A promising new technology was successfully marketed by forging new alliances.
In 1992 Ian Kibblewhite had a promising technology but neither the cash nor the connections to capitalize on it. He managed to get both money and marketing partners by entering an unconventional alliance.
Kibblewhite, the founder of Ultrafast, in Malvern, Pa., has patented a calibrated bolt tightener suitable for the automobile industry and a proprietary bolt coating necessary for the fastening to work. In Gillette-like fashion (sacrificing the razor for the blades), he licensed his bolt-tightening technology to two large corporations and kept the coating product for himself.
In return for co-exclusive rights to produce Ultrafast's bolt fasteners, two European manufacturers, Atlas Copco and Robert Bosch, forked over more than $1 million each and pledged future royalties of roughly 5%. The money became the seed capital Kibblewhite needed to focus on the bolt coating.
In 1994 Ultrafast was the star attraction in Bosch's elaborate $250,000 exhibition at the world's largest engineering fair, in Hanover, Germany. (Ultrafast's bill? A mere $5,000.) Kibblewhite also has gained direct access to car manufacturers by accompanying Atlas Copco and Bosch reps on sales calls. He likens watching the two big companies talk up his technology to having "50% of the industry's sales force pushing our product."
How did the entrepreneur strike his marketing alliance? He had spent a year casting about for partners before he hooked up with a "matchmaker" named Technology Management and Funding (TMF), in Princeton, N.J. TMF takes start-ups that are developing proprietary technologies and pairs them with big corporations to catapult them into their markets.
In exchange, TMF takes an equity stake in the young companies. Kibblewhite gave up 20% of Ultrafast. Is the assistance worth the arguably hefty price? "Not if a start-up can successfully get the ear of large corporations by itself," says Peter Ligeti, general partner at Keystone Venture Capital, in Philadelphia. "But there are a number of industries," he adds, "especially more mature ones, where it is very difficult to break in, no matter how good your idea is."
"Forging these alliances is a skill TMF has perfected," claims Kibblewhite. "It gave us business-development expertise superior to most large businesses'." And that, he reasons, makes the 20% look cheap. At the end of 1995, as Ultrafast was preparing to open its first bolt-coating facility, Kibblewhite knew exactly where his first sales would come from.