The instrument · The thesis
The Tax Lease: an end for the operators, a means for Volcano.
For the classic Tax Lease operators the instrument is an end: they act as intermediaries between other people's projects and tax investors, and their remuneration is a percentage of the project's cost. For Volcano it is a means: we apply it only to our own projects, we manage the whole process at cost with minimal margins, and we shift our margin to the stake in the startup: we gain later, and only if the startup gains.
5 min read
The comparison
Two ways of using the same instrument.
The instrument is identical and the rules are the same for everyone. What changes is the place it occupies in the model of whoever uses it. We are describing categories, not companies: the Tax Lease market has serious operators, and this page does not dispute their seriousness but their architecture.
The classic operators
The Tax Lease as an end.
Projects: other people's. Third-party projects are brokered.
Remuneration: a percentage of the project's cost.
When the money is made: with the transaction, whatever happens afterwards.
What is offered: a service, to startups looking for funding.
The private investor: outside the perimeter. Deals with the isolated startup, with more risk on their side.
The relationship: ends with the transaction.
Volcano
The Tax Lease as a means.
Projects: our own. Generated and managed by Volcano.
Remuneration: management at cost with minimal margins. The margin shifts to the stake in the startup.
When the money is made: afterwards, and only if the startup gains.
What is offered: infrastructure open to all the actors of innovation, free to access.
The private investor: inside the game. Comes in with reduced risk: the riskiest phase is funded by the tax investors and R&D funds.
The relationship: continues into the startup.
The margin
The margin does not disappear: it shifts.
Volcano manages the whole process, from capturing the problem to the market, at cost and on minimal margins. The reason is arithmetic: every euro that does not stay in brokerage is a euro working in R&D, and the innovation budget yields more the more of it reaches the activities that justify it.
That does not mean working for free: it means being paid at another moment and in another currency. Volcano obtains a stake in each startup, and that is where its margin lives: in a possible future return, not in a certain present percentage. It is the same asymmetry we propose to the other actors, applied to ourselves first.
The competition
Who we compete with, and on what.
With the Tax Lease operators we compete on one point only: the tax investor looking for the deduction. We do not compete for projects, because we do not broker other people's projects. With the startups working on our own subjects we compete as any solution competes with another in its market.
And there is a part of the board where we find nobody: the synergy. The operator offers a service, and only to startups. Volcano puts into the same project the tax investor, who obtains their advantage as a resident, and the private investor, who would otherwise have to deal with an isolated startup, with more risk on their side. To all the other actors, whoever brings a problem, an idea, capabilities or a network, it offers collaborating and gaining together on a systemic infrastructure that has already run the full cycle, from project to tax credit, and access to which costs nothing.
Frequently asked questions
In four answers.
Does Volcano broker third-party projects with the Tax Lease?
No. Volcano applies the Tax Lease only to its own projects. With the operators of the instrument it competes on one thing only: the tax investor looking for the deduction. Not for the projects, because it does not broker other people's projects.
How does Volcano make money?
It manages the whole process at cost and on minimal margins, so that as much as possible of the innovation budget goes into R&D and not into brokerage. Its margin shifts to the stake in the startup: it gains later, and only if the startup gains.
What makes Volcano different from a Tax Lease operator?
The operator offers a service, to startups, and its remuneration is a percentage of the project's cost: the Tax Lease is its end. Volcano offers infrastructure open to all the actors of innovation, applies the instrument to its own projects and continues into the startup: the Tax Lease is its means.
What does the private investor gain from this model?
Coming into the startup with reduced risk: the riskiest phase of each project is funded with the capital of the tax investors and public R&D funds, instead of dealing with an isolated startup carrying that risk in full. The detail is in how we reduce risk and in the model.
The instrument, rule by rule, is in the Tax Lease page; the doors in, in capital; the private investor's stake, in investing in innovation.
John F. Kennedy, 1962