Over the course of almost 30 years working in corporate finance, seed’s founder, Jon Lillian’s, 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 provide significant value for others outside the firm.
Outventuring can dramatically improve the fit between the project and its owner/operator, with a focus on its potential value from future activities.
For outventuring clients, finding the right partner has 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.
Jon’s 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 the client, because the project had become non-strategic, it was very exciting 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.
Jon’s team tried for a long time to come up with a way to deploy outventuring’s power in reverse for clients, and do in-venturing; however, he never saw a model that he 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.
was born when Jon’s team figured out their 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.