The Sipher Manifesto
We are entering the third age of technology venture capital. The first age came to an end with the dot.com bubble burst. Only the best companies survived and have since become today's powerhouses. After 2000, startups began to employ agile development and project management with the lean startup methodology, taking lessons from the past.
However, still to this day, 70-95% of startups fail or don't meet expectations. The top reasons for failure are 1) No market need. 2) Ran out cash 3) Not the right team.
To address these top points of failure along with other reasons (ignoring customers, product timing, etc.) Sipher is adopting a model that will be the new standard in the third age of technology venture capital: Research, Develop, Consult (RD&C).
Many of the top consulting firms have recently adopted this model. Realizing that to charge their exuberant fees, just consulting on tech is not enough. They need to develop lasting solutions for their clients.
Why this model is so powerful is that it considers the customer's needs and pain points from the get-go, building solutions to meet the targeted goals of a paying client. Something that many a tech startup fails to accomplish before they come to the end of their runway.
In Germany, the corporate VC is the prevailing model, where the corporation themselves invests money into the innovation that will benefit them.
Where does this all leave the venture capitalist and venture capital in general? The consulting firm works directly with their corporate client, and the corporate VC is just an extension of the corporation, leaving little room for an outside investor to get in on the action. Aside from buying diluted shares of a big company, how will investors that traditionally invest in VCs benefit from the next great innovation?
Sipher has entered the chatroom...
At Sipher, we are taking a hybrid approach with the RD&C model. As a startup, Sipher is open to outside investors to scale and to grow. Sipher leverages the RD&C model to work with corporate clients from start-to-finish, researching and developing solutions to meet their specific needs and pain-points based on critical technologies that are within our area of expertise. We also actively search out innovators and mavericks at the forefront of technology to help build our solutions with our clients.
Flipping the old model on its head, only solutions that show industry-wide promise are spun off into their own startups.
Outside investors can invest directly into Sipher and, in turn, get a piece of any startups that are spun off. Unlike a VC, Sipher reserves the right to spin up and spin down various projects as the market and timing dictate. There is no cutting of checks, and praying a startup will succeed after its two-year runway is through.
Corporations — A Partners of Choice
Sipher and their corporate clients develop solutions together with backing from outside investors. Risk is shared between all three parties, and the upside is also shared if a solution becomes scalable industry-wide.
Meanwhile, Sipher maintains profitability from client consulting and development work, further reducing the downside to outside investors.
As a hybrid consulting firm/startup or product studio that partners with corporations and leverages outside investment, the magic happens as risk is shared along with the upside of all breakaway solutions.
This eliminates the need for corporations to look for funding with debt instruments and can provide both the investment and expertise to help them with their innovation. This also provides the opportunity for outside investors to participate in impactful solutions that have market demand right-away.