Startup Saturday: Dealing with investors, investment and patent worries
How safe is it to show your product to a big corp when seeking investment? Four entrepreneurs share their experiences of getting in the door with a big name and then, worrying their USP will be copiedUpdated: Aug 03, 2019 16:22 IST
The art of the deal has some visible cache given it has led at least one person who lent his name to the idea, to the President’s chair; president of the USA, no less.
In Pune, however, innovators are asking presidents of mega-corps, a different question; can we trust you?
There is an art to making the deal and from incubating the discovery/invention/idea to getting it to marker, what you say and how you say it has a lot to do with getting from being president of your company, to presiding over the next startup unicorn.
This is the reality for Pune startups moving from the shop-floor to the board-room.
Karan Sarsar, Awrega
Exhaust muffler made from hemp for motorbikes
It is very difficult to get in touch with a decision maker at a large MNC. You have to go through various levels of employees who may or may not be finely tuned into the value of an innovation.
I made several presentations at several levels to a German auto company. Finally, I was told that they would take it to their HQ in Munich and let me know. It’s been a few months now and I am still waiting to hear from them.
Dr Mrinmayee Bhushan,
Developed a cream using castor seeds that helps hair removal
I started my R&D in 2003. We have done several tests and it shows that it works. I have approached maybe hundreds of companies - big and small, national and international; but haven’t got anywhere with them.
There are two levels of valuations. One is valuing the technology itself. The other is valuation of the product developed. The product is valued based on the sales. So far I have managed some sales starting with family and friends and now generating some sales via online. To get to large numbers I need a network, funds all that.
Large organisations generally focus on the product valuation. The potential of the technology may be large, but in the absence of large revenues they do not see the bigger picture. As a result the innovator feels cheated and walks out of the deal.
Since the tech valuation and commercial validation are the biggest challenges for innovators like us, I think we should have a government body that can do this for us. In the US, they have such a body that evaluates your technology on its potential rather than the revenues it has generated. This is a great boon for people like us.
Mayur Patil, founder, Small Spark
Air filter that helps increase mileage
I am very careful when I deal with large companies. Look at it this way, they have their R&D and engineers who have 20-30 years of experience. It is not very difficult for them to look at your presentation and figure out slight variations and make your product.
I never make a presentation to the lower management directly. An R&D guy at a large company has to show something and may find ways to re-engineer my innovation. So using my network or through others I meet the CEO or MD of the company. This helps because while lower management is focussed on the technical aspects of an innovative product, it is the top guy who understands how a new product can impact his bottom line. He may choose to manufacture it himself using your technology legally or outsource it to you if he believes you can do so.
I go up first and then present to the middle management. Also I never give my product to them. If they have to conduct the tests, they have to do it in my presence. That’s because if I am using component A, B and C they can figure that out if the product is left with them and make something similar changing the composition of the same components A,B and C. So all testing is done in my presence. So far I have showcased his air filter to six PSUs/corporates.
Kapil Shelke, Tork Motors
I look at it this way. It’s a relationship that you need to build, not negotiate. We were looking for an investor and a friend told me about Amit Kalyani of Bharat Forge. He loves technology and motorbikes and when I showed him our bike he was very impressed. I think what startups need to understand is that you have to be true to yourself and what you have built. Never undervalue your hard work and efforts. I found an investor and that enabled me to set up my manufacturing plant.
The expert view
Prakash Sharma, strategic consultant and incubation activator
We have seen a couple of cases where a large automotive manufacturer shows an interest in innovations from startups and then moves inputs to their tech division and the same products are scanned in international markets. There is a preference for foreign startups as they are seen as more sustainable than Indian ones.
Dr V Premnath, director, Venture Centre
Incubation centre for startups, with an emphasis in Science and Technology
Copying ideas from small startups does not make sense for a large corporation. Which is why they are very careful about accepting or even listening to stray ideas. If the invention is valuable and a large company infringes on the patent, then that is an opportunity to extract large punitive damages. In such a situation several lawyers will step forward to help a small entity.
Chinmay Vaidya, lawyer experience ith litigation pertaining to trade marks, patent and copyrights
First of all it is an unfair relationship. Large corporations spend millions of dollars on research and then you may have a startup who comes with maybe a similar or a product that is not very different from what they are working on. This is an ethical dilemma. It may be the case that they will reverse engineer it. In fact I know of some people who refuse to file patents simply because filing a patent exposes your technology or product to the world and then it is open to being copied.
However, that said I think it is important for an innovator to first file for a patent because that is the only recourse in the law to protect oneself. Then before he showcases his work to any company, he should sign a non-disclosure agreement that will prevent anyone from disclosing/using what is shown.
While the law has remedies for infringement of IP, I think it is best if trade bodies and associations come up with incubators that help young innovators and then present it to their members. This is because self regulation is the best solution.