With more than 25 years of private market M&A, capital-raising and other corporate finance projects, typically on behalf of strategic investors; my firm developed a practice called outventuring. Outventuring allows clients to realize value from technology projects and internal services they have developed that have become non-strategic to the developer, but could significant value for others, outside the firm.
Outventuring can’t help flawed technology, sloppily prepared IP, or products that have no imaginable demand. What outventuring can do is dramatically improve the fit between the project and its owner/operator. And, where outsourcing, is about capturing current value of an asset and ignoring the future value for others, outventuring goes after the opposite thing, i.e. the potential value from future activities.
Outventuring clients – the ones seeking to exit non-strategic corporate technologies and services and redeploy resources from non-strategic activities into strategic ones, finding the right partner had two economic benefits: (a) cash at closing and transfer of non-strategic expense, (b) development acceleration and therefore earlier receipt of royalties or other back-end payments. The other side got great benefits, too. They tended to be strategic investors rather than VC/PE funds – and you’ll see why in a second.
My team always got a kick out of the excitement on the part of incoming partners as they got to know the target project. While it was an exit situation for our client, because the project had become non-strategic, it was anything but that for the investing party. For them, the outventuring project was a like a time machine, and brought the train loaded with relevant IP, know-how and market potential back into the station. Beyond being interested in the target, the newcomers’ involvement had a turbo-charging effect on the target that came from the existing, specialized that could be put to work right away for the target technology. It is those specialized resources, e.g., scale-up know-how, ecosystem knowledge, access to first customers, and so forth, that really drove value.
We tried for a long time to come up with a way to deploy outventuring’s power in reverse for clients, and do in-venturing. I never saw a model that I liked. The technology search is well populated by firms with a lot of talented (and expensive) technical and scientific talent that I thought made no sense to recruit.
seedsprint was born when we figured out our clients’ tech scouts didn’t have enough time to comb through every potential collaboration, licensing or acquisition opportunity and wanted to find efficient ways to clear projects for due diligence.