Sunday 25 April 2010
Addressing the challenges faced by inventors… commercialisation, capital and intellectual property
When the Triton Foundation, an assistance service for inventors, closed just over a year ago, it created a vacuum for very early stage commercialisation, where people either have ideas, or are just a little further on. The AIC stepped in quickly, assisting the Queensland Government to fill this space and ensuring that inventors and very early stage entrepreneurs had access to the resources they needed. In the past 12 months around 400 individuals and companies have contacted the AIC to access the Queensland Inventor Service. The increased flow of these inception stage businesses to the AIC has reinforced to us how common the many issues that plague these companies are. There are many such issues, but the most common are misunderstanding the commercialisation stage, misunderstanding the likely capital sources, and misunderstanding intellectual property. Misunderstanding the commercialisation stage
A proof of concept demonstrator is not a design for mass manufacture. This sounds obvious, but most of the people that contact us are under the impression that you are ready to sell product when you have a proof of concept. In fact, aside from the engineering and supply chain issues you have to pay for and deal with, you still need to deal with all the issues that sit between the idea and the market. One of the things AIC has invested in deeply is defining a Commercialisation Roadmap, so that we can assist our customers with identifying the things they need to address. There are literally hundreds of issues that need to be dealt with to successfully commercialise a product or service. In addition, and following on from this theme, it is very common that when people have (just) an idea, they think they can sell it. Acquiring companies rarely buy ideas. They buy granted intellectual property rights, and they buy market-tested products or services. Yes, there are exceptions, but these are relatively rare. Misunderstanding sources of capital
Almost every person that contacts us is seeking to access capital to move their idea forward. The reality is that very few early stage companies receive any 'arms-length capital' before they are earning a revenue stream. We tell the companies that contact us that most firms are funded to the revenue stage by the inventor or entrepreneur themselves, their friends, their families and their associates. It is not uncommon for us to hear, "I have a great idea, but I need money to ... ". There is a great book by US academic (and angel investor) Scott Shane, Fool's Gold?: The Truth Behind Angel Investing in
Misunderstanding intellectual property
Most entrepreneurs or inventors who approach the AIC do not understand Intellectual Property Rights at all. Given that the bulk of them are trying to protect the function of their invention, it's generally patents that are relevant. Patents are extremely complex, from the process (provisional, application, PCT etc) through to the rights you may or may not be entitled to at the end of the process. In addition, the security of these rights is often poorly understood, as is the time to receive them, and the fact that if you get into a legal challenge around intellectual property you'll be dealing with a seven-digit cost. There are many aspects to this, but the biggest shock is the cost. First, we find most people are not aware that patents are issued country by country; there is no such thing as a worldwide patent. The next thing we need to tell them is that it's going to cost them an average of $20,000 per country to get their full patent granted in that jurisdiction. This conversation does not always go well... any patent attorneys reading this could help us out here! What is clear from our service for inventors is that there are a huge number of ideas out there, and certainly there is no lack of invention. What's evident is the major lack of commercial skills and understanding of the commercialisation process. This is something that product managers understand well, except for spending 80% of their time chasing capital, but inventors need a lot of help with. Despite few inventors realising that they have 'ugly babies' during the process, the feedback has been excellent. We've seen some very clever ideas and inventions in the past year and hope to see some of them in full production in the coming years.
Click here to find out more about the AIC Inventors Service.
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