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innovation DAILY

Here we highlight selected innovation related articles from around the world on a daily basis.  These articles related to innovation and funding for innovative companies, and best practices for innovation based economic development.

The Swearer Center’s Social Innovation Initiative is creating a new blog aimed at promoting social innovation and entrepreneurship at Brown.

Although students and others have already written online material describing their individual experiences and sharing tips, the improved version will feature a new crop of student authors who research and write about salient social innovation issues in the University community and the world at large.

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Nanotechnology has surprising applications in mundane materials like sunscreen and esoteric items like high-tech body armor for soldiers. But some fear scarier scenarios worthy of a science fiction novel.

At Florida State University, engineers are creating new body armor for American troops. It's more durable, more bulletproof and light enough that it can cover arms and legs as well as torsos.

``It's definitely more flexible and more comfortable,'' says Frank Allen, operations director for FSU's High Performance Materials Institute.

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Economic growth is highly correlated with an abundance of small, entrepreneurial firms. This relationship is even stronger looking across industries within cities, and has been taken as evidence for competition spurring technological progress, product cycles where growth is faster at earlier stages, and the importance of entrepreneurship for area success. Any of these interpretations is possible, however, and the only thing that we can be sure of is that entrepreneurial clusters exist in some areas but not in others. This paper first documents systematically some basic facts about average establishment size and new employment growth through entrepreneurship, then analyzes entry and industrial structures at the region and the city levels using the Longitudinal Business Database. Key concepts include:
  • There is a remarkably strong correlation between smaller average firm size and subsequent employment growth due to start-ups.
  • Evidence does not support the view that regional differences in demand for entrepreneurship are responsible for these entrepreneurial clusters.
  • Instead, the evidence suggests that spatial differences in the fixed costs of entrepreneurship and/or in the supply of entrepreneurs best explain cluster formation.

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Fundraising by U.S. venture capital firms continues to lag. A survey released overnight by Dow Jones Private Equity Analyst shows that 26 VC funds raised about $3.5 billion during the three months that ended September 30—down about 51 percent from the same quarter last year.

The findings nevertheless represented an improvement over the previous quarter, when VC fundraising was down by almost two-thirds compared with the second quarter of 2008. While fundraising was down for all types of VC firms over the past three months, those that invest in late-stage startups were hit hardest.

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In the September issue of Harvard Business Review, authors Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami provide a framework for adopting sustainable practices to bring about technological and organizational innovations that will ultimately yield top-line and bottom-line returns, providing a competitive advantage when the recession ends. They feel that sustainable companies will emerge from the recession ahead of their competitors, who will face difficulties trying to catch up.

The authors argue that sustainability is not the drag on the bottom line that many executives perceive it to be, and that it can actually lower costs, and increase revenues. This is an indicator that business leaders will have to rethink business models, processes, technologies, and products.

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When General Motors discontinued America’s oldest automobile maker, Oldsmobile, in 2004, it ended a grand tradition of technical achievement.

Oldsmobile was created by Ransom Eli Olds, born in 1864 in Geneva, Ohio. His father, Pliny F. Olds, moved the family to Lansing, Mich. in 1880 and established an engine-building and machinery repair company. Ransom joined the firm in 1883. He completed a crude steam car in 1887, followed by an improved version in 1891 that was featured in Scientific American. He built his first gasoline-powered vehicle in 1896 and founded the Olds Motor Works on Aug. 21, 1897.

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Paul Kedrosky, a Kauffman Foundation senior fellow who often criticizes the venture industry for fattening up too much (see here and here), must have felt the need to show some love, too. Over at TechCrunch, he pens a column called “Why I Love Venture Capitalists.” The column doesn’t say it, but Kedrosky is a former VC himself having worked as a venture partner at Canadian firm VenturesWest a few years ago. No matter, at a time when entrepreneurs continuously criticize VCs, it’s refreshing to see someone whose mission it is to promote entrepreneurship saluting the investors. After all, entrepreneurs and VCs in theory should be working together to create innovative companies….

Of the more than 20 million small business in the U.S., only about 500,000 are in a position to do business with the federal government, according to the New York Times. “That’s not because they are the only ones capable of doing the work; it’s because they know how to get the work,” says the Times, which offers a guide for start-ups looking to secure a federal contract….

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This week saw a lot of coverage of new technology in televisions and displays, mostly centered around Ceatac, the big consumer electronics show in Tokyo. Most of the technology - ranging from 3D to very high-end processors for TVs - has been discussed before, but it remains quite fascinating. However, these features aren't likely to impact the TVs the vast majority of us are going to buy any time soon.

The most coverage went to 3D, with Panasonic in particular making a big push for their upcoming 3D plasma screens. Sony is also committed to shipping a 3D with high-speed LCD sets, and Toshiba, Hitachi and Sharp also showing 3D sets I wrote about a lot of the 3D technology here.

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One of the most interesting topics of the evening was reverse innovation. Radjou explained that traditionally, new technologies and gadgets were produced in the developed world, and then exported and adapted to developing markets. Now, that is changing. Because the growth potential for lots of industries is now in developing countries such as India and China, innovation is shifting: new things are now invented for developing markets, and then imported and adapted to the quirks of developed nations.

Radjou used GE as an example to explain the reverse innovation phenomenon. When he explained the concept, the first thing that came into my head was… mobile, of course.

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Following quickly on the heels of its $43 million grant to the Teacher Quality Partnership program, the U.S. Department of Education announced this week the launch of a $650-million innovation competition aimed at closing the achievement gap in the U.S. educational system.

The competition, called the Investing in Innovation fund (i3), falls under the $5 billion investment in school reform from the America’s Recovery and Reinvestment Act (ARRA).

