Think about commercialisation early, be careful of intellectual property pitfalls and respect non-disclosure agreements.
Investing in deeptech startups is tricky, but understanding the technology, understanding what makes it distinct and commercially feasible and engaging with legal advisors early on are some of the ways to make a success it.
At the Global Corporate Venturing Symposium Josemaria Siota, executive Director of Entrepreneurship and Innovation Centre at IESE Business School moderated a panel discussion on artificial intelligence (AI) and deeptech, which featured Tara Bishop, founder and general partner at VC firm Black Opal Ventures, Zoë Reich, fund manager at venture firm Octopus Ventures as well as Luca Gori, partner at law firm DLA Piper.
Bishop noted that many of the most valuable discoveries in healthcare AI tend come from academia and the difficulty is often in turning an AI model into something that can be commercialised. It is important to think about commercialisation early, she said, noting that many of the startups she works with are still struggling to find a go-to-market strategy for potentially valuable medical devices.
Reich noted that the best practice, when investing in pre-revenue pre-seed companies in the space, involves conducting extensive in-house due diligence, leveraging internal expertise of one’s own team. She said: “That is how we feel confident investing in an early-stage company of this space. It is a technology and team first approach.”
Intellectual property (IP) can be one of the pitfalls for corporate investors when it comes to AI, Gori said. A key one is questions around universities’ say on IP issues, as well as the difficulty of keeping entrepreneurs in a corporate environment conducive to and not suffocating creativity.
The panel discussion also touched on the importance of signing non-disclosure agreements (NDAs) when negotiating with corporate or traditional VC investors. NDAs had never, in Gori’s experience, led to litigation although he said he had seen “some very nasty letters”.
The panellists concurred that corporate venture investors are to play a key role in helping deeptech and AI startups commercialise their solutions. Reich pointed out: “Deeptech startups fail because they have a tendency to go into endless research and having a corporate partner could bring insights on what is actually needed to be invented and commercially viable.”
In the context of healthcare deeptech, Bishop said, corporates also play a crucial role in providing data sources for startups. Those data are used by startups to build their models.
Gori said that corporate venture investors can help AI and deeptech startups by also providing them with validation in the eyes of other VC investors who may lack expertise in a specific area.
Photo courtesy of CDC on Unsplash