Quarterly Newsletter: December 2005

Corporate Venture Capital
According to an article in the Wharton Finance and Investment newsletter, in 2000, when corporate venture capital was at its peak, over 300 large corporations poured more than $16 billion of venture money into small start-up companies dropping to a low of $1billion by 2003. Corporations that have stayed the course with venture investing such as DuPont, Johnson & Johnson, IBM and many others, tend to make equity investments in innovative start-up companies with strategic rather than simply financial motives, and in time reap both strategic and financial benefits. They go on to say, "Corporate venture capital is seen as a three-legged stool whose other two legs are a strong internal R&D capability and strong alliances with academic or government researchers."

Technology Disclosure Dilemma
According to Gary Dushnitsky, author of The Paradox of Corporate Venture Capital, many mutually profitable investment relationships do not materialize because a corporation is not interested in investing unless entrepreneurs demonstrate their quality by upfront disclosing details about their inventions. According to his study, the probability of a relationship between the two parties "decreases if the products are potential substitutes and increases when the products of the two are complimentary."

If the products are potential substitutes, there are incentives for a corporate venture capitalist to behave opportunistically and copy the venture's novel technology. According to Andrew Sherman who writes about "common mistakes entrepreneurs make in the search for capital," says a big problem in raising capital is being so afraid of sharing your idea that you don't tell anyone about it. Sherman says, "You can't sell if you don't tell."

Move over HDTV
According to an interim report by Matsushita and Sony, among others, the television of the future not only shows the actors or players in three dimensions but will let you experience the "smells of the stadium" and even pat the players on the back when they score! Such a TV would have a wide range of potential uses. It could be used in home-shopping programs, allowing viewers to "feel" a handbag before placing their order, or in the medical industry, enabling doctors to view or even perform simulated surgery on 3D images of someone's heart.

The future TV is part of a larger project, which aims to promote "universal communication," a concept whereby information is shared smoothly and intelligently regardless of location or language.

Nanotech advances
According to professor David Leigh at Edinburgh University, "Although man's understanding of how to build and control molecular machines is still at an early stage, nanoscale science and engineering could have a life-enhancing impact on human society comparable in extent to that of electricity, the steam engine, the transistor and the internet.

Scientists have made a breakthrough in nanotechnology, which could hasten the development of molecular machines that could act as artificial muscles or drug delivery systems in the body. In the technology that deals with manipulating materials on a minuscule scale, researchers have built molecules that can move objects larger than the size of an atom.

Psychopaths as financial traders?
According to a recent article in Reuters, researchers at the University of Iowa shows that the best stock market investors might plausibly be called "functional psychopaths." A team of U.S. scientists has found the emotionally impaired are more willing to gamble for high stakes and that people with brain damage may make good financial decisions. Fellow author, Baba Shiv of Stanford Graduate School of Business said many company chiefs and top lawyers may also show the same trait. "Emotions serve an adaptive role in speeding up the decision-making process. However, there are circumstances in which a naturally occurring emotional response must be inhibited, so that a deliberate and potentially wiser decision can be made."

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