TechPulse 360

It is no secret the value of venture startups has fallen in the past several months in step with the imploding economy.

Young companies are worth less as their prospects (and sales) tumble.

But what about the value of promising R&D at large corporations with money to keep projects going if necessary? Apparently they too have seen the worth product development fall sharply as well.

What's different is corporations are turning to VCs, says Pete Bodine

In an unusual turnabout, many of these big firms are turning to venture capitalists –instead of the other way around – with the remnants of their work, hoping venture investors will be eager to fund abandoned projects.

They are saying, “We have these things. Do you know what we could do with them?” says Pete Bodine, managing director at Palo Alto-based Allegis Capital. “That’s what’s kind of different.”

Many top name firms are among these expense cutters jettisoning development, including Yahoo and eBay. Even Google, with its famous “spend 20 percent of the work day on personal projects” offer, is seeing engineers forego the opportunity and remain focused on company business.

Ninth months ago, says Bodine, Allegis offered eBay a term sheet to take over an in-house technology, but was turned down. The software helped evaluate online content to determine whether it would encourage a consumer to make a purchase.

Now eBay has come back saying it is ready to spin out the work.

The question is what impact the cancelled R&D will have on product innovation over the long term. With corporations hitting the panic button, there are reasons to believe they are foregoing inventions that could prove valuable when better times return.

Without them, it will take some time to restart the engine, said Bodine.