VC Models for Bricks and Mortar Companies
(Identify best practices to accelerate innovation through minority equity investments)
Until 2001, venture-capital funding had increased dramatically for several years. In certain industries, such as telecommunications and pharmaceuticals, acquisitions of startups were common. It appeared that in some industries, funds that were previously spent on internal R&D were being used for the acquisition of or investment in startups. A subcommittee was established to understand how these trends could impact IRI member companies in the future. A Special Interest Session on "Structuring the Options for New Ventures" was conducted at the 1999 IRI Annual Meeting. Its purpose was to discuss new business structures and the challenges that can arise when they differ in culture from the corporate parent. A follow-up Special Interest Session was conducted at the 2000 IRI Fall Meeting, on "New Methods of Investing in Research: Applying VC Models to Brick and Mortar Companies." Topics now being considered include when to invest in a venture- capital-funded company, and how to adapt some of the more successful venture-capital management practices for an established enterprise.