What we call “Innovation Dipole”, is the duet of, a creative mind set in one side of a dipole and a business mind set on the other. This dipole has to be in perfect balance and in resonance (to use an antennaengineering term), to get to the desired result which is, to Innovate.
There are various examples, this dipole can be seen and the effects of the imbalance are visible, i.e. we say that in EU we have high efficiency in R&D and in US we have better business sophistication. An easy assumption could be that if we somehow, magically, joint together these two qualities, we will spark an explosion in innovation in the western world… not possible though, for many reasons…
That simple observation, leads us to the conclusion that,behind innovation are actually and almost always, two key persons that are responsible for the outcome of a business venture. The entrepreneur and the business developer.
The entrepreneur is the creative mind or the person that has the new idea, the innovative vision and wants to try a startup, which most of the time is an engineer or a researcher, some other times is just a creative or an inventive mind or even an ex end-user that has foreseen the need and envisioned, a unique solution. A more explosive combination is the end-user to be the engineer as well.
The business developer is the person that has a more business oriented mind set, which is primarily marketing and communication; he has business studies, MBA most probably and typically a long résumé in sales and international marketing, he knows how to position a product or service in the international markets, he knows how to reach clients. It’s paramount to his effectiveness, to have in his past an entrepreneur activity and had his failures and success in order to foster his experience.
These two actors are the main enablers of every business venture that wants to win the market and finally innovate. As we have state before, they form Innovation Dipole.
iDea, the solution…
By enabling Innovation Dipole and combine it with an on-line/off-line network/framework designed to orchestrate all actors together along with the activation of the Community, we could provide a good solution to all these problems, by adding a little help of a State aid, we could ignite the growth cycle.
If we provide the "How" to our Politicians or our Regional Governors, we could allow all resources to be reorganized to our common goal of Innovation and change our course in the new world economy.
We don’t believe that innovation is only, about business plans, business models and ideas which are the typical investor first filter, neither about teams only, claiming that ideas are not so relevant because they tend to change, like Y-Combinator teaches.
Instead we believe, ideas can only be truly tested in the market and that innovation is a dipole that has to resonate and involves both ideas and teams. If Innovation Dipole resonates, then we have a possible winner.
We believe that simply we have to do more and talk less.
iDea, in General…
iDea is a novel Entrepreneurial Assessment and funding framework that can be implemented by Governments or Institutions. Using a funnel filtered Crowd Sourced matching mechanism, iDea totally eliminates the need for unnecessary business plan writing, lengthy proposals and committees of experts, from the initial assessment phase. The actors that materialize the Innovation Dipole are the entrepreneurs (or idea promoters) on one side along with the experienced business developers on the other.
By implementing the Innovation Dipole for the evaluation of all ideas, a massive cross-assessment is promoted, leading to a mutual selection/matching of a pair of partners that are to be incorporated for profit. This evaluation ensures that no one will loose time running a business that is based on a bad idea or cooperating with an ineffective partner, without any kind of return.
This simple assessment method leads to a Crowd Sourced web-centric, peer selection process, driven only by ideas, profitable targets, market needs, business instinct, talent, motivated work and team chemistry, aiming to produce massive materialized innovation with high success rates along with large economies of scale.
At the same time all types of investors play a key role in the process by having, through iDea web portal, total access on the successful ventures activities, reports and presentations in order to evaluate risk versus return and decide their potential investments.
A self sustained system, designed to recycle funds in a eight year cycle, a bottom-up alternative proposal, that democratize access to capital by shifting the driving force from physical assets to intellectual assets, allowing everyone to be a part of it, a mechanism that creates innovation driven, growth.
This idea/team centric peer selection process aims to these simple things:
How it works
What iDea is about? Imagine an incubating and funding mechanism, which will have a physical level (figure 1) and a web based level (figure 2).
On the physical level the mechanism will be a combination of a state fund, which will also be able to incorporate private capital in a risk sharing basis, which will act as an early stage funding system, along with business incubating/accelerator infrastructures, either internal or outsourced.
On the web based level, there will be a portal dedicated to the mechanism. This portal will have an administrative view, an entrepreneur view, a business developer view, an investor view, a venture view, a mentor view, an incubator view and a public view. Every view will have a different functionality dependant on interest group function in the mechanism, with different, tools, data views and access properties.
Preparation of initial operation
On the physical level the administration of the mechanism will create and run a recursive accreditation procedure that will be a widely advertised campaign in the mass media, with the motto i.e. “Use your skills, Innovate!!!” which will target to the business development pole of the innovation dipole. The aim of the procedure will be, to gather a continuously growing pool of experienced business developers that will pass the criteria’s set and will be “willing and able" to get into a partnership with entrepreneurs.
