From Venture Capitalists and 'Dragons Den' style meetings with business angels to the government's announcement a few weeks ago that it was ploughing a further £100 Million into supporting innovation in the UK; our economy seems to be awash with potential funding for new technologies. But how does a company with an unproven idea or piece of IP go about getting their share of this money? As Mike Pearson of Pearson Matthews explains, his company is pioneering a new approach to improve return on this investment in research by bridging the gap between raw technology and commercial opportunity. It is ideal for start-up projects in the scientific, technical and healthcare sectors.
Research, if it is to generate revenue, needs to be converted into innovation - invention that is commercialised. The most effective way to achieve this conversion is by showing the connection between a technology and a market need. Yet despite its obvious value and ability to speed up the commercialisation process, funds for this 'proof of principle' work are hard to secure.
So this has created a funding gap where exciting ideas and technologies never reach licensing because of a lack of resources to carry out this vital exploration- unable to demonstrate its value means they can never meet a VC's requirements. Pearson Matthews' solution proposes the use of a more targeted investment method where design bridges this gap by helping spot the best technologies and develop them at low cost and risk to a point where latter stage investor can get involved.
In the medical and technical sectors Pearson Matthews come in contact with opportunities that range from individuals with 'back-of-a-fag-packet' ideas; through to academics with research, and registered companies with secured IP. They have new technology or ideas with huge potential and the enthusiasm to move them on, and see proof of principle work as the way forward if only they can secure funding.
Proof of principle design investigation will establish whether their technology works; give an assessment of what it does, and explore the commercial opportunities it creates.
It will provide a systematic analysis, drawing together economic evaluation; R&D activities; user-research; technology assessment and provide them with prototypes; generate concepts that visualise potential; report on advantageous manufacturing approaches, and identify the best commercial directions. This is then a highly effective way to communicate to latter stage investors, showing proximity to market, whilst exposing both the potential and risk of an idea. Rather than being a cost, design activities during early stage R&D becomes an investment, adding value by identifying rich commercial ends and unearthing valuable IP.
Pearson Matthews' acts initially as a filter for ideas through normal discussions with inventors, medical specialists, academics and companies. Those with the potential to derive clear benefit from R&D-based design activities we will recommend for funding to an investment panel. Between £15k and £50K of design activity is usually sufficient to advance an idea to this stage of readiness. 15-20 suitable investments could therefore be funded in the first year for £500k-£1m.
As an investment mechanism it advances ideas to the stage where VCs get interested sooner because there is substantially better information, risks mitigated and some of the cost of due diligence is eliminated.
Clearly not all small start-up companies, academics and individuals are willing or able to release IP or equity in exchange for this funding, and in that case there is little one can do. On the other hand funding at this stage may make the difference between dropping an idea and seeing it forge ahead on a clear development and funding pathway, a powerful argument for releasing IP or equity, at little risk to themselves, in order to get going.
Both low and high tech ideas in healthcare and general technology will be considered for funding. For high tech ideas the right work early on can save considerable time. Having facilities that include design tools, laboratory and advanced prototyping facilities, in close proximity, makes it possible to assess technology and bolster its IP position very fast, which will confirm whether a more sizeable investment is worthwhile. Low tech ideas or those with near market potential can benefit from proof of principle funding for working prototypes and an idea of what they may look like or cost to manufacture. It is then possible to approach companies directly for discussions on licensing or sale in their market. The individual with no protected IP is hard to deal with but occasionally an idea is so good that the proof of principle funding will achieve enough to interest a manufacturer.
© Crimson Business Ltd. 2006