Bridging the Valley of Death: A New Business Model

Xconomy.com (Roth) - To address this funding challenge, I worked with retired Warner-Lambert pharmaceutical R&D executive Pedro Cuatrecasas to propose a new funding model for innovation, which we call the Distributed Partnering Model. While we explain in our paper how to apply this model to advance life sciences innovation, it can also be applied to high-tech, cleantech, and other technology sectors.

This model emphasizes the importance of advancing the innovative technologies and products— instead of a model that emphasizes building individual companies around each new discovery or invention. In our model, we have identified four independent entities that work collectively to advance innovation—based on the unique assets, skill sets, cultures, and risk tolerance to be applied. Each would have a rational investment risk and reward as a specific innovation gets relayed from one business entity to the next. They are:

• Discovery: A research institute that focuses on new discoveries.
• Definition: A company that invests in defining the initial product(s) from the research-based discoveries in a given field of expertise. 
• Development: A company with responsibility for funding and advancing product development.
• Delivery: A company with a significant marketing and distribution channel.

Our model is fundamentally different than previous models in that it focuses on these independent groups to collectively contribute to advancing products from research discovery to commercialization. As senior fellow Frank Douglas says in a statement issued by the Kauffman Foundation, “The model focuses on advancing products as opposed to companies. We need thousands of new products, not thousands of new companies.”

[Editor's note: This post was adapted from The Distributed Partnering Model, an article co-authored by Pedro Cuatrecasas, an adjunct professor at UC San Diego, published yesterday by the Ewing Marion Kauffman Foundation] Hat Tip: Innovation Daily