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As per our last post on Open Innovation vs. Lean Startup the process by which IP is developed and brought to market differ greatly.

In the LSU we make founders fund and pitch random egos and icons, venture funds and apply to TV shows for a long, painful process which needs to stop. If we tackle industry problems and co-develop IP instead, startups get the benefit of co-ownership of IP. When managed in a portfolio, the IP provides for several paths to monetization vs. start, scale up and grow a company.

We know from experience that the expectation management of a startup team by investors is brutal. The investors may take too much equity for their risk, which is based on a matrix that suits their investment profile, not the startup’s requirements to succeed. Liquidity events such as buyouts happen too early, at low valuations as good technology IP based startups disappear before becoming global organizations. This has been noted by US research firms.

US based innovation labs such as Plug and Play in Silicon Valley are private labs which work in collaboration with startups, vendors and customers as industry partners. These are popping up all over the globe. The basic process is to innovate with industry partners who have identified a few adjacent business models to prove out. These are businesses they need to be in or have a will to partner with “unlikely bedmates” to stay competitive.

The process moves very fast. The lab co-ordinates teams of industry partners, customers, technology vendors and startups. The presentations form dynamic groups (startups are not necessarily set up as 2 co-founders) and they sprint to problem solve. All paperwork is managed in house with lawyers and venture money is allocated appropriately (vs. pitching random investors) and recipient companies pay to attend as beneficiaries of the IP/ Product development.

Within a few weeks, deals are made and new IP is created with customer pilots and prof of concepts developed in the lab together. If a customer wants to own the IP, they can negotiate right then or if they want to bring it to the industry as a platform, they can create strategic partnerships with the technology vendors to bring it to market as a new venture.

As you can see, the startup output is not a small company full of challenges, it is a part of a team that has needs based design and development (paid for) a fair stake in the IP ownership and venture opportunities to choose. Startups can participate in several programs at once and have many virtual teams to draw from. The focus is on problem solving and being agile vs all the friction. IP as a product has so much more inherent value than a startup with an idea.