Idea Farm is a temporary project name (a brand name has been commissioned from a multi-national branding company) for a multi-national conglomerate of companies to be established over the next 18 months in about a dozen first-tier developing countries. At its essence, venture capitalists will seed entrepreneurial projects and conduct complementary activities with the hope that the synergies of these efforts will produce profits beginning sometime during 2001. The next 3 years will also be dedicated to building a brand name so that the project effort will be viewed as The Address for penetrating these developing country markets with one-stop shopping and standardized conditions throughout its network. The target countries are (in no particular order): Turkey, India, Pakistan, Brasil, South Africa, China, Indonesia, Thailand, Egypt, Russia, Mexico, Poland and Hungary. A staff and a holding company is being organized in the United States to coordinate the establishment of infrastructures, joint ventures and staffs in each of these countries.
In each country, a joint venture will match the multi-national company with an in-country passive investor (typically a -plus net worth individual) who will contribute $5 million toward this project and in return receive equity in the project both on the country and the multi-national level. The investor will also receive first refusal rights with regard to further financing in later stages of development of various ventures seeded by the project. Within the country, 3 initial activities will take place:
- A small business incubator will be constructed and staffed. Ten entrepreneurial projects will be funded each year in each country’s center in the amount of $50,000 each and these startups will be nurtured through their gestation periods with backup support and services. An entrepreneur will receive up to 40% of the equity of the business (s)he creates. In all, this means that approximately 100 projects will be seeded each year assuming that 10 centers exist. These startups will be focused toward providing benefits to the local and regional market as well as take cues from venture capitalists in the US or other countries “outsourcing” R&D to these centers. An additional value will be that the 10 centers will be interconnected so that they can use each other’s resources and offer a sort of one-stop global shopping in the field of business incubation, particularly should the various centers themselves organize their startups around particular technology clusters (ie: internet, biotech, genetic engineering, software development, human resource development, 3-D imaging). There is an expectation that first refusal rights as to cluster-related project financing can be presold.
- To attract such entrepreneurs, an organization such as the New York Business Forum will be franchised to operate under the aegis of the center. Such an organization stages regular meetings and activities which encourage the spirit of entrepreneurship and networking. These meetings themselves are profit-generating activities since attendance is paid. For instance, the New York Business Forum holds monthly breakfasts with speakers and networking opportunities; it costs $100 to attend and attendance is standing room only. Leading multi-national firms, already involved with entities such as the NY one, will be invited to sponsor these forums, more for their credibility-enhancement than for their money.
- The center will, under its aegis, offer templates and assistance in constructing a Digital Library at its location and place satellite terminals available for public use in ten locations in each country as well as host the Library for general use by people on-line anywhere on the planet. This will be a large-scale effort to digitize and index in searchable form the entire history and corpus of authored works in that country. Although this will, like the Business Forum above, be presented as a not-for-profit type of activity, the intention is that the availability of such a wide range of material on line and on terminals placed in rural areas will promote the on-line purchase of goods and services (ie: books digitized in the library and referral fees to third party vendors). Companies such as Dell and Kinkos would be envisioned to supply computers and copy centers ancillary to such library terminal locations out of their own self-interest.
An example of a follow-up activity which would synergize with the above is the concessionairing of warehouse construction and product fulfillment activities (ie: via an entity such as Fingerhut) so that on-line purchasers within a country could receive goods ordered via an Idea Farm terminal or from any other third party using the system or facilities of Idea Farm in that country. The intention is to position Idea Farm as a private sector initiative and form lateral alliances within the private sector entrepreneurial and local university sectors and to attempt to keep entanglements with local and national governments to a minimum. The face-level appearance of not-for-profit oriented activity is intended to help achieve this objective and to encourage receptivity on the local level to this project.
Opportunity Factors
The proposed coordinating staff includes leading international experts in the 3 initial thrust areas — incubation centers, digital library and business networking forums — that have clearly been around the track in these pursuits for the bulk of their professional lives. The project founder, Michael Smolens, has a full portfolio of international business projects executed over a 30 year period and is making extensive use of networking opportunities afforded by the World Economic Forum, an annual convention of highly regarded incumbent industrialists and future leaders held in Davos, Switzerland. Smolens is attracting an unusually high caliber of talent to leave prestigious positions to join this project, both because he is committing personal and other venture capital funds to seed it, offering the various senior members of the staff a high degree of autonomy toward executing the various objectives, and because the project itself appears to be sexy with its multi-national multiple-choice lottery component in an Internet related field. The buzz is that this type of project would be first to market in pulling together the various elements of a big picture (Hi-Tech, multi-national coordinated development, venture capital) that is being talked about but not yet really implemented and in creating a worldwide brand that would serve as a focal point for entities wishing to catch up in the race to penetrate these markets when, in a few years, they will realize they wish to do so.
