BIC Helping with Second Stage Funding

As a member of a number of Research Groups on the subject of Innovation, I read an article this morning by Uday Phadke on Crossing the 2nd Chasm and I thought its observations were very interesting and an area the BIC is trying to provide assistance locally. A summary of the article is as follows and if you would like to read further please look at

https://connect.innovateuk.org/c/document_library/get_file?p_l_id=650151...

We are outstanding in the UK at generating new ideas and innovations: over the past ten years many of these ideas have been turned into product and service demonstrators, using proof-of-concept funds provided mainly from public sources (the BIC being one of them), via research institution grants and regionally-targeted funds. This has been referred to as Crossing the 1st Chasm.

Where we have been very poor is at crossing the 2nd Chasm, which is about turning the proven concept into a product or service with a viable business model. Historically, this was the area that Venture Capital was supposed to concentrate on, consistent with its mantra of high risk-high return. Unfortunately, since the collapse of the first dot-com bubble in 2001 and the continuing problems in investment banking, VCs have been increasingly reluctant to invest in crossing this 2nd Chasm, instead focusing on what they call growth stage. In reality, their focus is now on scaling up proven propositions, by crossing the 3rd Chasm, the Chasm originally highlighted by Michael Moore, in his book on high-tech marketing.

So we are faced with a seriously broken funding environment, which needs to be fixed if we are to create new businesses, jobs and revenues.

We need to think about how we mitigate the risks associated with crossing the 2nd Chasm. This includes shaping the product proposition finding viable, sustainable business models, and dealing with the execution risks, especially the expertise of the management team.

We also need to educate potential investors about taking a more ‘enlightened view’ on the risk vs reward equation, so they recognise that getting involved at this stage provides a genuine prospect of high returns, quite different from their experiences with returns from most VC funds over the last ten years.

Here at the BIC we would like to think that we are doing something to help local businesses to cross that 2nd Chasm – we run a number of self- development workshops and we have recently introduced a consultancy fund of up to £2,500 on a 25% contribution to help companies to grow. Further details are shown on our website and if eligible companies are interested please do not hesitate in contacting us.