Newsletter – Franchise Capital Management (Vol. 2, No. 2)

The World Class R&D InstituteFranchise Capital Management+

This month's home page has as its topic Franchise Capital Management. The articles for this topic describe a new approach for funding of R&D. We are no longer reliant on venture capital or corporate funding in order to take exciting research and turn it into blockbuster+ commercial products.

The home page articles give the big picture. Editors' Picks provide many of the operational details. This is a very financially oriented view toward R&D. It helps if the reader has followed the arguments for increasing R&D productivity over the last 8 issues of this website, but we have included a summary article for those just now getting introduced to the challenge (here).

April 2011 Home Page

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This month we describe the salvation of commercial R&D.

Franchise Capital Management marries investors seeking long-term capital safety with researchers seeking long-term funding. We replace (out-compete) corporate R&D and Venture Capital. We take features from corporate and from Venture Capital, but we add many new features not seen in either of these competing approaches (see comparison here). Franchise Capital Management is patent protected.

Last month we described the need for ‘new money’. Here it is. Since it’s new, many will find this discussion difficult to follow on the first read-through. The reader faces two hurdles: 1) it’s very oriented toward the financial side of the equation, and 2) it’s a new financial equation. If you care about commercial R&D it’s worth the hoe. A roadmap to help you navigate this month's articles is included as a link at the top of many of the articles.

We invest into unpredictable R&D+. These investments are uncertain as to if, when or where they will succeed. Investors don’t like unpredictability. Researchers need predictable funding. Our (mental) feat was to find common ground between these two parties in the form of a middleman, the funding agent+.

Think of this as a research annuity. Investors buy an insurance policy from our firm (the funding agency) and they see steadily increasing value in their policy. The funding agent invests the receipts from policy sales to fund research and to provide steady increases in the value of policies. Accounts are reconciled (cashed out) as soon as unpredictable success happens (a windfall+). The money flows that allow this happen are depicted in this chart.

Last month we announced a change in direction for the World Class R&D Institute. This month we start down that path. This is our first installment for a new R&D-centric industry. Hope you enjoy the articles. They were a lot of fun to write. They can radically change your views of funding for R&D.

This month we introduce a new literary device: Reba Tull. Reba is an editorial user providing acerbic comments on select articles (found at the bottom of the articles), to remind readers that although articles are intellectually honest they are always open to rebuttal. View a listing of Reba’s comments here.

Slowly, slowly the economy is coming back.

Keith Ortiz, President and CEO
The World Class R&D Institute, A Non-Profit Institution
609-954-8319 (c)

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