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OLATHE, Kan. — The Kansas Bioscience Authority took bold action today to significantly increase the amount of venture capital available to innovative Kansas bioscience businesses — and to lead the state’s economic recovery — approving a commitment to invest $50 million in eight private venture capital funds. The KBA investments will create a powerful magnet for private capital investment from around the country in Kansas bioscience companies.

To qualify for KBA investment, the eight funds are required to have a substantial presence in the state, including establishing Kansas offices. Additionally, the fund managers must each raise a minimum of $25 million from private and institutional sources, effectively leveraging the KBA’s investment to $250 million.

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Just like their portfolio companies, venture capital firms continue to find it difficult to raise funding compared with last year.

Through the end of the third quarter, 83 venture funds raised $8 billion, a 58% drop from the $18.9 billion raised by 141 funds at this time last year. In the third quarter, 26 funds raised just $3.5 billion, according to Dow Jones VentureSource.

The weakness came even as a boost in public markets provided some respite to limited partners’ liquidity issues. But many LPs remain capital-constrained, or are being cautious about committing to venture firms until they’re sure the funds can hit a certain minimum level.

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Ten firms have been named finalists for a venture capital program run by the state of Tennessee. Six will be chosen for the TNInvestco program, in which the state will offer tax credits to insurance companies that invest in their business plans. The winners will be announced in about a month, after a round of interviews.

More info on the 25 applicants to the program can be found here. The six finalists follow:

Council & Enhanced Tennessee Fund, LLC
Innova Fund II, LP
Limestone Fund, LLC
Memphis Biomed Ventures Tennessee I, LLC
Solidus-TNInvestco LLC
Tennessee Angel Fund
Tri-Star Technology Fund, LLC
XMi High Growth Development Fund, LLC

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In an industry often vilified for putting profits before patients, Daniel Vasella, chairman and chief executive officer of Novartis, the $40 billion pharmaceutical company headquartered in Basel, Switzerland, sits in a special spotlight. A physician grounded in science and clinical practice, Vasella is determined to put medical advancement before short-term shareholder returns. Rather than following the more traditional model of channeling R&D budgets into searches for new blockbuster drugs, he focuses instead on drugs that will treat patients with rarer ailments. If those drugs later prove to cure other diseases as well, thereby enlarging their commercial footprint, then so much the better. But potential market size is not what drives him, he says; using science to improve the lives of patients is.

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While these are challenging times for the global economy, the energy industry is thriving as federal agencies and investors seek out technologies and opportunities with promising futures. In the coming decades, the five pillars of clean energy — solar, wind, hydroelectric, geothermal and biomass technologies — are intended to form the cornerstone of many U.S. economies.

Highlighting renewable energy and energy-efficient technologies, the 2009 National SBIR/STTR Conference will bring together federal agencies — U.S. Department of Defense, Health and Human Services, Department of Energy, Department of Commerce, Department of Education, Department of Transportation, National Aeronautics and Space Administration (NASA), the National Science Foundation (NSF), Environmental Protection Agency (EPA), Small Business Administration (SBA), Department of Homeland Security, and the Department of Agriculture — as well as venture capital and angel investors, large companies, small businesses, lenders, researchers, university and federal laboratory representatives and other experts who provide assistance to or are interested in doing business with early-stage and advanced-stage ventures.

For more information, visit the conference website.

LOS ANGELES--(Business Wire)-- Beginning with the lack of pre-startup customer response research, and extending to a poor use of their seed capital, two Southern California entrepreneurs have pinpointed three key reasons many new business ventures fail. As reported in their new book, "Successful Startups" (, veteran venture founders Bill Benjamin and Jason McDowall point to their own experiences with nine different ventures in setting tighter priorities for new, and more successful startups.

Reviewer DuWayne Peterson, Chairman Emeritus, Pasadena Angels, termed the new guide a must read for both the entrepreneur and the early-stage investor. He commented: "Benjamin and McDowall have written the perfect book for the current investment climate for startups. It provides a straight forward set of steps to build a solid foundation of success for the entrepreneur and the startup venture."

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RA Mashelkar, former head of India's CSIR [see IPBiz post Dr. R.A.Mashelkar of CSIR ] is now working on an innovation team of Ambani's Reliance Industries directed to "extreme innovation." Mr. Ambani notes: "What's needed is extreme innovation. Twenty years from now, people will not talk about garages in Silicon Valley, but projects in Indian villages and rural areas that will be scaled up."

Inmelt of General Electric pushes "reverse innovation"—the flow of knowledge and products from the developing world to the developed world. Inmelt also noted: ''The next generation of BPO jobs should be in the US,'' he said, and asked Indian businesses to see the world "from (US President Barack) Obama's eyes." Emphasising the importance of ensuring that politicians come on board, he said, "If globalisation is put to vote today in the US, it will lose 70:30."

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While even small businesses now have global market opportunities, they now also have a whole world of competitors, he noted. They also face a product cycle in IT especially that has shifted from years to months.

"It's changed the rules, but it doesn't mean we can't learn those new rules," Bendis said.

The need to adapt readily was also echoed by a local voice. "If intelligent communities around the world share one thing, it's that we're dedicated to constantly re-inventing ourselves," Moncton Technology Group head Doug Robertson said.

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Energy entrepreneurs are developing new technologies for generating, storing, and conserving power. Cleantech investing is beginning to recover from the hit it took last year. But changing the underlying energy infrastructure from a one-way power grid to a smart two-way grid could open the gates for more energy entrepreneurs, at different scales.

If the grid is something more like an open network, small producers can sell energy back to utilities. So maybe local farmers have an incentive to generate their own power with solar panels or wind turbines. As King notes, smart meters create opportunities for new technology as well: Software that helps households and businesses reduce their usage at peak times, for example.

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