They can be unemployed or daring professionals that want to evolve, from all ages starting at 25 and above. Developers sing a contract that binds them in an NDA framework and in an understanding of the process rules, additionally are passing a couple of day’s seminar about the mechanism structure and the rules of conduct of all the next steps.
When there will be an adequate number of business developers in the pool, the mechanism will give them access to the web portal, business developer view. This view of the portal will give them access to a series of tools like a categorized database, a voting mechanism and a live streaming presentation viewing mechanism that will have the ability to send messages.
Recursive collection of ideas
When the above initial phase has being realized, the mechanism will run a second recursive widely advertised campaign in the mass media, with the motto i.e. “Unleash your ideas!!!” and will target to the entrepreneur pole of the innovation dipole.
Entrepreneurs will be urged to register and login freely in the portal and submit an elaboration pitch with a 1000 words text and also a limited number of photos or diagrams or a short video. They will also have to select the target market category of their business proposal from a list. If they propose something new and unique they will be also urged to secure their intellectual property rights first before submitting the proposal (that is dependant on the respective IP laws). The mechanism would also organize recursively seminars and closed group pitch slam events in order entrepreneurs to be more prepared, for the proposal submission to the system.
Assessment, first step
The proposals would be accessible for voting, from the business developers through the portal, without knowing who has submitted the proposal. The goal is a proposal to pass a given threshold of interested business developers that want to partnership with the entrepreneurs in order to make a startup and exploit the proposed business venture together. A positive vote for a proposal will be equivalent to an offer to a direct full time employment and partnership along with the entrepreneur in the startup.
A business developer will have a limited salary for his services and as a business incentive, a percentage of the startup stocks and a bonus in cash from the second round investment, all that only if the business venture successfully graduate from the mechanism.
Every two to three months the mechanism will close the call for proposals and pass to the next step the business ventures that passed the threshold, of lets say 20 interested business developers.
Optional Proof of Concept step
In this point can take place an optional proof of concept stage that will allow entrepreneurs to get a limited pre-seed funding to create a more appealing pre-prototype of their product or service in order to be able to go forward to the next step with more chances.
Assessment, second step
The next step is for the entrepreneurs that passed to that phase, to prepare and do within a period of two weeks, 2 hours on-line in depth presentation of their proposal with live streaming video to the business developers. At this point only the business developers see the entrepreneur and ask him questions that are moderated in order not to disclose their identities to him and between each other.
The goal of this process is for the business developers to assess the idea, the feasibility of the venture along with the entrepreneur attitude and skills. The proposal that pass a second threshold, of lets say 6 interested business developers, goes to the third phase of the selection process.
Assessment, third step
In the third step, is appointed from a pool of volunteers accredited mentors a three member advising committee that will follow the venture all the way from this point on. The role of this committee is to advise, mentor, assist and resolve possible problems of the venture.
The entrepreneur and the interested business developers are gathering in a meeting room and team up, with two laptops, with a goal to make the executive summary of the business plan of the venture within four or five hours. The aim of this exercise is to allow the entrepreneur and to the mentoring advising committee to form a firm opinion on which business developer is appropriate to be a partner in the next steps of the startup. They need to collaborate under strict deadline to deliver, that stress will bring to surface possible character differences between them and will effectively show who matches better with the entrepreneur. If they don’t deliver within limits, the venture is rejected and everyone looses the opportunity.
If the team delivers the executive summary successfully, the mentoring advising committee, with the right to apply twice veto, along with the entrepreneur decides which business developer is the best match for the venture. If there is no agreement the venture is rejected.
When the match happens, the venture is ready to begin the seed phase. In the seed phase the team gets a deadline of three months to deliver a full business plan that must comply to specific rules, time limits, milestones and sales growth relative to cash burn in the first stages. To do that they would select from a pool of accredited business consultants, that are listed in the resources of the venture layer of the mechanism portal, a consulting firm to cooperate with for the rest of the phases of the venture.
Additionally to be better prepared and if they hadn’t took the option for the Proof of Concept previously, they can do it now by passing to the optional proof of concept stage.
The next millstones on the seed phase would be, delivering of the business plan with a business model, issue all job descriptions and prepare contracts for the stuff needed to be hired and lastly form the company.
When the company registers, the seed stage ends successfully and the venture enters to the startup stage. If the venture don’t catch all the deadlines is rejected again.
