Where’s that next big idea going to come from, and how is it going to get off the ground?

Increasingly, established companies seeking the next big thing are establishing or tying into “incubators” or “accelerators” designed to identify and help a seed of an idea – or perhaps a somewhat better-developed seedling – sprout into something more robust, scalable and lucrative. Some are standalone entities with their own “communities” and panels that evaluate proposals and products. Others are separate groups within larger corporations charged with taking fledging products and ideas potentially into the mainstream. All have the same goal: to capture the next big thing. How these many of these incubators and accelerators will play into brand licensing, like the organizations themselves, is still in the early stages. And the approach each takes is different. Accelerators focus on short-term support to enable a brand to get off the ground, while incubators take more of a marathon approach and start with a company at an earlier stage of development.

BuzzFeed ‘s Tasty

But at least four companies –- BuzzFeed, Quirky, Jazwares’ Jazwings and InventHelp — are taking space at the upcoming Licensing Expo as they seek to attract licensees and licensors to their concepts. “You have to get an in-flow of ideas beyond the people that work for you,” says Karen Kilpatrick, who heads up Jazwares’ three-year-old Jazwings program. “That doesn’t mean the people within your company don’t come up with great ideas; they do. But there is a difference between a world of ideas and a company of ideas.” The products and ideas that run through incubators and accelerators can vary from early stage development to fully-formed project. But what many lack is the financial muscle, and marketing and manufacturing expertise needed to create a product or establish a brand. If a concept is refined and polished, it may take 6-9 months to bring it to market, but if it needs extensive work it could two years or more.

The Process Varies

The actual process varies. With Jazwings, a product/idea is submitted through the service’s web site and creators passing muster with a Jazwings panel initially receive a $1,000 “success” bonus. A second $10,000 bonus is then paid when the design, product or idea is approved as a Jazwares brand and manufacturing and sales begin, save for those products that receive funding through crowdsourcing. Lastly, creators get a 3-5% “participation payment” for the life of the idea based on net revenues from product sales, licensing and additional content. The payments vary based on whether Jazwings enlists additional companies to help in bringing the idea to market. At community-driven invention platform Quirky, product ideas are submitted by registered users of the community. Members can then choose to post their idea publicly on the site, allowing other community members to contribute to the idea by offering features, designs, or taking market research. Once a product meets Quirky’s requirements (describing at least three features, product sketches and renderings and providing a pitch) it then becomes a candidate for development/commercialization and is reviewed by the Quirky staff, licensing partners, and retailers for vetting. If a product is launched, all “influencers” who contributed to the idea are eligible for a portion of the royalty, which ranges between 1.5 percent and 3 percent. Members who have patents and/or prototypes on their ideas are eligible for an even higher royalty to be determined on a case by case basis.

Quirky’s Pivot Power 2.0

Quirky, which relaunched its service after emerging from bankruptcy protection in 2016, has introduced sponsored “challenges” for its inventors. The most recent of them – Doggy Dental Challenge — was sponsored by Quirky Church & Dwight’s Arm & Hammer and licensee Fetch For Pets, which wants to create a line of pet dental products. The challenge runs through May 18 and Fetch expects to get more than 1,000 submissions says Gina Waldhorn of Quirky. Arm & Hammer will then review the proposals, and a winning entry will be selected in June and products delivered six months after that. The products will be sold under the Arm & Hammer brand with a “Powered by Quirky” tag, says Waldhorn. “Without having to rely on retailers to launch a product, incubators such as Quirky will flourish since products can be sold direct to the consumer without the retail bottleneck, says Steven Shweky of Fetch for Pets. “It takes longer without someone behind it because many of these ideas that are posted are raw and haven’t been fine-tuned,” says Steven Heller of Brand Liaison, which has worked with Jazwares on Jazwings. “There aren’t brand assets, stylebooks, logo development and trademark clearance. So all the things you need to do to launch a new brand are required.”

Bringing Something New to Market

The task of bringing a new product or brand to market is daunting regardless of whether it emerges from an incubator or accelerator. And what was once a way for small brands or companies to expand into medium-size companies is quickly becoming the norm in product development. For example, L’Oreal and a half-dozen other companies are partners in Founders Factory (a product incubator), while Target formed its own accelerator and partnership with Beach House Group (a brand development company) to launch private label brands like Mayfair Soap Foundry and Marlowe.

