All technology investors know. The math is brutal. Nine out of ten technology startups fail. It’s the nature of the business. However, one conventional wisdom drives the investors into making a “go” decision on any technology investment. While 9 out of 10 startups fail, the one that succeeds will pay off perhaps more than 10 times making up for the 9 setbacks. That’s the sense in which startups “on average” pay off a decent aggregate ROI.
So it’s the game of probability that speculators play. But do you have to be entirely ruled by the rule of probability and speculation? Well, certainly not if you had a choice. Now our novel SAFE-IP strategy for seed technology investors provides you a choice. A choice that: converts total probability to some certainty.
There are many reasons why a technology startup could fail. Some of those reasons are within the control of the investors’ due diligence, others are beyond the founder’s expertise, and occasionally they may be acts of God (believe me, a couple of my own ventures have been victims of financial & circumstantial tsunamis). But the reason hardly ever is that the intellectual property emanating from the novel technology was totally worthless. So why is this not accounted for in a manner such that the startup’s IP is designed to live on and benefit people including the investor instead of getting stuck or killed in a failure outcome? Our unconventional wisdom answers that question.
Any new venture due diligence flits around two questions: Will the venture succeed? What is its value if it succeeds? And perhaps, how best to capitalize that value?
Investor’s due diligence always includes the estimates of the pre-money value of the venture. Of course any pre-money or post-money value is based on presumptions of potential future revenues if the business plan is successful. Do investors or technology appraisers estimate or even think about the value of the IP if the venture fails? No need to think actually. It is presumed zero, something that will be written off 9 out of 10 times. No sweat, the killing that 10th venture makes compensates for 9 losses. Well, let’s do some thinking for you.
Will the venture fail? And, will there be left over
value that the seed investor can recover? And, how best to recover
your capital from that value? Will it not make sense to ask the questions
regarding a probability which is 90% certain to happen rather than
completely focus on an eventuality that stands only 10% chance? Why
not be diligent about an eventuality that hits you more often and
prepare to win over it? Does our unconventional wisdom make sense?
Well, it should if it:
• Recovers seed investor’s capital even from each of the 90% of the portfolio ventures that are statistically destined to fail.
• Increases seed investor’s aggregate ROI from the portfolio companies.
• Makes the seed funding easier for the founders of the technology startup.
• Ultimately promotes and flourishes Hi-Tech industry.
If it makes sense get SAFE-IP (Secure Against Failed Enterprise’s Intellectual Property) on your side to secure your investments.
MRI Limited, the sponsor of www.IP-Unlimited.com, is introducing a very novel seed funding strategy, which is surprisingly non-existent even in the most technology savvy equity financing outfits anywhere in the world. SAFE-IP (Secured Against Failed Enterprise’s Intellectual Property). If the venture fails usually the IP is dumped and forgotten as the casualty of bad business. However the fact of the matter is that there may still be plenty of juice left in the failed venture’s IP. Why not leverage to increase the confidence of the seed investors? The inventors have hardly anything more to lose and investors got everything to gain. SAFE-IP will create more confidence in the angel investors providing seed capital to a technology startup, and the founders of the technology startup will find it easy to get funded. SAFE-IP is a win-win for both.
We have developed a proprietary rating system to
rate a venture in terms of the value the seed investor can recover
in the event the technology venture fails1. A SAFE-IP five
star venture has so much potential in its IP that even a failed venture
can earn the investor a decent exit with full recovery of his capital
plus interest plus some profit. At the other extreme is a venture
that rates only a single star in the SAFE-IP rating system, which
leaves no prospect of any recovery if it fails.
1 Assuming any 2-5 star SAFE-IP ventures execute an agreement creating lien on the Venture’s IP in favor of the seed investor is executed and recorded with the patent issuing office or any appropriate agency in accordance with the law of the land.
|SAFE-IP Ratings: Based upon the ability of the venture to payoff the seed investor in case of failure:
: 100% recovery of capital + interest + some profit from IP disposal within 1-2 years of failed venture
: 100% recovery of capital + interest from IP disposal within 2-10 years of failed venture
: 100% recovery of capital possible from IP within 2-10 years of the failed venture
: Less than 100% recovery of capital possible but doubtful at any time after failed venture
: No recovery of seed capital possible if the venture fails.
Get SAFE-IP ratings for your technology startup today, and let’s help you design a Win-Win startup funding strategy.