Innovation America Innovation America Accelerating the growth of the GLOBAL entrepreneurial innovation economy
Founded by Rich Bendis

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.

WSJThe venture-capital industry is undergoing some tough times, with returns scarce and new money hard to raise in the recession. But a new survey by law firm Fenwick & West shows some optimism is emerging as venture capitalists mark up the valuations of their start-up investments.

According to the Fenwick & West survey, which covers the third quarter, 41% of new venture financings in that period were for up rounds, which means a company was given a higher valuation when it received venture money. That compares to 36% down rounds and 23% flat rounds. It was the first quarter this year where up rounds exceeded down rounds, said the survey.

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Massachusetts ranked first in the nation per capita for the total number of patents produced by higher education institutions - with a rate nearly twice as high as the next closest state, the Greater Boston Chamber of Commerce said.

That was one headline of Competitiveness Scorecard issued by the chamber. The scorecard aims to be a barometer of cost and competitiveness issues facing the Massachusetts economy and a comparison of how the commonwealth fares against the 49 other states. This iteration of the scorecard focuses on the role that colleges and universities in the state play on promoting and sustaining innovation.


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Wellington's economic development agency is hopeful a $20 million digital innovation hub proposed for the capital could help attract more foreign business to New Zealand shores.

The New Zealand Institute for Screen Innovation and the Hong Kong digital hub Cyberport are working together to establish the centre, which would be a smaller version of a $2.8 billion hub already being run in Hong Kong.

The central Wellington centre would house the New Zealand Symphony Orchestra and facilities to allow it to record musical scores for films, as well as other digital entertainment ventures.

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The Wall Street JournalWhat do John Deere, Cisco, and Obopay have in common? All three companies form a new breed of enlightened Western firms that have embraced what I call "polycentric innovation."

Polycentric innovation is an emerging business practice that consists of networking international talent, capital, and ideas to meet global demand for new products and services. Wait, isn't that what multinationals have been doing for decades? Not really. While it's true that leading American and European MNCs (I won't name any here for fear of embarrassing them) have been operating R&D centers in emerging markets like India and China for years, these regional R&D centers merely adapted existing technologies and products developed in the West for distribution in local markets.
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It's not what we're trained for as leaders or how our businesses are set up to work.

Most companies everywhere are struggling to grow right now. With their revenues flat to down, they're cutting costs to raise profits. But cutting costs faster than revenues decline is no prescription for long-term success. It is, rather, as Gary Hamel, the author of The Future of Management, puts it, "management inertia." Businesses are on a track that is easy to follow but ultimately self-destructive.

The answer seems to be innovation. Yet few businesses are any good at innovation. For all their brainstorming exercises and "open innovation" programs, they mostly just come up with reformulations of existing products, new pricing plans and basic updates--the same old things just a little cheaper, faster or better.


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Another first. This time in New Delhi, a mega city with 100 million people living in its metropolitan area. Today we had our first ONE DAY WITH INNOVATION in India. And in our way to the ONE DAY we found 24 billboards promoting the Seminar. A big event with a massive audience.

Thanks to the efforts of our INNOVATION’s Director in India, Pradeep Sharma.

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As more U.S. companies send their sophisticated R&D offshore, America must provide worker retraining to maintain its tech leadership

Research and development is increasingly going global, according to a new report by Duke's Offshoring Research Network (ORN). More than half of U.S. companies now have corporatewide initiatives to outsource innovation activities, up from 22% in 2005, according to the ORN, which has been tracking the growth of outsourcing since 2004. And of those companies already offshoring development, 60% intend to do so more aggressively.

The days when you could trace development of the majority of the world's innovative technologies back to U.S. labs are fading fast. Outsourcing of R&D is irreversible. Still, the U.S. retains key advantages and remains well-positioned to continue its technology leadership. But that can happen only if as a nation we recognize the changing role of R&D and refrain from wasting scarce resources trying to recapture a bygone era. Mandating that R&D traditionally performed in the U.S. should stay in America would tie the hands of companies at precisely the time they need flexibility to compete against up-and-coming foreign competitors.

