That may be for a variety of reasons. All businesses become commoditized at some point and face cost pressures. Companies, he said, are looking for "that next big thing," something that can allow them to sell products at a premium price. But the overwhelming majority of early-stage investments don't pan out, Shane said.
When there is a positive outcome, two factors drive an investor to acquire the firm boasting the new technology. First, it wants to bring the technology to the market. Secondly, it wants to deny competitors access to the technology.
While the majority of these new-horizon deals involve large companies, Shane contends that small- and mid-sized firms can and should take similar investment steps. Smaller firms have fewer hoops to jump through, and that agility gives them an edge in accessing start-up technology related to their own businesses.
Even better, when small- and mid-sized companies take advantage of these opportunities, they gain access to R&D projects they might not have the capability to handle internally. If the technology hits, the partnering company can become the "best first customer."
And having a built-in customer is the first step toward clearing what Niaura said is the highest hurdle—building a viable business around new technologies.