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The Challenge of Brash Citizens

Summary: 

The very confidence and brashness we instill into the minds of our citizens often permits them to later claim they could have done it without us.

The most difficult task for the funding agent+ will be the distribution of new-found wealth across the citizenry. We will often distribute enormous sums of cash.

Your early success and momentum are a result of the full faith and backing you received as a member of the community. You had access to the community Rolodex. You leveraged the financial reputation built up by those who came before you. You leveraged the funding agency infrastructure. There are a thousand little considerations you received that contributed to your eventual success. It’s excusable to forget or diminish some of these benefits individually, but you could not have succeeded without them collectively.

It’s too easy for citizens to point to their own unique contribution as a claim for a greater share of newly-minted wealth. This wealth emerges from the minds of members in our community. The very confidence and brashness we instill into the minds of our citizens often permit them to later claim they could have done it without us, and therefore deserve a greater share in their success. We check this ambition, but in a way that keeps the passion directed toward building even more wealth from the next success.

Below is an illustration from the venture capital world.

We set up a firm dedicated to improving the quality of physician education. It had four major partners: the provider of raw medical content, the packager of that content into digestible educational cases, the software firm responsible for delivering those cases to physicians, and the venture capitalist. All participants claimed theirs was the most important ingredient for success in the venture, and insisted on a larger share of ownership. You can’t do this without content! You can’t do this without case studies using that content! You can’t do this if it’s not delivered to the physician’s desktop! You can’t do any of this without the money. Months were spent arguing over the split of ownership in the venture. In the end, the partner with the money pulled out and the venture collapsed before it could even start.

Your success while a member of the funding agency is success for the community. We set this up as a contractual commitment for membership+. All monies up to the second blockbuster+ success are reinvested back into the community. These monies may have names attached, but cash will not be disbursed until after the second success.

Your split of ownership once you're ready to leave the funding agency is fixed and common across all unpredictable R&D+ investments.1 With success, the percentage is generous (i.e., ~30%) and comes with several protections not found in typical venture capital contracts. The funding agency maintains a robust backlog of highly attractive investment candidates, offers a highly competitive financial package to investees, and practices take-it-or-leave-it for ownership percentages as a negotiation strategy. There may still be squabbling amongst the various non-funding parties to the contract, but the funding agent as an indispensable party to the contract, will not be involved.2


Editor's Picks for September, 2011

  • 1. There may be tiers, based on the maturity of the science platform.
  • 2. Except perhaps to find alternatives for recalcitrant non-funding parties.
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Reba Tull
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Joined: 03/30/2011
The competition will be tight

This will be your biggest challenge. First you have to convince investees they will be better off – then you must convince them they actually were better off. You’re in competition with many funding sources that will be no where near as challenging in their due diligence of investment opportunities.