The Spin-Out Opportunity

Innovation, once embodied by the image of a sole, brilliant inventor, has become the domain of the corporation and the highly trained, well-equipped R&D team.

The top 100 corporate innovators alone spend $288 billion annually on R&D, generating more viable ideas than they can commercialize. In some cases, innovations fall outside the company’s core markets, customers, or channels. In other cases, the new technology fits the strategic intent of the corporation, but would better serve its needs if the technology is purchased from a third party focused on the development and production of the technology. Accordingly, valuable innovations often remain unrealized, even under increased pressure for a return on R&D investment.

Large corporations lack internal processes to efficiently address non-core innovation opportunities. These innovation opportunities often need more technical, commercial and organizational development before they can stand on their own and raise institutional financing as independent companies.

New Venture Partners helps corporations by cultivating attractive investment opportunities based on technology inside a corporation and spinning them out into successful start-ups that bring strategic, technological, and financial benefits back to the corporation.

The Spin-Out Rationale

Strategic

• Creates new channels to market for technology
• Transforms captive cost centers into value-added suppliers to business units
• Provides opportunities to test a developing market or create a market for the corporation’s products
• Creates the possibility to re-acquire or re-invest later when risk is diminished

Technological

• Increases clock speed of innovation
• Brings entrepreneurial culture to corporate labs, and attracts young researchers
• Provides market feedback that can shape future project direction
• Leverages New Venture Partners’ network of corporate partners and portfolio companies, leading to new collaboration opportunities

Financial

• Generates financial gains through equity ownership
• Complements, does not compete with, intellectual property licensing
• Provides a source of risk capital