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In just a short period of time the spatial location of invention can shift substantially. The San Francisco Bay Area grew from 5 percent of U.S. domestic patents in 1975-1984 to over 12 percent in 1995-2004, for example, while the share for New York City declined from 12 percent to 7 percent. Smaller cities like Austin, Texas, and Boise, Idaho, seem to have become clusters of innovation overnight. Despite the prevalence of these movements, we know very little about what drives spatial adjustments in U.S. invention, the speed at which these reallocations occur, and their economic consequences. In this paper, HBS professor William R. Kerr investigates whether breakthrough inventions draw subsequent research efforts for a technology to a local area. Evidence strongly supports the conclusion that centers of breakthrough innovations experience subsequent growth in innovation relative to their peer locations. Key concepts include:

Breakthrough inventions spur higher subsequent growth in innovation within a local area and technology compared to peer locations that, for example, have the same overall numbers of patents and similar technologies at the time when the breakthrough occurred.

The underlying mobility of the workforce is quite important for the speed at which spatial adjustments occur. Immigrants, and particularly new immigration to the United States, can facilitate faster spatial reallocation.


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Skimming the recent spate of somewhat rosy articles touting the resurgence and benefits of angel investing, I was persuaded to dig through some of my older posts to examine whether my somewhat caveat emptor position on raising angel capital had been swayed. With a few exceptions, it hadn’t.

This is not to say that I am a critic of the practice of start-up teams chasing investment dollars from individuals. Capital coming from private individuals is still how many, if not most, start-ups initially get off the ground. Additionally, in a challenging funding environment like the one we currently inhabit, finding individuals ready and able to “top off” institutional investment rounds is often a key element in getting those rounds closed at all. Indeed, one of my more popular posts over the last couple years, The Rise of the Pledge Fund, focused upon the emergence of “fundless” or non-committed funds that were targeting seed stage deals and offering individual angels the administrative, post-investment supervisory and deal flow benefits of a traditional venture fund without some of the drawbacks of being in a committed fund. On balance, I was a fan.

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As a rule, angel investors are wealthy people who like to bet on early-stage startups.

They offer first-round financing, bridging the gap between bootstrapping and institutional capital, with the hope that their high-risk seed money will return big rewards.

Numbering about 260,500 nationwide, according to Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire, angels work on their own or by joining private networks that pool money, share expertise and divvy the due-diligence tasks.

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WASHINGTON (Reuters) - The Obama administration has set a November 18 date for a small business forum to define a new initiative to boost lending to smaller firms and help reverse U.S. job losses, an administration official said on Monday.

The forum will gather business owners, lenders, lawmakers and regulators in a bid to make more credit available to small firms so they can expand again after the recession and curb U.S. unemployment that has swelled above the 10 percent rate.

U.S. Treasury Secretary Timothy Geithner and Small Business Administrator Karen Mills will host the meeting to discuss "new ideas and strategies for expanding access to financing for small business

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Can governments spark start-up activity and job creation by getting into the venture capital business? Or do they just waste taxpayer money whenever they try?

Those are the two questions that animate the new book from Harvard Business School prof Josh Lerner, Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed--and What to Do About It (The Kauffman Foundation Series on Innovation and Entrepreneurship)

Much of Lerner's book focuses on all the things that can go wrong when governments try to pour taxpayer money into the gas tank of their region's innovation economy.
I need to state that Innovation America does not totally share Josh Lerners perspective on his book as it does not represent the early stage capital and the many successful State Government programs that have worked. - Richard Bendis
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Most believe new businesses provide substantial economic benefits. Scott Shane explains why this isn't normally the case

Myth: The typical entrepreneur creates jobs, generates innovation, provides wealth, and rejuvenates communities.

Reality: Only a minority of entrepreneurs start businesses that provide these benefits.

