However this approach does not yield success on it’s own. The work we do is to address the five key challenges of investing in innovation projects. These are:
1. The “penicillin problem”
“You need six months of treatment – but I am only going to give you six weeks…”
Most very early stage projects only receive a very small amount of initial funding. They soon run out of cash and development slows or stops while they try and find more investment. This can happen several times in the life of the venture and increases risk.
Investors often set arbitrary constraints of how much investment or time a venture will have. Given that these decisions are often made at the start of the venture, these decisions can only be arbitrary.
The Genesys solution – we commit to continually fund development so there is no penicillin problem and so further reduce risks by eliminating delays between rounds of funding and removing the constraints of size of investment and time to value.
2. The capital markets problem
It is very hard for global capital markets to invest in individual very early stage innovation projects. By definition, there is often very limited or no information on which to base investment decisions.
However, we need to be able to access global capital markets to sustain funding of innovation locally, regionally, nationally and globally.
Genesys solves this problem with its investment platform that manages investment selection and allocation of funds according to evidence of value created as it develops project by project. This is “Genesys Active Management”: on demand reports track three vectors which are independent of each investment: change in confidence, time to market and value potential.
3. The problem of picking winners
Most investors are trying to pick winners as they are unable to identify and maintain a large enough pool of potential projects.
Our approach, technology and network allows us to build a large portfolio and manage risk at the portfolio level. Genesys Active Management tracks individual performance vectors which allow us to allocate funds according to the performance of each investment while limiting downside risk.
4. The problem of liquidity of innovation capital
Key cities such as London and San Francisco have become innovation and investment hotspots where projects, teams and investment can readily be assembled to create innovative high growth businesses.
Genesys works to provide this type of liquidity across across a global market. So capital raised in a country where the demand is lower can be used in a country where the opportunity is higher. Similarly, projects from one location can be leveraged across the Genesys network so that international teams can help identify international demand, while the project originator can still benefit from the value generated.
5. The problem of employment
The lack of commitment to fund early stage projects means that many projects with significant potential do not get funded because the innovators have to choose between conventional full time employment and starting a venture with not enough money to provide a viable alternative.
This is especially true for university students who have a choice between working for a global brand or trying to win a business plan prize; another aspect of the penicillin problem.
Our solution is to commit sufficient funds up front so the student, innovator or entrepreneur has a realistic choice and clear alternative pathway.