I grew up in the early days of the Texas oilfields days in the ‘50s and ‘60s. My family friends were wildcatters, drillers and production experts. They were all looking for the Big Hit, and they sometimes found it.
But as the Big Hits diminished and wells dried up, a new breed of oilmen emerged. Creative petroleum engineers called secondary recovery experts showed up, worked hard and took big risks to develop processes and infrastructure that could efficiently and profitably go after the oil still left in the wells after natural forces and traditional extraction had reached their limits and flow had slowed to a trickle. A typical well produced only 12 to 15% of its total yield from primary recovery, and the secondary recovery processes captured an additional 15 to 20% of the oil. These “enhanced recovery” techniques continue to be developed and refined, delivering yields of up to 60%.
The crucial task of getting early technologies out of research institutions and putting them to work for society reminds me of the early days of the oil business.
The Venture Capital process is well known and ubiquitous. despite the numerous challenges to that model, VCs continue to go after the big deals that absorb lots of capital in the hope of large returns. The VC model has produced some Big Hits, and there are certainly more to come. But the gushers of the early days just won’t occur as frequently. New secondary recovery techniques are required.
The problem is simple. All the potentially valuable inventions not brought to the surface by the VC Big Hit process lie undiscovered out of sight of the public, many of them in research institutions. All this technology is stranded— it is of no use to anyone.
At IP2Biz, we are what Satish Nambisan calls “Innovation Capitalists”—the secondary recovery experts of today’s early technologies.
Innovation Capital connects identified corporate demand for the energy of innovation with the wellsprings of tomorrow’s ideas in our university and national research labs, and using a new, creative process, pumps those valuable resources to the surface so they can be refined into useful products by our clients. And – like the oilfield guys – we know that we can recover an additional 15 to 20% of the value lying trapped in labs and incubators.
We’re talking tens of billions of dollars.
As we do the hard work of scouting, investigating, comparing and investing with our clients in these early opportunities, I am struck by the paucity of companies like IP2Biz who are trying to develop processes and infrastructure to capture the value in “stranded” technologies and very small companies.
But, as the percentages above suggest, there is more value to be captured in the secondary recovery efforts of Innovation Capital than in primary VC investments. More deals, lower risk, faster time to commercialization, shorter illiquidity period— this is just the beginning of a long list of reasons why innovation capitalists like IP2Biz are poised to turn promising new ideas into tomorrow’s practical technologies.