Page and Brin controlled the product vision and pushed through one or two controversial ideas, such as developing their own advertisement platform. 'If you as a VC or angel know more about the product and market than the entrepreneur, you've got a problem,' says Wojcicki. What the investors did bring to the party - aside from cash - was a high-level focus on the key issues, acting as validators for Page and Brin. The VCs also brought practical assistance, helping with complex deals like the AOL/Netscape agreement, difficult legal and corporate governance issues, and key hires. Recruitment was also taken seriously from the beginning, says Wojcicki, and Google's still keen on flat organisational structures. That was occasionally taken to extremes in the early days - at one stage, the VP of engineering had 150 direct reports.
Summing up, Wojcicki passed on eight lessons to start-ups looking to emulate the Google story:
1. Build a great product that users love
2. Think big
3. Solve an important problem. Google, she says, wasn't always sure if search would make money - but the founders knew it was a problem
4. Rally the company around a vision and be focused
5. Hire the best people you can
6. Question accepted practices, and invent the right ones for you. Google's product launch philosophy, for example, is based on doing things fast rather than building comprehensive business plans - if it thinks a product is right, it launches it and then sees how it works out
7. Base decisions on data. Wojcicki stresses that the company has always put value on business and statistical analysis
8. Make decisions for the long-term. 'We were willing to wait,' she says
By Keith Rodgers, Webster Buchanan Research
Everyone knows you can't be a true Silicon Valley icon unless you started up in a garage. The 12 x 18 foot building at 367 Addison Avenue in Palo Alto, where Bill Hewlett and Dave Packard first started working together, is probably the most famous of them all - so much so that HP recently restored it to its 1939 condition. Almost sixty years later, it was Susan Wojcicki's garage that served as the critical real estate for Google, providing the first office premises for co-founders Larry Page and Sergey Brin.
Wojcicki, who didn't even work for Google at the time, has as good a handle as anyone on what it's like to take a start-up from angel funding through Initial Public Offering - and in Google's case, on to become Silicon Valley's flagship Internet success story. Joining the company as employee number 16 and now vice president of product management, she's been part of a local legend characterized by the founders' insistence on doing things their way. As keynote speaker at a Women's Technology Cluster event in San Francisco earlier this month, she talked through some of the lessons she's picked up on the way.
Google actually spluttered into life at Stanford University in January 1996, when Page and Brin started collaborating on a new search technology known as 'BackRub', reflecting its focus on the 'back links' that connect to a website. The early years were characterised by a lot of R&D and a fair amount of improvisation - the 'data centre', for example, was actually Page's dorm room. Their first big break came when they cornered Andy Bechtolsheim, co-founder of Sun, on an acquaintance's front porch, and after the briefest of product demos landed themselves a $100,000 cheque (remember - this was the dot-com era). With contacts and family taking the start-up funding to $1 million, the two founders formally incorporated the company and hired their first recruit, Craig Silverstein, who's now director of technology. They also took out space in Wojcicki's garage and rented a couple of rooms. In these early days, the Google brand didn't carry a great deal of weight with its landlady - Brin, Page and their clients were forbidden from using Wojcicki's front door.
The challenges Google faced in its early years will be familiar to every start-up. To begin with, their business plan needed a credible revenue stream - but no-one knew for sure where the money would be coming from. They predicted three equal revenue streams - one third from licenses, one third site searches, and one third advertising. For what it's worth, they were wrong: today, advertising accounts for 99 per cent of the company's revenues.
Then there was the marketing, part of Wojcicki's initial remit. When it launched, Google was operating in a competitive market, with companies like Excite and Alta Vista making much of the running. Wojcicki recalls that Alta Vista in particular was spending millions on marketing, but Google took the decision not to splash out, reckoning that doing so would force it to go through more funding rounds than it needed to. Instead, the bulk of the funds were spent on the product, and most marketing was done through public relations and word-of-mouth initiatives.
Like many start-ups, much of the Google story was simply about making things happen. Computing power, for example, was always a problem. In the early days, much of the infrastructure consisted of low budget, cheap systems - at one point, they tried bungee cords and velcro to earthquake-proof the machines. Not surprisingly, they nearly ran into capacity problems when they struck their first deal with AOL/Netscape, which selected Google as its web search service and pushed traffic to three million searches per day.
Despite these hiccups, they also got a lot of things right. Most important, says Wojcicki, they had a clear vision of where the company was going and they focused hard on the product, believing that if they built a great product the users would come. That's not always a successful business philosophy, of course - the early Apple user interface beat Microsoft hands-down, while Betamax lost out when VHS won the video standards war - but it's been one of Google's strengths. Even today, Google engineers spend 20 per cent of their working time on their own chosen projects, helping to sustain a culture of innovation.
