Is IP a Gating Issue for Getting Investors?

Caldwell Video Series – Part IV

Joining Keegan were the following Caldwell Intellectual Property clients:

Tom O’Leary, Team Member at BETA Technologies

Jay Jacobs, Founder of RAPID

Karl Ruping, Managing Partner at incTANK Ventures

Cyrus Schenck, CEO & Founder of RENOUN

(Transcript of panel discussion below)

>> KEEGAN M. CALDWELL:

Before I get into this other line of questioning, maybe you could just hop in real quick (Karl) because I know people are always curious about this, and that is:

Is it a gating issue for receiving…for getting YOUR money, Karl? [Keegan laughs]

>>KARL RUPING:

I go back to, I think, as long as you have the strategy, right, in a biotech, life sciences, yes. Because that is the asset, and if the world ends tomorrow, at least I can walk away and I can leverage that asset as a remaining asset, and maybe get some of my money back. But in a medical device you may not have the patents filed but you have a strategy to get there, And, again, I’m going early-stage. I would expect by a Series A, that you have it figured out, and probably some provisionals filed. Seed, friends-family-and-fools, I think it’s fine. But certainly, when you get professional money in, and I usually say that MY money is not professional pressure money, So, I would say that some of my seed investments are even without a business plan. But, you have an idea. You get the people and around the table. You have the vision. You articulate that business opportunity and how to get there… but, certainly, by, you know, Series A you would want to have that.

>>CYRUS SCHENK:

If I could just chime in, once again. Look, if there’s an example where I had a fair number of people in Vermont, which is not hard, or, not very often, that happens. They’re all, kind of cheering for RENOUN and to throw a check in and because the IP was not granted because we had not had enough time for that to process, every single person pulled out because I hadn’t filed and been granted yet. So, in that case the IP was there, but, it wasn’t checked off and we had to completely downgrade or change our plans, for the next three years when we were pretty close to the signing table, or something like that. So, it was a tough change, but, I mean, looking back on it now, it was the right one to happen. But just for reference, this is what happened to us.

>>TOM O’LEARY:

We had, I guess, something similar to that where from an IP scenario we interviewed investors, in early-stage, where, again, we’re less than a year old, we interviewed somebody as an early-stage investor and they were so impressed that we had negotiated the rights to the IP that the conversation about investment accelerated to the point where that person ended up, basically, just asking if they could work for free for the business. It was sort of they were so interested in investment, they’re like, “Wait, you mean I can just come to work here and work on my investment?” It was just the enthusiasm-momentum of that scenario.

And now, that person, who had sold their strain gauge processing company five years prior, and was essentially in retirement at that point, came out of retirement and is basically working in our lab. And that conversation started with, hey, he wanted to invest and we own all the IP and it was just like this snowball started gaining momentum from that discussion. So, that our experience has just been, that having a, straight to your point, of like having a strategy, like do we have the patents filed now, but having a strategy where  the client has given us ownership and there’s the pieces, you know, the pathway is laid out  has definitely helped.

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