The Battle for Inventor Startup Capital in the Pharma, Software & Energy Sectors

A few leading entrepreneurs and inventors have noted the valley of death that exists between research and commercialization when it comes to seeking financial startup capital, especially in the energy sector.

This means that the “hardest part of innovation often comes after you make the discovery” since it pits entrepreneurs against a formidable existing infrastructure (which in in sectors like energy) may represent as much as $8 trillion in investments.

Contrast this to the Information technology & software sector where there are lower capital costs.  Likewise, Pharmaceuticals are “fueled by hope—a miracle pill, an ultimate cure”.

These conclusions were drawn recently by the inventor of the artificial leaf, Prof. Daniel Nocera, who pioneered a radical new system for making liquid fuel from sunlight, water and air.   The technology was never quite commercialized but he did manage to switch the product’s focus from energy production to energy storage by partnering with Lockheed Martin.

The commercial evolutionary process described above left a bitter taste in his mouth: “I’m starting to hate my community where a professor makes a discovery and they think they’re going to become wealthy.”

Instead, he countered, that might happen with IT and pharma, but it’s not going to happen with an energy capital-intensive market with an established infrastructure.

The key challenge is that energy innovation tends to be capital intensive, giving startups an initial obstacle in competition with large companies that can move quickly, if necessary, to protect that investment.

“I really think the biggest problem with translating technology is starting with the inventors and academics. And it’s partly being driven by the universities who think they’re going to make a lot of money off these inventions, and they never make any money.”

The above explains why his partnership with Lockheed was so critical, essentially transitioning the risk from the inventor to the company making the money.

He believes the early partnership model is the way forward to introduce radical innovation in the American startup sector, since it frees the inventor (and institutions such as the University) from venture capital prospecting and allows them to focus exclusively on the idea, offering hope for solving world problems including climate change.


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Categories: Energy, patents, pharmaceuticals, Software