Open Innovation

• External Collaboration: Rather than relying solely on internal R&D, companies actively seek out partnerships with external individuals and organizations—such as universities, startups, and even customers—to co-create new solutions and products. ^{[oh658w] [5lmjky] [verg9d] [hqxm84]}

• Inside-Out and Outside-In Flows:
  • Outside-In refers to integrating external technologies and ideas into one’s own innovation processes, such as through technology scouting or crowdsourcing. ^{[7kwpvx] [5lmjky] [verg9d]}
  • Inside-Out means licensing, sharing, or spinning out internal innovations so that external entities can use or commercialize them, thus extending the market reach of those innovations. ^{[verg9d] [hqxm84]}
• Trend Management: Companies track and adapt to emerging trends by analyzing external signals and forecasts, ensuring their innovation priorities align with future needs. ^[7kwpvx]
• Technology Scouting: Systematic search for new technologies around the world, including partnerships with research institutions, attendance at industry events, or collaborating in startup ecosystems. ^[7kwpvx]
• Crowdsourcing: Organizations issue open challenges or use platforms to source ideas, feedback, and technical solutions from a broad community, harnessing diversity of thought and expertise. ^{[7kwpvx] [5lmjky]}
• Innovation Ecosystem: Open Innovation creates a network of collaborators, including alliances, academic partnerships, and open competitions, widening the scope of potential solutions and expertise. ^[5lmjky]

• Open Innovation recognizes that not all smart people work for a single organization; valuable ideas and technologies may come from outside.
• It accelerates innovation cycles and increases competitiveness by expanding the pool of solutions and creative input. ^{[oh658w] [7kwpvx] [verg9d]}
• Implementing Open Innovation requires cultural change, moving from secrecy to openness and collaboration. ^{[5lmjky] [hqxm84]}

How the Strategy Aligns with Open Innovation

• By investing in Emerging Managers and Solo GPs, you leverage a diverse set of external networks, sourcing unconventional dealflow beyond your direct reach. ^[snj3us]
• Co-investing in bridge rounds of their portfolio companies ensures active participation in networks of innovation as portfolio companies scale or pivot, amplifying learning and syndication opportunities.
• Discretionary direct investments ensure you retain the ability to harness internal sourcing and proprietary insights, balancing the openness with a tailored thesis.

Diagram showing flow of capital and information from Hypernova to Solo GP funds and onward to portfolio companies, illustrating multiple “innovation entry points” for dealflow.

Evidence Supporting the Strategy

• Investing across a constellation of emerging fund managers enhances portfolio diversification. Emerging managers often back non-obvious founders and ideas that large funds overlook. ^{[snj3us] [cixfs4]}
• The potential for outsized returns (the "Power Law" in VC) is higher when you access broader, less obvious early-stage dealflow. ^{[zn7nlf] [cixfs4]}
• This multipronged approach can hedge risks and avoid concentration in any single thesis, maximizing upside if one or more managers hit high-growth outliers. ^{[zn7nlf] [cixfs4]}

• Allocating significant capital to bridge rounds places Hypernova in critical inflection points for startups (between seed extension and Series A/B). ^[cixfs4]
• Early-stage bridge rounds typically offer strong valuation advantages and access before growth inflection, providing early entry to potential future winners. ^[cixfs4]

• By being enmeshed in the sourcing and selection of dozens of Solo GPs and managers, Hypernova can aggregate and synthesize proprietary insights, arming itself with a richer qualitative portfolio assessment versus traditional funds. ^[puijz5]
• This aligns with recent strategic thinking suggesting that fund-of-funds structures can be foundational for exposure, access, and agility in the so-called "Venture 3.0" era. ^[puijz5]

Visualization showing how Hypernova’s fund interacts with multiple Solo GPs, who then invest in diverse startup sectors, widening Hypernova’s private market intelligence and exposure.

Why This Can Outperform Typical Early-Stage VC

Graph comparing typical VC fund returns to those using a fund-of-funds plus bridge round model, with markers for diversification benefit (“Venture Spread”). ^{[puijz5] [cixfs4]}

Summary of Research and Beliefs

• Fund-of-Funds and venture spread strategies are gaining favor for their ability to broaden exposure and compensate for the limitations of single-thesis investing, especially as the market becomes more thematic and fragmented. ^{[puijz5] [qyr1yt]}
• Open Innovation’s collaborative and networked approach matches the fund-with-funds model; evidence suggests emerging managers outperform on a risk-adjusted basis due to their motivation, agility, and willingness to back non-obvious founders. ^{[snj3us] [3gqesl]}
• Positioning capital for co-investment at bridge rounds capitalizes on lower competition and more favorable pricing, consistent with early-stage VC’s highest upside opportunity zones. ^[cixfs4]
• Discretionary allocation gives Hypernova flexibility to exploit proprietary dealflow and test emergent theses, ensuring continued relevance as markets shift. ^[puijz5]

Citations