“There’s a ton of stuff that really could be impacting the lives of everybody on Earth, that is not making it out of the lab and into practical application,” said David Van Wie, founder and chief investment officer at Aventurine Capital Group. That’s how he summarizes the problem he is trying to solve with his IP-forward accelerator. He hopes that spinning out companies — and letting inventors and academics continue to do what they do best — is a winning formula.
Aventurine focuses on where venture capital doesn’t typically go: It gets in early to support people who aren’t natural entrepreneurs and invests in IP for the long term using what it calls a Perpetual IP Income fund, or PIPI fund. If it sounds as if it’s the antithesis of quick growth and timely exit, that’d be accurate. But the team believes that’s OK, and that perhaps VCs don’t need to be in a big fat hurry all the time anyway.
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“This is a researcher who spent 20 years of their lives chasing a certain thing,” said Joe Maruschak, the company’s managing director of Aventurine’s investment studio. That’s how he described who Aventurine is looking to fund. “They caught the bug for chemistry, and they’ve spent all of their lives going into chemistry. They’ve got their Ph.D., got a job in university, and then discovered something.”
Central to Aventurine’s thesis is that academics shouldn’t have to be entrepreneurs to ensure that their discoveries or innovations can be developed and brought to market to eventually have an impact in the world. It recognizes that a researcher’s skill set is not necessarily the same as a founder’s, and that they shouldn’t be forced to learn how to do it overnight.
“It’s [a case of], ‘No, don’t do what you’re not wired for; it’s not what you chose to do with your life,’” Maruschak told TechCrunch+. “‘We have those people that can grow companies; you stay there, do the research … we don’t want to fund you to stop doing what you spent your entire life doing.’”
To Aventurine, it doesn’t make any sense to remove people from their specialities. Letting academics continue doing what they’re good at may lead to new innovations or discoveries. They can stay in their own labs, which they’ve spent years cultivating and where they feel most comfortable.
“These people are professors at universities, and asking them to pick up roots and come to where we are, where there’s a studio, is not going to work,” Maruschak said. “Where can your professor have a lab there? So part of this is that we have to be virtual, and they’ll stay where they are.”
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“The idea is we’re looking for IP that has the potential to go to several markets,” Maruschak said. “The model itself assumes that we’re going to make the most of our returns from the licensing royalties for intellectual property, which means we’ve got to find stuff that has, like deep tech, heavy intellectual property, which oftentimes [means we get in] much earlier than what you normally see out there.”
How much earlier? Well, a lot earlier than when VCs — even early-stage VCs — tend to start getting curious. “We expect that we’re going to be investing in these companies for one to three years before they’re ready for venture capital,” Van Wie said. “So when we say get in early, we mean years ahead of them being ready for VC.”
Once the research is mature enough to be able to do robust IP, the firm is able to engage. That’s long before there are any customers, much less recurring revenue.
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Aventurine’s model is based on establishing an entity that holds and manages the core IP, together with any branding or patents that run alongside it, as well as a startup that makes use of the IP. While it would be ideal if the startup made it, the financial returns, perhaps lasting decades, come through the IP operation. Here, the IP can be sold as a package many times over to anyone who can make use of it. And it ensures that even if the startup goes belly-up, everyone continues to benefit from the IP licenses.
“It’s the package that people want to license,” Maruschak said. “It’s not like, ‘Here’s a patent, go have fun.’ It’s: ‘Here’s a patent. Here’s the technology behind it. Here’s the data that makes it run. Here’s the branding behind it that you can stick on there that validates it.’ You license the whole thing.”
By taking a different approach to typical VC, placing the focus on IP and using the PIPI fund, the Aventurine team hopes that it has shifted the incentives for investment and, in doing so, can have a positive impact on scientific endeavors.
“When I think about how the VC style creates incentives for entrepreneurs, and I look at what we’ve done with our PIPI fund, we’ve shifted those incentives, because IP is really at the core of what we’re doing,” Van Wie said. “Of course, we want to see wonderful success from the startups that we’ve invested in. But really, the focus is on that IP and our incentives are around the long-term management of that IP in as many markets as it can apply.”
Time is necessary for much of the technology or innovation in which Aventurine is putting its money and expertise. The later funding and compressed timelines for traditional VC means that what could be a valuable and effective intervention, whether for climate change or multiple sclerosis, isn’t even picked up, let alone given the time it needs to be developed.
“If we find some IP, and we know the world’s going in this direction, that eventually it will get there, and we know the core technology is part of the solution — let’s get in there and actually own a piece of that,” Maruschak said. “Eventually, it’s going to pay off. It might not pay off in two years, it might take eight. But since we’re perpetual, and the licensing fees are going to be huge with this particular technology, we can afford to wait.”
Ultimately, the innovation of investing in long-term IP, the firm said, is a reaction to shifting initiatives in how to invest in deep tech. It’s also benefiting from the opportunity inherent in a lower amount of investment in this space; the team believes that there’s a lot of untapped potential.
“‘Make that laser more efficient! By tomorrow!’ It doesn’t work like that,” Maruschak said. “Our approach is a response to that.”
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