Intelliversity’s Story
Frustration, Legacy and Prosperity
The story of Intelliversity began with a burning question: how can we help thousands of entrepreneurs change the world in a positive way AND help investors succeed at the same time? The way forward was to translate our own near-perfect success as business owners into the success of thousands of others. That would be leverage. That would also be difficult. Yet helping hundreds or thousands of entrepreneurs would be much more rewarding than starting another company. So we decided to start a non-profit to assist others entrepreneurs making an impact.
At the same time, we found true frustration when personally investing in other people’s companies. Our families’ nest eggs were at stake. The stock and bond market was unpredictable, while low-risk investments are eaten by inflation. We needed a way to reliably invest in innovation. We looked everywhere. There was no reliable way.
The problem was, by the late 2000’s, it became impossible to predict when any given innovative company would pay its investors back. The average time to a liquidity event was nine years and growing. Yet we knew that the world in nine year’s time was impossible to predict. So investing in technology became a crap-shoot. But we were not gamblers. Frankly, we became disgusted by the gambling mentality of the small-cap and angel investment communities. We HAD to find a better way to invest.
So Intelliversity’s founders looked around for methods that could make starting or investing in an innovative company more predictable. We had to find ideas that were equally applicable to visionary founders and for the investors that support them. We found and agreed on two innovative ideas:
First, the composition of the leadership team makes a huge difference in the success of innovative companies. Only the right kind of team would be able to make the pivots necessary to succeed in a fast-changing world and pay back investors. We interviewed dozens of successful investors to find what they looked for in winning teams. We sought patterns in winning teams that could be used to predict future winning companies. And we found them.
Second, even more revolutionary, we had to get away from liquidity events and “exit” as the goal. Thinking about it, a “liquidity” event means liquidity (cash) for investors but liquefying of the company for the founders. Conflicts are endemic. Company founders and their investors are adversaries. Long-term impact? Gone. Sustainable business? Gone. So we sought a replacement for the idea of “liquidity event” and “exit” . And we found it.
So early in the history of Intelliversity, we began to advocate two innovations to visionaries and their hopeful investors:
First, build a winning execution team. Picking the right “execution master” and filling out the execution team is full of dilemmas for the visionary founder. We became experts on solving this issue. Our first series of blogs articles and a conference centered on this idea began in 2010. We created a collection of articles entitled “10 Steps to Extraordinary Leadership” soon to be a published book. We created a series of 30+ video-taped profiles of companies that followed this pattern, called “Entrepreneurs to Watch”, still available on YouTube. We became experts in Harvard Business School professor Noam Wasserman’s The Founder’s Dilemmas, a 10-year research project on what works and what doesn’t when starting a company. Companies that took our advice are still growing today.
Second, offer to investors a “share in the company revenue rather than a share of ownership.” We called this innovation “revenue participation.” Revenue participation would align investors with company goals and incent investors to help promote the company. For investors, it would return liquidity almost immediately and pay investors back in full within about five years, or sooner. This would attract more investors to innovators. More good companies could get started and get their funding. We began writing about revenue participation in 2011.
Soon we ran into others who had been advocating revenue participation for decades. Wall Street legend Arthur Lipper was the most prominent, going public with the idea as early as the mid-1980’s. In late 2014 we joined forces with Mr. Lipper (now our Board of Advisors Chairman) and associate Michael North of Pacific Royalties and accelerated our advocacy, using the term “Revenue Royalties” as more descriptive.
In late 2014 and early 2015 we ran two conferences centered on Revenue Royalties. Attendance was overflowing and the response was overwhelming. We published an eBook entitled The Road Less Traveled on how to offer Revenue Royalties and its exciting possibilities. Recognition of our influence spread and the L.A. Business Journal in 2015 asked Intelliversity to be its “Community Partner” to locate candidates for the prestigious Patrick Soon-Shiong Innovation Awards. Shortly thereafter, Metropole’s popular 4th Annual Alternative Global Funding Forum asked us to be a “Community Partner.” We became innovators in the mainstream.
The future path for Intelliversity is increasing the availability of information about innovative funding and execution methods through online education and through small-group trainings. Most exciting, we are now advising in the formation of Impact Investing funds using Revenue Royalties as the investment method. We hope in this way to make a direct difference in the future of companies seeking to solve many of humanity’s most pressing challenges.