1. Scenario:
A FTSE 30 company ring fenced a multi-£m, multi-year funding stream for investment in working with Small & Medium Enterprises (SMEs) but wanted to create a mechanism that was tailored to its desired outcomes and was therefore different to the existing approaches. Its desired outcomes, in order of importance were:
a. To demonstrate that large corporates and SMEs could work together to create mutual advantage
b. Gain access new and novel technologies as a part of a cultural move from a predominantly internal approach to technology to one where externally developed technology played an increasing part
c. Create an economically efficient mechanism
.
2. Potential Existing Solutions:
A number of existing approaches were considered and discussed with various potential partners, however, these were based on models that relied on:
– Equity investment
– Private equity/venture capital involvement
– Capital growth driven
– Short to medium term focus
3. Approach Adopted:
In order to achieve the right balance between the three desired outcomes above, a shared benefit model was developed and adopted. The approach was based on:
– A focused portfolio – directed both by company strategy and customer intimacy
– The aim to accelerate, and direct technology growth, to meet customer requirements
– A non-equity approach, including both financial and non-financial investment
– A shared benefits approach over long term
– Access to the solutions for the corporate rather than ownership of intelectual property
– Success would create a self-funding mechanism over the medium term
4. Implementation and Benefits:
The approach was piloted in UK market over 3 years, with c. £5m invested in approximately 10 investments, achieving:
– Positive market reception and publicity
– Technologies pulled through to create differentiation and augment the companies in-house competencies and technologies on over £100m of opportunities.
– Progress towards the aim to becoming self funding in the medium term
– Potential for use in other markets and to scale up in the UK being considered
