November 17, 2008

Credit Crunch IP


I have a hard time to trying to hide my obsession regarding the financial situation and the worldwide economic downturn. Here are some IP-related thoughts I have absorbed during the last months from various sources.

Venture Capital

Many start ups get funded on the promise and vision of turning their intellectual assets into valuable intellectual property to enable value extraction or be acquired by bigger fish. The current economic climate seems to restrict the flow of new capital to the VC funds. Moreover the model of VC funding is, according to some, about to change. This will probably change the innovation ecosystem and have an effect on IP generating possibilities for start-ups relying on venture capital. According to Bob Kagle and VentureBeat, about half of all VCs going out of business.

IP (patent) liquidation
The strategic focus of the usage of IP will be to generate money to support the operations. The companies have to turn their intellectual capital management to become a profit center instead of a cost center. This includes increased IP transactions and more focus on alternative costs since money in the bank is more attractive then IP assets with no clear purpose except a potential FTO function. To tie on to Marcus' blog post some while ago, perhaps a increased number of transactions can be a driver for a common market place for IP to reduce transaction costs.

Technology transactions
Is this the time where open source and open platforms gets the formal recognition in the corporate world? I am not completely sure that open source solutions, when speaking of software, is less expensive. However, the cost is distributed in another way to reduce upfront costs.

Moreover, open collaborations or outsourcing could be measures to lower costs in development activities or in day-to-day operations. To what extent this will actually happen is yet to see. To manage relationship and results in open platforms are demanding. My view is that not many firms have developed capabilities in relation to this, but I am too inexperienced and lack some insight to do a proper prediction regarding the adoption level dependent on corporate capabilities.

Strategic research
Less capital and commitment to strategic research. Cost cutting means lay-offs. Lay off could implicate loss of knowledge and research momentum . The impact of this will be hard to predict. Some claims that the societal value of having companies doing strategic research will decline vastly during the downturn period. The


That's all for now. Given the media buzz regarding the economic downturn and the effect on our lifestyle and future this topic will be revised in the future.

Mathias Hellman

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