That unwavering focus demonstrated itself in Google's relations with its VCs, where Page and Brin controlled the product vision and pushed through one or two controversial ideas, such as developing their own advertisement platform. 'If you as a VC or angel know more about the product and market than the entrepreneur, you've got a problem,' says Wojcicki. What the investors did bring to the party - aside from cash - was a high-level focus on the key issues, acting as validators for Page and Brin. The VCs also brought practical assistance, helping with complex deals like the AOL/Netscape agreement, difficult legal and corporate governance issues, and key hires. Recruitment was also taken seriously from the beginning, says Wojcicki, and Google's still keen on flat organisational structures. That was occasionally taken to extremes in the early days - at one stage, the VP of engineering had 150 direct reports.
Summing up, Wojcicki passed on eight lessons to start-ups looking to emulate the Google story:
1. Build a great product that users love
2. Think big
3. Solve an important problem. Google, she says, wasn't always sure if search would make money - but the founders knew it was a problem
4. Rally the company around a vision and be focused
5. Hire the best people you can
6. Question accepted practices, and invent the right ones for you. Google's product launch philosophy, for example, is based on doing things fast rather than building comprehensive business plans - if it thinks a product is right, it launches it and then sees how it works out
7. Base decisions on data. Wojcicki stresses that the company has always put value on business and statistical analysis
8. Make decisions for the long-term. 'We were willing to wait,' she says
By Keith Rodgers, Webster Buchanan Research
Saturday, October 20, 2007
Recruiting for skills and experience
While US politicians argue about immigration and offshoring, London entrepreneurs have a big opportunity to take advantage of skills shortages in the American tech sector
As he grapples with war in Iraq, nuclear showdown with Iran and North Korea, and the inexorable growth of China, President George W Bush could be forgiven for seeking a little light relief at home. But he isn't getting it. With his popularity ratings low, petrol prices rising and his Republican comrades looking for inspiration ahead of mid-term elections, Bush has become embroiled in a debate that no-one can ever win - immigration.
For a country shaped by pioneering pilgrims who arrived uninvited on a boat, it's ironic that Americans are so strung up about immigration. Every country has similar contradictions, of course - the British make a point of hating the French, yet if we could unravel our lineage many of us would end up sooner or later at William the Conqueror and his Norman mates. But in the US, where an estimated 11 million illegal immigrants have made their home, it's a red hot and highly controversial topic. The House of Representatives recently passed draconian legislation up to the Senate that criminalises illegal entry to the country and demands that much of the US border with Mexico be fenced off. The Senate has since been debating a complex set of alternative proposals, including a compromise bill that increases border security while expanding a guest worker scheme and offering more immigrants a chance to acquire legal status and ultimately, citizenship.
Bush, whose conservative instincts would usually align him with the 'Kick 'em Out' brigade, finds himself in a quandary. For one thing, the Hispanic vote is an increasingly powerful force in US politics. For another, big business is pushing for flexible policy, since so many sectors rely on immigrant labour, including construction and agriculture. All this explains why, during a speech in California on Monday, Bush was pushing for a compromise.
The problem with the current immigration debate, however, is that too much of it is focused on the US-Mexico border and unskilled labour. As we've reported before, there are significant issues relating to a shortage of skilled labour in the tech industry and elsewhere, which tend to get overshadowed by the broader political arguments. While US politicians wring their hands in anguish at the growth in offshoring, the reality is that the policies they create are restricting tech businesses from hiring the talent they need, because of a shortage of visas and delays in issuing green cards see 'Work in Progress'. That leaves many companies with no choice but to hire labour abroad.
All of this matters for the London tech scene. Offshoring has historically been associated with low-skilled jobs, but Western companies are increasingly comfortable hiring programmers and IT specialists from India. While the rates they pay for these skills are low compared to Europe and the US, cost is not the only reason they do it. Many US companies would be prepared to pay more for the right people - the fundamental problem is that the people they want aren't available. It's a shortage of human capital - the kind of capital that resides, of course, in the UK.
No-one's suggesting that London should turn itself into the Bangalore of the West, but there are clearly enormous opportunities here for companies to fill the gaps in the US market. UK entrepreneurs have long partnered with major US suppliers, resellers have always developed add-ons to other suppliers' products, and organisations such as Yahoo foster a network of independent developers to create innovative products for their portfolio. That process can logically be extended even further. There's little to stop UK companies from providing a whole range of specialist services to plug US skills gaps, in anything from product design to marketing expertise. If aircraft manufacturers can design and build prototype craft using virtual teams around the world, then tech companies are perfectly capable of collaborating across 5500 miles of water as well, particularly for intangible products such as software.
