The contact of science with business often raises stereotypes of: “a scientist detached from the reality” and “greedy, ignorant businessman who does not understand the ideas presented to him, and in particular does not see their obvious genius.” They are partly caused by communication problems, in particular regarding the goals and roles of both parties during cooperation.
If a scientist says “I would like to profit from my invention”, then most often he means one of two things:
– “I invented this and now I would like to sell it to people” or
– “I invented this and now I would like someone to pay me for it”.
A common communication problem is that the scientist means the latter, while the investor (for example from a venture capital fund) assumes that the scientist means the former. What the researcher wants to do in the first case is to establish a company whose business will be to provide customers with goods or services based on the developed technology, while what he wants to do in the second case is to sell or license his technology. It is important to think about this issue and define your intentions, because this decision implies what benefits can be expected, what will be the necessary degree of your involvement and who should you present your idea to.
Choosing the first way, i.e. starting a business based on your invention, has a number of advantages, of which the possibility of creating a profitable business is certainly not the least important. Simplifying slightly, it can be said that the sale of licenses generally brings lower profits than its independent commercialization, because the buyer of technology will always purchase it at a price lower than the expected profits from its use. If the founder chooses to introduce technology to the market himself, it will inevitably introduce far-reaching improvements. During the market implementation, the technology will become much more mature, because its development will be based on the reactions of real customers. This increases the value of the technological solution, if in the future the author will want to sell it. The value of “bare idea” is lower than the value of the same idea, which has already passed the crash-test against market realities.
Selling your technology also has some advantages. One of them is the transfer of uncertainty and risk related to its future market results to the buyer. In addition, the level of involvement of the inventor in the commercialization project, the time and effort required in the process of introducing technology to the market is always considerable. It may even mean it will be necessary to give up your scientific work to get fully involved in running a business. Certainly not every scientist is willing to change his career path, nor is he necessarily predisposed to be a businessperson. The sale or licensing of technologies definitely reduces the need for the inventor to be personally involved in a commercialization project.
What the venture capital fund does not deal with is the second of the commercialization routes described above. If an inventor comes to the venture capital fund with the attitude: “I have developed my invention, and now you make it into a business” he will be seriously disappointed. The operation of the fund is definitely aimed at the originators who chose the first way – independent development of the project. The concept of “smart money” underlines the importance of a set of additional resources and skills that a good investor brings to the company in addition to money. One of them is business experience. However, the advice and assistance that an investor provides to an inventor in financial, legal, strategic or supervisory matters should not be equated with the removal of managerial responsibilities from him. Scientists not particularly predisposed to develop a business are not necessarily in a lost position. They can compensate their shortcomings by properly selecting a partner or partners. Legendary tandems, such as Wozniak and Jobs or Hewlett and Packard, perfectly illustrate the idea of matching partners with complementary competences. A good venture capital fund is sometimes able to help the originator even in this task. For sure, however, it will not deal with the commercialization of the project on its own.
An inventor who definitely does not intend to take a personal role in building a business based on his invention, has a number of possibilities for its commercial use. He can sell intellectual property rights and receive a one-time payment. He can also actively manage his intellectual property by granting licenses for its use. By properly building license agreements, he can derive financial benefits from his invention without losing his property rights. However, in this situation the more appropriate partner for the researcher will be the technology transfer center, not a venture capital fund.