Innovation refers to this humankind specific capacity to create new solutions, tools and more efficient processes to improve the living conditions of the whole society.

Indeed, our world today would be by far different if the industrial revolution, for instance, had not taken place, if Thomas Edison had not invented the electric bulb or if the Wright brothers had not contributed to what became later modern aviation.

In the light of these innovations that had a direct impact on our contemporary lives and our way to see our future, we can indeed say that the world of tomorrow is to be built on the innovation projects created today.

Today, innovation is at the heart of our societies. Indeed, the major technological innovations of these last years combined with the economic current environment demanding companies to be more and more competitive are meeting the ideal requirements for the innovative ecosystem to be fully operational.

Besides, some major society challenges such as ecology, overcrowding, or else decentralization appeal to the capacity of our societies to find innovative solutions that will help solve these problems in the years to come. The Blockchain is a perfect example of the importance of this innovative process combining both the maturation of computing technologies and the need to bring alternative solutions to banks, following abuses linked to the currency centralization that notably led to the subprime crisis in 2007–2008.

The Blockchain is thus an example of an innovative alternate model to revolutionize our considering economic models.

Nowadays, it is very difficult for an individual to get directly involved in an innovative project. Indeed, the available solutions for an individual are either to put one’s money in a bank that will invest for you in the company innovative projects they will have chosen on their own or to be part of a group of investors (business angel type) who are incubators’ partners or else who directly know startups to allow them investing in their project.

Yet, this second solution requires a very important financial contribution. Thus, the current innovation ecosystem is in fact really closed to a large part of the population who can only join via indirect and centralized means, such as investment banks.

Considering the great impact of innovation in our life now and in the future, we think that anyone must have the opportunity to join the process, and all levels/steps.

Everybody should thus be able to join the creative phase of an innovative project by bringing suggestions or their financial support, but also the project follow-up by confirming that it follows the proposed direction. Furthermore, once the technology or the concept developed, they should be able to determine the future of this technology by deciding, for example, on the way it should be used.

The status of innovation today and the blockchain new possibilities

The recent popularization of crowdfunding demonstrates the need to create new financing models of innovation, thus allowing to involve the population directly, either via financing projects aiming at revolutionizing the established models such as EOS, Status or TenX or by allowing new technologies to emerge like with Elio Motors, crowdfunding has proved that individuals today are ready to take part in the creating process of heart-taking innovations.

Most crowdfunding models today allow to support innovating projects but the operating models still remain deeply centralized. Either for kickstarters or for ICOs, these models allow to support a project financially and to get economic benefits in return, such as tokens or the product itself once it is developed. Yet, the investors supporting the project have no control on it, and often little capacities to direct the project in a special direction.

Recently, the technology of smart contracts has allowed the crowdfunding models to make further advance, by offering solutions that allow investors to be more directly involved in the participatory projects.

For instance, DAO or more recently Aragon have allowed to propose models to finance new companies, giving investors some shares of the created company, in proportion to their investment and allowing them thereafter to participate in the significant decisions and in the company’s development via the principle of Decentralized Autonomous Organizations associated with the technology of smart contracts.

Yet, as far as an innovating project is concerned, the main point is technology, the process or the created product and not really the management of the private company in charge of the innovating project. In our view, it should be thus possible to support an innovating project without dealing with the management of the company in charge of the project, while keeping rights on this innovation and maintaining control on its developing process. If we refer to today’s crowdfunding models, it seems essential to us to create a new model of crowdfunding of innovation projects, at the junction of the kickstarter models and those proposed by the DAO or Aragon.

The principle of the financing model of LabStart innovation

A patent is an exclusive right granted on an invention that gives its holder the right to decide how or if the invention can be used by other persons. In the innovating ecosystem, patents are today the means to add more value financially to the development of an innovation. Indeed, once the innovation is achieved, patent licenses or the patent itself may be sold to third party companies so as to make profit from the developing process of the concerned innovation. Today, 2.9 million patents a year are applied whereas 180 billion dollars are generated by the licensing fees.

In order to open the innovating system to everybody, the idea of LabStart is to draw on crowdfunding models and include the concept of patents. Thus, once the innovating project achieved or the product developed, each investor holds a share of the patent ownership. Sharing the patent ownership among investors allows them to be rewarded for their financial support to the project, via the licensing fees or the sale to come of the patent as they wish.

Sharing this ownership is made possible today thanks to the smart contract technology and the principle of Decentralized Organizations (DO). This way, each investor is registered in the DO associated to the innovating project in which he invested, and votes to decides the major decisions concerning the patent, such as the resale to a third party.

Furthermore, in order to allow investors to control the progress of the innovating project and to bring suggestions, we use again the Decentralized Organizations principle; each investor will have the capacity to vote for the project progress to be approved. Such a working principle allows investors to control, with a voting power equivalent to their investment proportion, what really matters to them : the proper conduct of the innovating process. As a consequence, one of the advantages of this system is that it allows the managers of the innovating project to finance it while controlling their company.

The LabStart platform

The LabStart platform is a decentralized application built on the Ethereum network. The platform links the project bearers and the investors. Anybody can support the innovating projects introduced on the platform. To facilitate investment in innovating projects, LabStart has developed its own token: the LabCoin. In addition to being independent from the changing rate of fiat currencies such as dollars, the LabCoin allows an interaction made easier with smart contracts, considering it is an ERC20 token.

For each project, the amount of LabCoins necessary to its launching are visible in the project presentation. Once the amount of necessary LabCoins collected, the project starts its developing phase. Investors can then follow the progress of the project and approve of it by voting via the platform. For each investor, their voting power matches the proportion of LabCoins he has invested in the project. If investors judge that the project is moving in the wrong direction and that the project leaders do not make the appropriate changes, investors can thus vote to stop the project so as to recover the LabCoins still available for the rest of the project (cf. 5.5. “Follow-up and control” of the Whitepaper for more details). In this way, investors are informed of the project progress and control that the innovation development really follows the right direction.

Once the innovation is developed, one or several patents are granted by the legal teams of LabStart to protect this invention. Each investor holds shares of the granted patents, in proportion of their initial investment. The third-party companies, eager to use the developed innovation, contact LabStart that transfers the request on the license or patent purchase platform. For each request, investors vote to approve or reject this request. In case of approval, the legal teams of LabStart take care of the administrative issues. All gains related to the sale of the patent or to the payout of licenses will be repaid to investors in the form of Ethereum, in proportion to the patent shares they hold. This way, investors keep under control the future of the invention, once it has been developed, and are rewarded for their initial support thanks to the return on investment composed of patents’ sale and patent license sale.

It has to be noted that the innovation developing company can use it by requesting a license from investors. This model thus allows innovation needing companies to launch an innovating project for free then to use the developed innovation by paying a royalty to investors on each product sold using the innovation (license principle). Moreover, contrary to financing models where the company directly transfers shares to investors, the LabStart model allows companies that need to be financed to keep a total control of the company shares.

The LabStart ecosystem