OnlineCapital Consulting News and views from OnlineCapital
Ross Greenwood makes some very important points in this recent article. We believe it is vital for inventors and entrepreneurs to seek advice early to avoid many of the pitfalls.
SOME people have good ideas. Some people can turn good ideas into projects. And some people turn projects into successful commercial ventures. There are few people, though, who can do all three.
This is the problem for so many innovators. Some fail because they don’t sufficiently protect their inventions with patents; others fail because they don’t have enough capital to see it through; others because of mismanagement and some because they have a greater altruistic motive.
The classic of the last cause is Sir Tim Berners-Lee, credited with the invention of the world wide web. Sir Tim wanted to help scientists at the Swiss-based laboratory CERN (the European Organisation for Nuclear Research and home of the Large Hadron Collider) to share their research. But he understood the secret of his invention was to make it freely available, and not to lock it up. The benefit to global business and community is in the trillions of dollars.
Closer to home — and also associated with the internet — CSIRO scientists John O’Sullivan, Terry Percival, Diet Ostry, Graham Daniels and John Deane are credited with inventing wi-fi technology. Despite its breakthrough — and patent protection — more than a dozen multinational technology companies ripped off the idea with impunity.
Around five years ago, the Australian government settled for $220 million with a group of computer manufacturers and mobile phone companies. It shows, even the Australian government must defend itself against big businesses prepared to exploit innovation.
Therefore, to succeed, inventors and small businesses either need patrons or products so good that they generate immediate cashflow. They also need to be protected. The death of so many small businesses is because the gestation period of their invention drains cashflow before the payback period.
The good news is that more banks and investors are focusing on innovation of the small business community, providing capital and loans where they did not before. Though the risks are great for investors, the message is getting through that the economy will stagnate without innovation.
But this also places responsibility on inventors and innovators. They must be more willing to share their knowledge and to understand that 100 per cent control of a business is worth nothing if the net worth is still zero. To share can create more profit for the control-hungry inventor.
That said, the pool of potential investors and angel-investors is still infested with opportunists that will rip-off innovators through dodgy loan schemes. The worst even relaunch the prospective invention through a new operation. There is little regulation and the inexperienced must beware: the chances of being ripped off are significant.
