Assets of the Australian MPEG-21 video compression technology company Enikos are up for sale, with investors unwilling to fund its further development. While the winding down of the company is a disappointing result, it highlights the vagaries of the entrepreneurial cycle, particularly for the man in charge.
Tasked with finding a buyer for Enikos' assets is serial entrepreneur Mike Nicholls, who joined as chief executive 18 months ago with a brief to sell the intellectual property of the company, not to build an operating business. That meant first turning the technology into a prototype product, the Enhanced Media Platform (EMP), a cloud-based service that enables users to combine audio, video, web pages and other forms of digital media into multimedia presentations.
Nicholls says he is only engaged in Enikos for three or four days each month, but confirms that discussions to sell the IP are underway. In July the Allan & Buckeridge-funded company had one of its patents approved, and a further eight are currently being processed, some of which relate to key parts of the MPEG standard.
"We're in the process of trying to monetise those IP assets," Nicholls says. "There is some pretty valuable IP around the MPEG standard and around things like session mobility between devices such as your iPod or a TV or a PC."
Nicholls, however, hasn't been sitting on his hands. He is on the verge of taking the covers off a new business, MortgageCorp, an online mortgage broker, calculator and home loan finder that compares 600 loans from 25 lenders.
He says there are some similar services around, but says usually these sites do not reveal who the lenders are, and require you to meet with a representative. Nicholls says MortgageCorp provides that information online, fulfilling his idea of streamlining the process of mortgage broking.
Nicholls says he spent three months achieving the necessary accreditation and is now almost ready to set the service as live.
A good entrepreneur should have the skills to not just grow a business, but to know when and how to close one down as well.
While start-up entrepreneurs are generally praised for their successes, good entrepreneurs also have the skills to know when it's time to pull the plug. It's not as glamorous as an IPO or a trade sale, but selling off or licensing out the intellectual property of a start-up can still ensure a return for the investors when it's clear that the business will never fly. Especially when you consider that most high-risk start-ups are doomed to fail.
In the case of Enikos, Nicholls says it's unlikely that the business would have ever attracted the funding necessary to succeed as a video and advertising business on an equal footing with US-based competitors such as Brightegg.
No word, however, on how much money was sunk into the business, but at least by selling now the investors are likely to get some return, rather than running a higher risk in building the company by investing further, potentially for zero return. It's not a great outcome for the investors, but nor is it a total write-off — although it remains to be seen what a potential buyer will value those assets as worth.
MortgageCorp, on the other hand, is relatively low-risk. It has been funded by Nicholls himself, and while it's too early to say whether it could ever deliver a massive windfall, it could at least become a solid business based on commissions for the loans that it will broker.