Reply to an AZ INTP

This is a communication with an idea entrepreneur in AZ that may be of some use. I can say that I wish someone would have offered me these words many years ago, and that I took them to heart. - MM

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Hi Mark,

I found your VC company through Google and e-mail through your blog. I'm an INTP trying to get some of my ideas out into the world and I think I have a few solid ones. Some software related, some that pertain to clean energy and others. I've lived in Arizona for my entire life, and would prefer to work with a company based here.

I would like to find out more information relating to how your company might help manifest my ideas into something tangible. What sort of information do you need from me?

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xxxxx,

First of all, you need to fully understand and appreciate a few cold, hard, and non-negotiable issues.

1) Professional investors don't invest in ideas, but rather mature working prototypes that have protected intellectual property, a very profitable business model, a large market, proven demand, and proven management.

2) Arizona is literally among the worst places in the world to start a business related to intellectual property. Unlike almost any other comparable market anywhere in the world, to include much of Europe and Asia during the past decade, AZ institutions do not support the essential infrastructure for bringing ideas to market. Not a single institution in AZ invests significant dollars in VC funds, which then typically support the infrastructure necessary in professional services talent, fund raising infrastructure, etc. In addition, while AZ has many wealthy individuals, they have not proven to work together in an organized manner, which has proven essential to compete in IP industries. The angel groups in AZ are terribly inactive compared to most, particularly relative to the amount of wealth deposited in AZ wealth management firms and banks (MM- a complex issue- big part of this is the stage of life, risk tolerance, and mobility- most wealthy individuals in AZ are part timers who invest back "home", and are not engaged in a civic manner).

Consequently, conventional wisdom has been that smart entrepreneurs will relocate to other markets that provide the essential infrastructure. There are exceptions of course, most of which are tied to entrepreneurs with the right affiliations- university, religious, family, or friends. But funding the initial idea itself is only one small part of the essential ingredients required to make it through the "valley of death" (term used to describe the gap in funding and assistance for early stage companies).

AZ has seen some modest improvement lately, but almost entirely restricted to universities, and in particular ASU, which does have a very small internal fund that students and faculty can apply to which acts in effect as friends and family capital for those lacking same. And they have an independent arm to assist mature intellectual property with packaging and licensing.

3) Because of the issues above, particularly the lack of financial support from both institutions and individuals in AZ, we are no longer considering assisting AZ entrepreneurs turn their ideas into applications, and are not even considering mature ventures. We have no incentive to do so and every incentive not to, unfortunately. We do state on our web site that we are not considering external investments of either time or capital, so this is my free time very early on a Sat morning rather than invested in my own ventures.

4) Venture firms and angel investors typically require a very sophisticated business plan that will demonstrate the issues above- protected IP, large market, profitable business model, and proven management. In some rare cases- usually from known sources like referrals from limited partners or portfolio ventures, they may engage somewhere along this path and assist, but generally speaking the inventor is left with family and friends to supply the capital and advice necessary in order to reach the professional investment stage, which in most cases is well into the 6 figures. Otherwise, generally speaking, the only other free resources worthy of tapping are those found in small business circles, which frankly don't really apply to intellectual property ventures (Score, SBDCs, etc.). The best alt. options are the few professional services firms in AZ who specialize in early stage tech- we do have a few, but they do need to get paid by someone- the lack of capital infrastructure places a heavy burden on the few who are foolish enough to engage in AZ, which is a state and culture frankly that still appreciates commodities far more than IP.

5) Even if the inventions reach the patent stage, and are approved- a process that requires many years and well into the 6 figures, gaining revenue from the IP can still be an enormous and expensive task requiring very specific experience and skill, and most important of all is that patent infringement is extremely common today in part because large corporations understand very well (their attorneys and lobbyists helped craft the environment and law) that very few have the financial means to defend their IP in court, which is an aggonizing effort that can easily (and most often does) run well into the 7 figures.

I assure you that all of this is quite accurate, but if you should still be interested in pursuing a path that matches your personality type and intellect, then I may be able to make some introductions for you, after you provide me with a CV or resume so I know something about who I am introducing.

Best of luck, Mark