This kind of collaboration has long been punted in the business community but rarely achieved. Business necessity, however, is a great driver. With compromise being sought on the whole immigration issue, the chances of a radical restructuring of US policy are slim. That leaves the door open for UK entrepreneurs to try something different.
By Keith Rodgers, Webster Buchanan Research
As he grapples with war in Iraq, nuclear showdown with Iran and North Korea, and the inexorable growth of China, President George W Bush could be forgiven for seeking a little light relief at home. But he isn't getting it. With his popularity ratings low, petrol prices rising and his Republican comrades looking for inspiration ahead of mid-term elections, Bush has become embroiled in a debate that no-one can ever win - immigration.
For a country shaped by pioneering pilgrims who arrived uninvited on a boat, it's ironic that Americans are so strung up about immigration. Every country has similar contradictions, of course - the British make a point of hating the French, yet if we could unravel our lineage many of us would end up sooner or later at William the Conqueror and his Norman mates. But in the US, where an estimated 11 million illegal immigrants have made their home, it's a red hot and highly controversial topic. The House of Representatives recently passed draconian legislation up to the Senate that criminalises illegal entry to the country and demands that much of the US border with Mexico be fenced off. The Senate has since been debating a complex set of alternative proposals, including a compromise bill that increases border security while expanding a guest worker scheme and offering more immigrants a chance to acquire legal status and ultimately, citizenship.
Bush, whose conservative instincts would usually align him with the 'Kick 'em Out' brigade, finds himself in a quandary. For one thing, the Hispanic vote is an increasingly powerful force in US politics. For another, big business is pushing for flexible policy, since so many sectors rely on immigrant labour, including construction and agriculture. All this explains why, during a speech in California on Monday, Bush was pushing for a compromise.
The problem with the current immigration debate, however, is that too much of it is focused on the US-Mexico border and unskilled labour. As we've reported before, there are significant issues relating to a shortage of skilled labour in the tech industry and elsewhere, which tend to get overshadowed by the broader political arguments. While US politicians wring their hands in anguish at the growth in offshoring, the reality is that the policies they create are restricting tech businesses from hiring the talent they need, because of a shortage of visas and delays in issuing green cards see 'Work in Progress'. That leaves many companies with no choice but to hire labour abroad.
All of this matters for the London tech scene. Offshoring has historically been associated with low-skilled jobs, but Western companies are increasingly comfortable hiring programmers and IT specialists from India. While the rates they pay for these skills are low compared to Europe and the US, cost is not the only reason they do it. Many US companies would be prepared to pay more for the right people - the fundamental problem is that the people they want aren't available. It's a shortage of human capital - the kind of capital that resides, of course, in the UK.
No-one's suggesting that London should turn itself into the Bangalore of the West, but there are clearly enormous opportunities here for companies to fill the gaps in the US market. UK entrepreneurs have long partnered with major US suppliers, resellers have always developed add-ons to other suppliers' products, and organisations such as Yahoo foster a network of independent developers to create innovative products for their portfolio. That process can logically be extended even further. There's little to stop UK companies from providing a whole range of specialist services to plug US skills gaps, in anything from product design to marketing expertise. If aircraft manufacturers can design and build prototype craft using virtual teams around the world, then tech companies are perfectly capable of collaborating across 5500 miles of water as well, particularly for intangible products such as software.
This kind of collaboration has long been punted in the business community but rarely achieved. Business necessity, however, is a great driver. With compromise being sought on the whole immigration issue, the chances of a radical restructuring of US policy are slim. That leaves the door open for UK entrepreneurs to try something different.
By Keith Rodgers, Webster Buchanan Research
Monday, September 24, 2007
Grant Funding
Winning Grant funding through competitions and applying for government-backed grants are both good options for start-ups - but they take different kinds of skills and present very different challenges
Getting funding under the DTI's R&D grants programme is like going to counselling, according to one entrepreneur. You don't think you need it, it feels pretty terrible when you're sitting on the couch - but on balance you're probably better off for having done it.
The R&D grants programme is just one of many government-backed schemes that provide funding for start-ups beyond traditional venture capital and bank lending. Competitions differ from grants in the way they're administered and in how the money is awarded, and they're often perceived to be more difficult to apply for. So which approach will work best for you?
A perfect fit?
First of all, don't be put off by the rules and regulations of either scheme. Invariably, there are conditions attached to the awards, which often require match funding and specific project deliverables. But many entrepreneurs who've successfully gone through the process argue that it's relatively straightforward so long as you provide all the information the administrators are looking for first time round. The most important consideration, they say, is to find a scheme that fits what you're trying to achieve - not to try to force your business idea to fit a scheme's requirements.
