Wednesday, June 13, 2012

Can Dell be Model for Nurturing Innovation?

I read with interest the launch announcement for the Dell Innovators Credit Fund. Dell has set aside $100m in financing to be allocated in $150,000 chunks to qualifying innovation led companies. For more details check it out

Some might see this a vendor financing through the back door, and I wonder if the $100m is the street price of the equipment they will be funding or the COG's? It is also worth noting that this is on the back of Dell's continued inability to allocate internally to innovation (stuck at around 1% of turnover).

In any event I wonder what similar initiatives could be created in the UK market to spark much needed innovation.

I quickly figured out the $100m is about 0.5% of Dell's market cap. Given the allocation they are talking about this could potentially expose them to hundreds of new and interesting companies. Many of these companies will not yield any value add to Dell, but I am sure that something of interest will come out of it!

Wouldn't it be great if "UK Tech Ltd" took 0.5% of their value and found creative and sensible ways to foster innovation. Of course each company would have the criteria that might support their wider aims and needs in life.

As a possible suggestion the recently announced StartUp loan scheme could be leveraged by tech companies if they offered to match the government funding if the start-ups met whatever criteria the corporate partner would set (sector, geography, size etc).

As a simple example, wouldn't it be great for the North East if Sage launched such a scheme to support 20 ventures a year matching the government funds by 5x for young entrepreneurs in the region starting a business in the areas of software, IT, SaaS or other relevant spaces. This would be a £250,000 program and everyone would be a winner.

  • Sage would encourage innovation in its back yard, which it could exploit as and when they mature. 
  • They show that government and business collaborate successfully
  • Of no less importance Sage would show that in an era of globalisation it still believes in the importance of giving back to the local community and fostering future talent that Sage and others in the region could benefit from.

By way of comparison if Sage spent the same proportion of its market value as Dell it would be allocating £16m (about 10% of its R&D spend) to this type of activity - now that would be radical!!

Innovation and entrepreneurship needs to be fostered, and the established tech companies have a responsibility to take part in that. More than that it is squarely in their interests to do say, as without home grown innovation it will not be possible to stay competitive in a globally demanding and dynamic market place.

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