"Cash up front" is a great term to include in a sales contract, but how do you convince a customer to go for it? Yehoram Uziel, founder of Soligen, in Northridge, Calif., tapped three potential customers he calls "alpha partners" for "membership fees to share in our technology."
Uziel's $5.5-million company builds machines that can quickly turn computer designs into ceramic molds for metal casting. The three "alpha partners" get basic versions of Soligen's machine and technical support on an exclusive basis for 6 to 12 months. In exchange, they supply up-front cash (at least $200,000 each) and regular input into the commercial product's design specifications.
When the commercial product is ready to sell, the original partners have no ongoing rights to the technology, says Uziel, but they can buy it exclusively, cutting out their competitors' access to it. "And spiritually, we remember them as the people who took a risk when nobody else would."