'People do try to shoehorn an inappropriate idea into a grant application,' says Gary Hellen, manager of the Grant for R&D programme at the London Development Agency. 'Some applications try to bundle several projects into one and that's often a reason we have to turn them down. If it's inappropriate we'll find out.'
Novacta Biosystems in Hatfield won over �500,000 funding in the Spring 2005 Collaborative R&D competition with its partner, Edinburgh-based Ingenza. The project was a three-year initiative to find new industrial processes using enzymes, and according to Dr Mike Dawson, research director at Novacta, meeting the scheme's criteria was key. 'It fitted pretty well, not just in terms of the science but on the commercial side and the objectives of the funding scheme,' he says. 'There are a whole load of criteria that the funding mechanism is looking for and it's important to meet them all.'
Winners and losers in competitions
When it comes to choosing between grants and competitions, bear in mind that the latter can be harder to apply for, primarily because they have very specific aims and cut-off dates that often provide little room for manoeuvre. The Autumn Technology Strategy Board Collaborative R&D competition, for example, opened at the Innovate Conference in November with a �50m pot for six priority areas. But if you're thinking of applying now, you're probably already too late - applications need to be in by January 15th. Likewise a �10m Competition of Ideas at the Ministry of Defence, which kicked off in October, closes on January 31st.
'The timelines are very tight from the announcement of the scheme to the deadline for submission of applications,' says Dawson. 'Given the collaborative goals, it's a relatively short timeframe to bring a consortium together.' To tackle that problem, Novacta keeps a rolling programme of ideas that it's seeking funding for and a network of contacts that can help fulfil them - that way, if an appropriate scheme is announced, it can quickly pull together the various partners.
There are also questions over efficiency. Competitions are most effective when they focus on a specific output - such as producing an energy-efficient battery - and offer one award (or at most, just a handful). But that invariably means some perfectly good ideas will be ruled out because they don't meet the specific goals. From 10,000 outline assessments made by the Technology Strategy Board since 2004, for example, only 500 projects have been approved for funding. This ratio is likely to improve now that the TSB has streamlined its two-stage process: in this year's spring competition, a new Fast Track approach made it easier and quicker for small businesses to gain smaller awards under �250,000.
'If [the competition organisers] know where they want to go and how to get there, then broadly competitions are good; they set a goal and let the market meet it,' says Richard Halkett, executive director of policy and research at the National Endowment for Science, Technology and the Arts (Nesta). 'But there's a lot of waste in them - they are not a perfect market mechanism.' Steps are rarely taken to capture the rejected ideas, for example. 'If they don't take account of the waste, they can be a blunt instrument and quite damaging - if they do, then it's more of a contract than a competition.'
Streamlining grants
By contrast, the world of grants can appear a sea of calm. The DTI has reduced the number of business support schemes over the past few years from several hundred to 10, but this is in the context of an ongoing reduction of business support schemes across all central and local government departments from 3,000 to 100. 'It's all about making things simpler for business,' says a spokesperson.
Devolving administration of various grants to the regional development agencies has also made things more straightforward. Hellen says the R&D grant programme used to be a competition itself but adds: 'Rolling programmes tend to be more flexible than competitions and more customer-friendly. Competitions have closing dates and are not open door.'
One common mistake entrepreneurs make is to look for funding after a project has already started, which rules it out of a competition. Under a rolling grant programme, however, the concept of 'additionality' allows the entrepreneur to return to a grants body for funding once the project enters its next phase.
It's also worth bearing in mind that most grant schemes require some sort of output in the form of commercial demand for the product you're developing and a route to market. There are exceptions, of course - the Grant for Investigating an Innovative Idea, for example, refunds consultancy costs in early stages of research projects. But generally speaking, you'll need to be able to explain the commercial potential of what you are developing.
Ultimately, the application process itself can be a useful exercise for future funding rounds when you find yourself in front of potential investors. 'People know their technology but not necessarily how to run a business,' says Hellen. 'This process tends to make them think about preparing accounts and bookkeeping and so on. Most people do find the structure useful, but we do sometimes spend some time going back and forth with them.'
By David Longworth, Webster Buchanan Research
Getting funding under the DTI's R&D grants programme is like going to counselling, according to one entrepreneur. You don't think you need it, it feels pretty terrible when you're sitting on the couch - but on balance you're probably better off for having done it.
The R&D grants programme is just one of many government-backed schemes that provide funding for start-ups beyond traditional venture capital and bank lending. Competitions differ from grants in the way they're administered and in how the money is awarded, and they're often perceived to be more difficult to apply for. So which approach will work best for you?
