Venture Technologists or VTs is probably a new term which I have just coined.
Let me explain why I have coined this term. Almost everyone in the startup world knows the term Venture Capitalist or VCs. VCs are companies or individual who have access to funds which they invest in companies. VCs make investments to get a higher return and try to balance between risk and returns. The investments they make in the companies are in the form of funds, experience and help in taking the company to success which leads to success in their investment.
Venture Technologists or VTs would be individuals or companies who have got access to technologies. VTs would be investing their technical skills/workforce in a venture in return of equity and a position on the board. The investments made by the VTs would be to get a higher percentage of returns on the investment made over a period of time. By investing in a company, they would extending technical skills, experience in completing projects/products, and sharing the experience with the founders to raise money for other activities or their exit.
Is this possible? Yes, it definitely is. Is this profitable? This is more profitable than the conventional Outsourcing model. Who can be VTs? VTs can be any companies or individuals who have got loads of experience technically.
VCs hear to hundreds of pitches every month and then decide on the many factors before deciding to invest in the company. Some of the factors they decide upon are the idea or concept, Business model, Team, market for the idea/concept, competition, ROI, etc. After carefully analyzing all these factors they decide to invest in a company or decline to invest. The risks for the VCs are high considering that they invest in ideas/concept. (Seed Funds)
VTs can similarly hear to a number of pitches and then decide on similar factors. VTs are at a better stage to take a decision to invest, coz they know their strength and they will be involved in developing the ideas/concepts. They would be able to quantify the investment required and the risk involved in that investment. Moreover, they would be investing in their own team and hence would be in greater control over the venture. After developing a prototype, they would be more capable of raising money at a greater valuation and take an exit successfully.
The ROI for the VTs would be high, if the VTs have the quality. This is a business model which is yet to be implemented by any major IT companies. The IT companies are basically following two models, either a service delivery model or a product development model. The ROI in the service delivery model is low and ROI in a successful product development model is high. There is a model in between both of these, providing service for product development of ideas and concepts for aspiring entrepreneurs in return of equity.
Companies like Infosys which revolutionized the onsite-offshore service delivery model need to take a step towards being VTs for the coming generation. Or some company can be the Infosys of future in pioneering this model.
How to incorporate this model into the existing model? This would be pretty simple and can be incorporated easily. I would more than eager to play an active role in implementing this model, if any company is game for this.
Excellent recommendation! It is high time that most Indian Cos realise that there is only so much that you can milk the Cash Cow
I have been pondering the idea of “Venture Technologists” (VT) as an analogous concept to Venture Capital (VC) for some time. While there is a role for VT and/or VC in a start-up enterprise, there are several important issues:
1. Classification:
The set of all types of VT is considerably larger than the set of all VC. Thus when one has an idea, it is relatively easy to identify the VC that have an interest in the specific idea realm, i.e., VC who specialize in IP start-ups, alternate energy start-ups, etc. But how are we to catalog VT?
I personally run an energy systems and components VT, which contains overlapping VT solar and earth nuclear energy source utilization (biomass, aeolian, ocean systems, hydroelectric, solar voltaic, solar thermal, and geothermal) and VT conversion systems and components areas of interest. I identify my organization as Energy Systems Venture Technologists.
2. Commitment:
The VC commits a specific funding for a specific percentage of the enterprise. Should the effort require additional funding, the founders shares will be diluted accordingly. It is difficult to establish an equivalent relationship with the VT, and impossible if both VC and VT are independently involved in the same enterprise. The only arrangement I have seen work is where the VT are part of the VC group.
What are your thoughts on the subject.
thanks for your reply.
My suggestions to your question are as given below
1. Classification: The VCs classify a startup in many different categories, like seed, early stage, growth, public, etc. They also classify based on the industry like education, web, green tech, etc.
VTs are already classified. For example, you are into the sector of Energy Systems. Now on which stage of the startup, you want to invest depends on you. You can decide on this after listening to the presentation or pitch given by the entrepreneurs. You may invest in early stage of some venture, and in growth stage of another.
Also you are the best person to check the risk factor involved in the venture as you are already an expert in your field. You can weigh your risks and returns and then take a decision.
2. Your commitment as a VT depends on the deal you finalize. You may like to exit in full after a certain stage. This would be possible by selling your stake to an interested investor. You may want to sell part of your stake for generating revenue. Again you would be able to do it by selling to an interested investor. You may also be able to cash out partial stakes in an investment stage.
Let me know if I have addressed your concerns.