Invention network company Xinova to shut down, 5 years after spinning out of Intellectual Ventures – GeekWire
Xinova, a Seattle company that operated a network of inventors, is winding down operations, GeekWire has learned.
Xinova spun out of Intellectual Ventures in 2016 and helped match inventor ideas with customers such as PepsiCo, Honda, Funai, and others. It billed itself as an “innovation-as-a-service” platform.
The company raised a $48 million Series A investment to scale the business and grow its network that included more than 12,000 inventors across 118 countries. Xinova would find companies that needed tech solutions; put a call out to its inventor network; and compensate inventors via upfront payment and profit-sharing agreements. Xinova would typically cover development costs and manage intellectual property. The company at one point employed more than 100 people globally across ten offices worldwide.
But Xinova needed more cash and ran into trouble when it tried raising another $100 million. The U.S.-China trade war and the pandemic caused investor wariness, and one firm even backed out of a signed funding commitment.
The company had to trim expenses, laying off staff over the past two years and cutting costs elsewhere. It again tried to raise more capital earlier this year but wasn’t able to convince investors. Xinova tried to work with its creditors on a restructuring plan but that also didn’t pan out, forcing the shutdown decision. The company now has only two employees who are helping wind down operations.
Edward Jung, who helped launch invention business Intellectual Ventures in 2000 and was an early Microsoft engineering leader, was Xinova’s founder and CEO. He said the company was able to run an “economically-sustainable business” but couldn’t renegotiate its legacy liabilities, which made additional equity fundraising impossible.
Jung resigned several months ago, citing a conflict with his position as the largest secured creditor. He said he is responsible for “taking on liabilities and risks in excess to what was sustainable through these unexpected changes.”
“I regret disappointing my most excellent investors, partners, and employees,” Jung added. “But I remain a believer in the vision of global innovation networks and am continuing this vision in new stealth projects.”
Jung launched Intellectual Ventures with former Microsoft technology chief Nathan Myhrvold. In 2007, Jung began heading up the firm’s “Invention Development Fund,” which was spun out in 2016 as Xinova.
Jorma Ollila, former chairman of Royal Dutch Shell and former chairman and CEO of Nokia, was Xinova’s executive chairman. Paul Levins, Xinova co-founder and former chief strategy officer, left in 2019 and is currently helping restaurant tech startup Souszen and agtech startup Beanstalk.
Xinova spun out its own standalone company called Allied Inventors in 2017 to help manage intellectual property assets. We’ve reached out to Allied to learn if it is still in business. Tom Kang, who previously led Xinova, is CEO of Allied, according to the company’s website. Update: Allied is still an active operation.
Xinova in 2019 launched a joint venture called Arcnet, an online capital marketplace that lets investors fund innovation projects on one platform across borders.
Xinova Asia will continue to operate. Xinova also had offices in Japan, Finland, Tel Aviv, Vienna, Beijing, Singapore, Sydney, Hong Kong, and Bangalore.