Big Tech Companies Spin Out Research Projects to Cash in on Hefty R&D Investments

Big technology companies like Microsoft, Intel, and Hewlett-Packard are increasingly partnering with venture capitalists to spin out new companies and technologies from their research and development projects. This strategy allows them to monetize unused or underperforming research projects and tap into the billions of dollars they invest in R&D each year. By spinning out small research projects or licensing individual technologies to start-ups, these companies can achieve significant returns on their investments.

Key Takeaways:

• Eighteen months ago, only a few companies were known to be engaging in IP spin-outs, but now several major corporations, including Microsoft, Intel, and Hewlett-Packard, have indicated interest in this strategy.
• Blueprint Ventures, a venture capital firm, has partnered with Intel to inject $17 million into Landesk, a software company spun out of Intel in 2002, and subsequently sold to Avocent in April, resulting in a profit of $60-75 million for Intel.
• Microsoft has set up a special division to explore IP spin-outs and is looking for external startup teams to bring its technology to market.
• Big technology companies see IP spin-outs as a way to monetize projects that would have otherwise been unnecessary or expensive to maintain.
• This trend allows companies to achieve real money at the bottom line, unlike shutting down underperforming projects.

Statistics:

• $17 million: the amount invested by Blueprint Ventures and Intel in Landesk.
• $60-75 million: the profit made by Intel from the sale of Landesk to Avocent.
• 2002: the year Intel spun out Landesk.

Sources:

• "Eighteen months ago I could not have pointed to a corporation and said these guys are on the record for doing (IP) spin-outs," said Bart Schachter, managing director at Blueprint Ventures (Source1).
• Blueprint teamed up with Intel to inject Dollars 17m into Landesk, a software company that was spun out of the world's biggest chipmaker in 2002 (Source2).
• Microsoft, the world's biggest software company, set up a special division to look at IP spin-outs last year (Source3).
• David Harnett, director of Microsoft's IP Ventures programme, said, "What we are looking for is external startup teams that can bring technology to market for us" (Source3).
• "It's different than your classic spin out," he said. "In this situation we look for outside entrepreneurs who can take a technology we have, get VC funding, and Microsoft in return gets an equity stake in their company and participates on the board" (Source3).

Note: The sources mentioned are direct quotes and references from the original text.