A proven model for creating breakthrough technology ventures

There are ten fundamental steps

During my tenure leading SRI ventures, I was responsible for both developing our venture creation strategy and for the execution of the strategy: to create and launch technology ventures from SRI. I had the best job in the world, working with world-class science and technology teams, as well as the best-of-the-best venture capitalists in Silicon Valley.

Though SRI had hundreds of researchers and thousands of patents, we created only about 3 ventures a year. This was because our criteria was to only chose opportunities that would be breakthroughs and solve important problems in the world. We didn’t neglect opportunities that didn’t reach that level, but instead of creating a venture, we often licensed those technologies.

The result was creating over 70 ventures with a cumulative market value of over $100B in diverse areas such as robotics, AI, biotech, microprocessors, and more. Our successes included companies like Intuitive Surgical, Nuance, and Siri, for which I was a co-founder. Our royalty stream was also a major source of income for SRI.

The ten step model that I describe below is the basis that we used for every venture we created. Today, I am no longer at SRI, and can’t speak for their current process. But I continue to help develop ventures with America’s Frontier Fund and other companies that have a mission to create the next generation of breakthrough technology ventures.

Here’s the important point: the greatest venture opportunities we will see for the next decade will dwarf what we achieved in the past. They will create the basis for the next multi-trillion $ economy of the United States and the rest of the world. These ventures will come from emerging technologies including AI, Quantum, Advanced Energy, Microelectronics, Biotechnology, Advanced Communications, and more.

Why are emerging technologies so important? It is because they fundamentally provide a new capability that never before existed. Look at LLMs and Generative AI as an example. Introduced to the public only a few months ago, hundreds of companies have been created to solve important problems never before capable of being solved in a vast array of market domains.

Technologies are now emerging at an exponential rate, and beyond emerging individually, they are “colliding” with each other, and compounding the opportunities. For example, AI and robotics will fundamentally make robots more capable, and impact virtually every service market today. I am working on a robotic/AI venture as I’m writing this.

Technologies alone are not enough though. In order to create value, they need to enable a product or service solution to a market problem. And it is the product or service solution that creates a breakthrough venture and overwhelming value.

These frontier technology ventures are far more difficult to create than “conventional” ventures because they involve much greater risk, knowledge, and experience. The teams that create them have to be deeply knowledgeable and capable in both technology and business. But the reward will be a venture that has a high potential to be groundbreaking.

To create a breakthrough technology venture, the founding team needs to accomplish these ten tasks:

1. Identify an unmet need in a large rapidly growing market, screaming to be solved. The greater the need, the greater the opportunity.

2. Conceive of a differentiated solution - a breakthrough product or service to address the market opportunity.  The solution is a “painkiller” not a “vitamin” for the customer. Seek disruptive solutions, not incremental improvements.

3. Seek sustainable competitive barriers. Look for the “white space” in the market where competition is not as intense. Develop intellectual property.

4. Iteratively refine the elevator pitch, the value proposition, venture deck, and business plan. Gain an an in-depth knowledge of the market, the customers, the competitors, the products, the business models.

5. Seek an effective positioning strategy for introducing the product into the marketplace.

6. Identify the trigger points that provide a clear and compelling answer to “why now?”

7. Identify the key elements of risk, and their mitigation.

8. Identify a founder/CEO and a core co-founder innovation team.

9. Build a compelling demo that brings to life your solution and allows for a deeper understanding of the power of the idea.

10. Identify great investors and a board, and raise external funds.

These are not easy tasks to accomplish. They demand great knowledge and creativity, experience, and collaboration. Crucially, they are not serial processes. The teams may iterate on the unmet need or product or strategy, returning back to a new need or even sometimes pivoting to a different market. This is NOT a rigid stage-gate process. Instead, it is a dynamic learning process, where the team continuously refines their understanding of the opportunity and the white space in the market, and iteratively converging on the solution.

Crucially, the ten tasks are not serial processes. This is NOT a stage gate process.

I recognize that each of these ten tasks need a deep explanation of what they really mean and how to accomplish them. And so several of my future posts will dive deeper into understanding them and helping you, the visionary founders of remarkable companies, achieve your goals.

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Your dedicated Venture Coach,

Norman