A perfect fit?
First of all, don't be put off by the rules and regulations of either scheme. Invariably, there are conditions attached to the awards, which often require match funding and specific project deliverables. But many entrepreneurs who've successfully gone through the process argue that it's relatively straightforward so long as you provide all the information the administrators are looking for first time round. The most important consideration, they say, is to find a scheme that fits what you're trying to achieve - not to try to force your business idea to fit a scheme's requirements.
'People do try to shoehorn an inappropriate idea into a grant application,' says Gary Hellen, manager of the Grant for R&D programme at the London Development Agency. 'Some applications try to bundle several projects into one and that's often a reason we have to turn them down. If it's inappropriate we'll find out.'
Novacta Biosystems in Hatfield won over �500,000 funding in the Spring 2005 Collaborative R&D competition with its partner, Edinburgh-based Ingenza. The project was a three-year initiative to find new industrial processes using enzymes, and according to Dr Mike Dawson, research director at Novacta, meeting the scheme's criteria was key. 'It fitted pretty well, not just in terms of the science but on the commercial side and the objectives of the funding scheme,' he says. 'There are a whole load of criteria that the funding mechanism is looking for and it's important to meet them all.'
Winners and losers in competitions
When it comes to choosing between grants and competitions, bear in mind that the latter can be harder to apply for, primarily because they have very specific aims and cut-off dates that often provide little room for manoeuvre. The Autumn Technology Strategy Board Collaborative R&D competition, for example, opened at the Innovate Conference in November with a �50m pot for six priority areas. But if you're thinking of applying now, you're probably already too late - applications need to be in by January 15th. Likewise a �10m Competition of Ideas at the Ministry of Defence, which kicked off in October, closes on January 31st.
'The timelines are very tight from the announcement of the scheme to the deadline for submission of applications,' says Dawson. 'Given the collaborative goals, it's a relatively short timeframe to bring a consortium together.' To tackle that problem, Novacta keeps a rolling programme of ideas that it's seeking funding for and a network of contacts that can help fulfil them - that way, if an appropriate scheme is announced, it can quickly pull together the various partners.
There are also questions over efficiency. Competitions are most effective when they focus on a specific output - such as producing an energy-efficient battery - and offer one award (or at most, just a handful). But that invariably means some perfectly good ideas will be ruled out because they don't meet the specific goals. From 10,000 outline assessments made by the Technology Strategy Board since 2004, for example, only 500 projects have been approved for funding. This ratio is likely to improve now that the TSB has streamlined its two-stage process: in this year's spring competition, a new Fast Track approach made it easier and quicker for small businesses to gain smaller awards under �250,000.
'If [the competition organisers] know where they want to go and how to get there, then broadly competitions are good; they set a goal and let the market meet it,' says Richard Halkett, executive director of policy and research at the National Endowment for Science, Technology and the Arts (Nesta). 'But there's a lot of waste in them - they are not a perfect market mechanism.' Steps are rarely taken to capture the rejected ideas, for example. 'If they don't take account of the waste, they can be a blunt instrument and quite damaging - if they do, then it's more of a contract than a competition.'
Streamlining grants
By contrast, the world of grants can appear a sea of calm. The DTI has reduced the number of business support schemes over the past few years from several hundred to 10, but this is in the context of an ongoing reduction of business support schemes across all central and local government departments from 3,000 to 100. 'It's all about making things simpler for business,' says a spokesperson.
Devolving administration of various grants to the regional development agencies has also made things more straightforward. Hellen says the R&D grant programme used to be a competition itself but adds: 'Rolling programmes tend to be more flexible than competitions and more customer-friendly. Competitions have closing dates and are not open door.'
One common mistake entrepreneurs make is to look for funding after a project has already started, which rules it out of a competition. Under a rolling grant programme, however, the concept of 'additionality' allows the entrepreneur to return to a grants body for funding once the project enters its next phase.
It's also worth bearing in mind that most grant schemes require some sort of output in the form of commercial demand for the product you're developing and a route to market. There are exceptions, of course - the Grant for Investigating an Innovative Idea, for example, refunds consultancy costs in early stages of research projects. But generally speaking, you'll need to be able to explain the commercial potential of what you are developing.
Ultimately, the application process itself can be a useful exercise for future funding rounds when you find yourself in front of potential investors. 'People know their technology but not necessarily how to run a business,' says Hellen. 'This process tends to make them think about preparing accounts and bookkeeping and so on. Most people do find the structure useful, but we do sometimes spend some time going back and forth with them.'
By David Longworth, Webster Buchanan Research
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