I fear the end of the gentlemen’s agreement, the firm handshake, the eye2eye contact, the verbal contract. These days, I serve the academic research seeking commercial endorsement, via an innovative laboratory called CUTE or Keio-NUS CUTE Center. That’s Connective Ubiquitous Technology for Embodiments. Reuters featured the Lovotics Project in August 2011 in a worldwide feed, right after huge spikes in YouTube was observed from robotics-love pro- and anti- commentary.
In a recent negotiation over licensing a lab-related project by a VC and edu-learning service company, the preso played out, then discussions with researchers followed by a demo made standard fare. Q&A yielded very positive response by the client, with the VC confirming arrangements using a JV vehicle to keep research connected to the product. He would revert with the relevant termsheet to finalise within a week. He gave me a firm handshake with a keen look when our eyes met.
Fast forward 2 days. I get a call from the university labour relations office.
I was appalled to be told the VC sneaked behind my back and went direct to the university, whining that we did not revert to him in time, the conditions were not clear, and he had doubts over delivery timelines, yadda yadda, and hence, he would like to license the technology direct from the university for a small fee, full exclusivity in every country, with royalties not exceeding 10%.
I did a check on the client company and discovered they were running low on funds from their previous round, and were close to the “valley of death” if another round was not on the cards. They wanted exclusive rights and wished to pay the patenting fees for every country they would target, in exchange for less royalties after the first $x of sales.
Me meerkat ears perked up. A company seeking an innovative angle to bump up its valuation prior to another funding round, claiming off patent fees as expenses, and reducing its targets by pegging a minimum $x of sales revenue on a nett basis. This opportunity would have been flagship for the VC.
The lab had spent close to 5 years on the project, more than $200k in research time, and had delivered a 100% working prototype 100% improved from its predecessor. It was a perfect fit to the business model of education and online interaction, with a play value wrap on top. Perfect for Hasbro.
Are we seeing the end of trust as we know it?