The company must be established in a business incubator that will provide logistics, basic front desk services along with security services, furniture, internet, local network and telephones. In the incubator there will be a biometric presence time clock that will record the physical presence of the team members in the venture. It will be mandatory to have physical presence in the incubator, 80% of the legal work time in the first milestone, 40% in the second and 25% in the third during startup stage, with a penalty of venture rejection.
In the startup stage there are three basic milestones, one for each side of the innovation dipole:
On each milestone if they fail to deliver the venture seizes. Sales targets can be adjusted to win certain goals like i.e. exports oriented growth.
Typical equity sharing will be, 31% funding mechanism, 63% entrepreneur and 6% stock option for business developer.
During the startup stage, mentors are visiting venture once every month and incubator services create quarterly reports of the financials and the progress of the other activities of the venture. On every millstone the presentation of the session is video recorded.
While all these are happening on the physical level of the mechanism in the web based level, in the mechanisms portal, in the innovation dipole views the system through the administrative view are being informed and few things happening. The business developer that runs the venture is removed from the pool as occupied; the business proposal is being removed from the categorized list and gets the active status. The failed proposals get the statistics of the voting’s and remain on the list for another two rounds unless the entrepreneurs removed them. The failed business developers return to the pool as active again to try their abilities in a next good idea.
At the venture view the startup has access to a directory of accredited recourses with the mechanism; the recourses can be anything from business consulting, patent attorneys, to machine shops, industrial design houses and web designers. The accredited services providers have an agreement with the mechanism to provide the services with heavily discounted fixed fees, additionally all public university laboratories are accessible by the mechanism. Also the startups are using this view to announce news and events related to their activity and it’s in interest of the public. Startups are not allowed to use other service providers outside of the list, unless first they haven’t exhaust the mechanism provided resources and only upon special permit from the mentor advisory committee.
The public view of the system is announcing the successful ventures, with details about the team and short description of the project. Also all the public announcements, financial and others, throughout the life of the venture are being published by the administrative team on this view of the mechanism.
On the investor view, the administrative team gives access to verified investors, (Business Angels, Venture capitals, Equity Funds and others) that have sing an NDA/Non Competition agreement with the mechanism. The non competition agreement aims to do not allow investors that acting in the same markets those also acting specific startups, in order not to compromise the competiveness and the industrial secrets of the new companies that the mechanism hosts.
In this view of the web portal, the investors will have access to all authorized startups quarterly reports and milestones video presentations as well as to the business plan and marketing plans that are submitted to the mechanism. This access will not be tracked by the startups; they will only be informed that a certain number of investors are actively tracking them.
This shadow operation of the portal will enable investors to have the time to evaluate the startups without hesitation and in depth. They will be able, to target the startups when they graduate successfully from the mechanism by “bidding” and “investing”. “Bid”, because the graduation process passes from a bidding process for the percentage that the mechanism holds (if it’s a state funded mechanism the bidding process is mandatory). And “invest” for the cash the company needs in order to get financed for the second round investment of the company in order to continue to operate outside of the mechanism. The percentage that remains to the mechanism is about 6% and gives the long term return on investment needed to sustain the system. The private investor or VC that will invest in this round will take the 25%.
As an example, to finance a mechanism that runs with iDea framework for four years, with 4 incubators with 20 persons stuff each, able to host 25 startup each and a collaborative space for proof of concept, that can facilitate 100 people on each incubator, plus the 20 persons stuff needed from the mechanism along with advertising budged of 1mil-euros/year, we can fund with 100% capital:
The budged for all the above is just 75Mil euro’s and includes ALL costs for four years, apart from actually build the incubators.
The whole mechanism looks like a big funnel with filters in stages, which allow everyone to have access and dependant on his skills and talent to be judged with a peer selection method that puts the business instinct in the center of the selection process. It takes advantage of a massive pool of business developers in the selection process making it very difficult for a good idea to be lost. Moreover gives the controls to policy makers to adjust thresholds and rules accordingly in order to target markets and drive growth towards to certain aims like i.e. green economy.
With the simple assumption, that none will loose his time to run a business that is based in a bad idea or cooperate with a person that is not effective without a gain of any kind, leads to a very efficient selection method that is based not in numbers but, in people, verified talents and visible skills.
What iDea claim’s is that, typical early stage funding mechanisms can be standardized and with the power of new media can be driven by the people for the people. The goal of the concept is to democratize access to capital and not to create another web based investor/entrepreneur matching service.
iDea teaches that innovation is a story about ideas and people, not capital.