IBM Picks Entrepreneurs' Brains

IBM has been reaching out to the world's innovators for business ideas.
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ARMONK, N.Y. (TheStreet) -- IBM (IBM) - Get Report, with more than 3,000 researchers who scored 4,900 patents last year, is a formidable bastion of in-house innovation.

Still, Big Blue makes a point of picking the brains of the world's entrepreneurs through its Venture Capital Group and a variety of new startup-focused initiatives. IBM's innovations tend to get overlooked by those captivated by the latest technology from the likes of

Google

(GOOG) - Get Report

and

Apple

(AAPL) - Get Report

.

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The first thing startups need to know about IBM's Venture Capital Group is that it doesn't actually dole out any venture capital. The IBM division comprises a handful of "partners" who share the company's needs with the venture-capital community and let VCs do the finding and the funding. Most VCs are psyched about the possibility of an exit strategy that involves IBM. IBM bought more than 100 companies in the past decade, including last year's acquisition of

SPSS Inc.

for $1.2 billion.

"Venture capital is a relationship business," says Deborah Magid, director of software strategy at IBM's VC Group. "We find multiple ways to find touch points with individual investors and the community at large. As we find that they've invested in a company that looks like a good fit, then we'll ask to meet the CEO and go from there."

Entrepreneurs have a better chance of securing VC funding if they target technologies that might lead to an IBM acquisition -- and point that out in their elevator pitches. Magid says the company is always looking for anything that fits under the umbrella of the company's "smarter planet" strategy, including health care, "smart grid" infrastructure, energy and water. The latter could be a boon for researchers in the Midwest, the world's water-research capital, who have difficulty securing

venture funding

because VCs tend to ignore flyover states.

That said, IBM recently has been making a point of helping entrepreneurs directly. Last month, IBM launched the Global Entrepreneur initiative, under which startups (companies younger than three years old) get free access to a variety of software tools, interact with IBM scientists and pick the brains of dedicated project managers who dole out advice on product development.

Among IBM's entrepreneur-boosting initiatives is SmartCamp, a business-idea competition that provides networking opportunities to a select group of technology startups. To qualify for SmartCamp, a startup must be younger than three years old with maximum annual sales of less than $1 million. The broad theme of the program is "IBM Smart Planet," and entrant companies must comply with one of the following categories: "instrumented" -- anything related to data capture and integration; "interconnected" -- Web 2.0 and search technology, for example; or "intelligent" -- in other words, something more than technology for technology's sake. Entrepreneurs can apply to

IBM

via an online application form.

Throughout the year, IBM will be running one-day SmartCamp programs in Paris (Sept. 16), Tel Aviv (June 24), Silicon Valley (Sept. 8), Boston (June 3), Stockholm (May 20) and London (July 21). Five applicants from each location will win a chance to attend the program, which includes face-time with 25 mentors, who are potential investors.

At the end of each event, IBM will choose a company from each city to attend SmartCamp week in Dublin (Nov. 15), where the worldwide winner will be named. There's no direct cash prize. The grand prize is a few months of mentorship from IBM officials, but the networking opportunities are priceless. Of five startups that made it to the finals last year, four received funding offers from angel investors.

-- Reported by Carmen Nobel in Boston.