Venture Solutions offers a new take on commercialising using a 'sweat equity' model.
The untitled head of nine-month-old Venture Solutions Ltd recently – and reluctantly – agreed to put up a website advertising its services.
Grant Marris’ reluctance is warranted. Operating in the ‘no-man’s-land’ between the (often backyard) inventor and other types of commercialising entities, VSL may now find itself being plagued by tyre-kickers and the rather mad.
However the Lower Hutt based, three-person privately-funded company has made the website move, and will see whether inquiries grow beyond the couple a month that VSL has been receiving.
Marris has an automotive background, as well as an involvement with the startup/incubator scene.
One frustrating element of the angel investment and commercialisation space is that often people, an inventor, would come along with a good idea.
“But no one ever invests in the wrong people,” he says. “They’re more likely to invest in a B project with an A person, rather than an A project with a B person.”
Often, Marris says, the inventor will have to give away most of the equity in a project or idea, or “generally they walk away and the project dies".
Hence Venture Solutions (whose name came to Marris while he was in the shower) and its process which is very much built around collaboration with the inventor, without VSL owning any of the project’s intellectual property.
What VSL does provide though is, following a market validation that a pain point exists for the proposed product, finance to get a product to market in return for a cut in its retail price (this will and does vary from product to product but is around 15–25 percent). The inventor retains all the IP.
Marris drew up a remarkably simple diagram of how VSL and its inventor’s projects hang together, which also includes a 5 percent marketing budget as part and parcel of the whole. The inventor receives a 25-35 percent portion of the retail price depending on circumstances and the product.
The inventor also continues in a role which most suits them. It could be as the main salesperson, or they may be happy continuing in that inventor/improver function.
Perhaps just as importantly, VSL looks after the back end administration, dealing with aspects such as production, invoicing, chasing debts (the accounting is all on Xero).
“We create a trading company that is totally transparent for the inventor,” says Marris.
“We’ve looked around the world, and haven’t seen a model like this. It’s a different approach.”
He gives examples of some (we should probably read most) inventors who have good ideas, but not enough money to kick them along. Options such as TechNZ don’t stack up as these usually require a 50:50 funding contribution.
“It is the classic inventor that we’re really aimed at, the people who don’t tend to fit the mould ... indeed, sometimes other people think they are mad,” Marris says.
“But, if you prise the person away from the product, then usually you can work something out. We want to collaborate with the inventor, with them, not against them.”
He says there’s a common goal to increase New Zealand’s and the inventor’s wealth through the VSL model. “We’re more about doing than talking.”
Under the VSL model however, the inventor, after a discussion about their attributes and the function they’d like to have moving forward, remains an integral part of the whole operation.
With one small exception!
“When we’re at the final product design, generally we keep the inventor out of it,” says Marris. “We want the minimum viable product to get to market, and often the inventor will be wanting to add a bit here, do something else there. So, we tend to keep them away at that stage, though the product doesn’t head out unless the inventor’s happy with it.”
VSL has recently entered into an agreement with Weltec Connect to collaborate on developing prototypes of new ideas (for which the polytech’s commercialisation unit receives a royalty from the final retail product).
Marris says as a ‘sweat equity’ model, the market validation has to be extremely sound.
“Both parties can pull the pin at any stage, and we have go, no go decision points. Initially there’s a casual memorandum of understanding process, and as we get closer to putting a product into the market, then we go to a full contract, generally for three years.”
VSL has some defined goals for its own growth, and has modelled the company’s growth to having 13 people.
It works by having one dedicated person handling one (inventor’s) product, as “one person can’t do more than that.”
“But it is a very scalable model, and we’ll bring on new people in Venture Solutions as they’re required,” he says.
VSL currently has three projects it is developing through to retail sale, with one ‘YouBike’ (exercise equipment for the disabled and paralysed) about to be launched.
Undoubtedly Marris will soon have more than the two enquiries a month – Venture Solutions appears to be a valuable addition to the tricky job of getting an idea to fly.
This post originally appeared on Sciblogs.
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription, an Idealog t-shirt and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).