While it may be true that some entrepreneurs provide substantial economic benefits, our view of what the typical entrepreneur can—and wants to—accomplish is greatly overestimated. In large part, this is because the typical entrepreneur—out of about 12 million people trying to start businesses every year—has low aspirations.


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Here’s the latest from VentureBeat’s Entrepreneur Corner:

Shoestring marketing for startups – Young companies typically don’t have the budget for a substantial marketing campaign, but that’s not necessarily a bad thing. As you search for your niche and your company evolves, serial entrepreneur Scott Olson offers advice on the best ways to get a big marketing bang for your buck.

Lean startups aren’t cheap startups – Too many entrepreneurs assume the lean startup methodology is a way to save money. It can be, but that’s not the idea behind the philosophy. Serial entrepreneur Steve Blank clears up some of the confusion, clearing up some commonly held misconceptions.
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In early 1998, Bill Gates headed Microsoft at the peak of its commercial powers. The world’s preeminent software giant claimed a 90 percent market share in all desk and laptop PCs and it was difficult to imagine anything that could unsettle, much less evoke fear in, the Sultan of Software.

Nonetheless, when asked what challenge he most feared, Gates responded, “I fear someone in a garage who is devising something completely new.” Sergey Brin and Larry Page, the cofounders of Google, were that very pair. Nestled in a Menlo Park, Calif., garage, these two software engineers were preparing to launch a product that would change the way the world used the Internet.

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New York (CNN) -- Israeli Prime Minister Benjamin Netanyahu returns to Washington, D.C., Monday to address a conference of the American Jewish Federations at a time of concern in Israel that the U.S.-Israel relationship is adrift.

Although Netanyahu has used each of his recent U.S. visits to make the case for confronting Iran and its nuclear ambitions, he might consider broadening the subject.

Israel's leader should speak to Americans not just about what threatens Israel, or what Israel's critics say, but also on what is unique about his nation's economy at a time of great economic uncertainty for Americans, when the unemployment rate here has just crossed the 10 percent threshold.

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The post I wrote a couple of weeks back - Is Ireland Really and Innovation Island? – received more interest than usual and in particular generated a very interesting discussion in the comments that is worth checking out. The conversation around the need for an online network for innovators and entrepreneurs continued offline with Michael and Johneric. I’ve volunteered to articulate what I see as the essence of that conversation to see if there is potential in developing something practical out of it.

No Shortage of Irish Innovators

All are agreed on this at least, even if some think that IDA, EI and multi-nationals need to do more to support and foster budding entrepreneurs. The Internet is now facilitating a whole new breed of lazy entrepreneurs. However there are many innovators that for very practical reasons will probably never bring their great ideas much further than a few scribbles on scraps of paper.

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Last week we had the chance to make three separate presentations to MBA and IT major students at both Stanford University and the University of Berkeley, Haas School of Business.

The response was very positive overall, with lots of questions from both sides. The presentations had slightly different focus:

The Eight Things I Learned in Asia” at Stanford, with a focus on Asia, culture, career and innovation (for a group of Asian Stanford students). Talk and discussion duration: 90 minutes

Rethinking Innovation” at Berkeley with a focus on innovation / business models, with the purpose of challenging some common misconceptions about Asia, inventors, innovation. It includes a few “problems” I asked students. The presentation highlights the importance of cross-market/cross-cultural aspects to understand how some companies succeed while other fail in Asia (and by extension, elsewhere). This talk was given twice, to groups mostly composed on MBA students. Total duration: 90 + 120 minutes
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Careful academic research on the business start-up process reveals that many entrepreneurs never write a business plan.

These studies also show that writing a business plan helps entrepreneurs in a number of ways, including improving their odds of successfully developing a new product, organizing a company, accessing external capital, obtaining raw materials, generating sales and surviving over time. Regardless of what measure of performance academics have looked at, research shows that writing a business plan has a positive impact.

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