With high-tech start-ups finding it difficult to attract investors on the one hand, and with shareholders in large companies wanting to invest without spreading money around on the other, Motorola has come up with a new investment model that could help both sides. Last week, the Israeli branch of the Motorola Computer Group (MCG) convened a meeting of dozens of high-tech executives and entrepreneurs and presented its model for strategic and engineering assistance. The model does not include a cash investment and also does not dilute the entrepreneurs' shares.
By the end of this year, Motorola wants to select five young companies that show stability and assist them in several areas.
Motorola's support program has three stages. During the first stage, when a company is developing a product and needs advice plus a not very large investment in equipment, Motorola will provide the company with additional work stations and technical equipment at cost. It will also provide free professional advice in all areas via its engineers throughout the world. MCG's costs during this stage could reach $500,000.
During the second stage, when the start-up company begins to market its product, MCG will open doors to large companies for it by making initial contacts with customers and providing engineering advice. MCG will also let the young company use the name Motorola. The strategic cooperation with Motorola will make it easier for the start-up to raise capital.
During the last stage, in which the company starts to compete on the market and increase its revenues, Motorola will provide logistical support and advice regarding customers worldwide. MCG's support centers will provide the young company with a broad logistical infrastructure, thus saving the start-up the cost of setting up such an infrastructure.
Motorola's proposal offers several advantages to start-ups: reduced risk, the possibility of focusing on the idea and the product, and the use of outsourcing to provide customer consulting and technical support before embarking on large investments.
Daphna Ronen, who manages MCG's Israeli branch, said that Motorola's interest in the new program is twofold. First, Motorola is interested in maintaining a presence in start-ups that have a chance of surviving and succeeding. Second, in helping the new companies grow, Motorola is building its own customer base.
"Motorola is investing time and equipment now in order to gain faithful customers in the coming years," said Ronen.
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