The Inventor—Investor Conundrum

Abstract

The complexities of developing a business based on a novel product may appear insurmountable. Stereotypical convention suggests that there are two major players: polarized inventors and ‘greedy’ investors. Surely there is a way of aligning the inventor–investor relationship into something positive for both parties? In this paper Francis Hobbs explores how both inventor and investor can be incentivized in a virtuous circle through the creation of a formal link between an ‘IP holding’ (inventor) company and an ‘exploitation’ (investor) company which is then free to commercialize the idea as it sees fit. With grant funding provided by the government and channelled through the exploitation company, the investor maintains cherished commercial freedom while the inventor benefits not only from paid contract employment to develop his or her own idea in the short term but royalties and, perhaps, exploitation company equity rewards in the longer term when product sales commence.