The Grommet

In hardware, Ace Hardware last fall bought a majority stake in the e-commerce/inventor platform The Grommet, which has discovered and helped launch more than 2,500 products and brands that include such names as Otterbox, Fitbit and SodaStream. Displays of new products under The Grommet brand began appearing in 2016 in 250 of Ace’s 5,034 stores, helping Ace differentiate itself from other ecommerce and brick and mortar retailers.The Grommet is highly selective. About 3% of products reviewed by its staff make it to the company’s web site. Each weekday The Grommet unveils new products, picked by staff, with a focus on items that are crowdfunded, handcrafted, made in the U.S. and produced by independent companies and entrepreneurs. Among other developments with incubators/accelerators:

• BuzzFeed Labs renamed itself BuzzFeed Commerce at the end of last year, reflecting a business spread across licensing, affiliate sales, professional services (product/brand development for third parties) and products (internally-developed merchandise). While BuzzFeed Labs, which was set up two years ago with the hiring of former Quirky executive Ben Kaufman, initially developed its own products (i.e. Homesick Candles with scents of all 50 U.S. states and the Fondoodler, a hot glue gun-like product filled with cheese), it is increasingly focusing on licensing out its brands including Tasty, Goodful, Nifty and others. Epoca International launched Tasty-licensed products through Walmart earlier this year and a kitchen electrics supplier is expected to introduce four Tasty-branded products in the fall. Much of the initial push in licensing will be with Tasty, but Goodful is expected to join the ranks later this year in food.

• Jazwares revamped its Jazwings program, moving from directly introducing toys based on an inventors or designers IP to testing the waters first with YouTube content via co-production with India-based USP Studios. The company is working with USP to create 40, 2-5-minute short programs across six brands that are available through the JazToonz and USP’s YouTube channels. Among these is one for artist Siu Hak’s Panda-a-Panda brand, which was among the first entries in the JazWings program and was later developed into a six-inch plush toy. Other properties in the program are Bunny Ninja, Crypto Trucks, Battle Bites and MeBear, the latter of which is going to be launched by Jazwares as a direct-to-consumer plush toy in the fall because of the following it has gained on YouTube. Typically Jazwings and USP take 9-18 months from content first appearing on YouTube before deciding whether it’s ripe for product and licensing, says Kilpatrick. And while Jazwings initially relied on crowd-sourcing to fund its projects, Jazwares is now making direct investments, says Jazwings’ Karen Kilpatrick. “We are trying to build awareness and demand before doing a retail rollout which is in and of itself a difficult thing to do — especially without Toys R Us,” says Kilpatrick. “Crowdfunding usually involves an innovative technology that is different and is able to get people moving behind it,” says Kilpatrick. “If you have something that has a really cute brand, premise or character, it is a little harder to get people to be early investors in the concept.”

Kano Computer Kit

• Sesame Workshop’s Sesame Ventures arm, set up in 2016 to align the network with emerging companies in education and health, has so far invested through three separate funds in more than 40 startups. These include the children’s eBook subscription service Epic! and Kano, which launched a PC assembly kit designed to teach basic coding skills. Sesame’s investments include Collab+Sesame — a $10 million venture with the much larger Collaborative Fund. It also is an investor in $53 million- and $75 million-funds run by Reach Capital. While Sesame can bring marketing, branding and research expertise to the companies, it’s not a given that a product that emerges from the process would be marketed under the Sesame Street brand, says Tanya Haider of Sesame, who oversees the program. “We would license our brand to the extent it makes sense, but we don’t start the relationship with [the expectation of] a brand licensing deal.”

• Inventor services company InventHelp is staking out space at Licensing Expo to launch its Virtual Invention Browsing Experience (VIBE) to the licensing industry. It’s built around a standalone touch screen kiosk with a 46-inch LCD that displays 3D renderings of an inventor’s concept or product and provides product information. Each kiosk has access to about 1,400 inventions. (The kiosks are deployed to trade shows and other industry events to bring exposure to a wide variety of industries and potential partners. The service can draw from InventHelp’s data base of 9,000 companies that have agreed to review products on a confidential basis. InventHelp sends an inventor’s ideas to companies for review and feedback, largely targeting small – to medium-size firms.

Contacts:

Ace Hardware, Surane John, EVP Merchandising, Marketing and Sales, 866-681-1836

The Brand Liaison, Steven Heller, Pres., 855-843-5424 x702, steven@thebrandliaison.com

Fetch for Pets, Steven Shweky, Pres., 646-572-0501, steven@fetch4pets.com

The Grommet, Joanne Domeniconi, Co-Founder and Chief Discovery Officer, 617-229-7140

Jazwares/Jazwings, Karen Kilpatrick, VP Marketing, 954 309-3640, kkilpatrick@jazwares.com.

Quirky, Gina Waldhorn, Pres., 850-212-8728, gina@quirky.com

Sesame Workshop, Tanya Haider, EVP Strategy, Research and Ventures, tanya.haider@sesame.org , 212-595-3456