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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.

CNBCIn the early 1980s, buffeted by a severe recession and nearly 11 percent unemployment, the economic future of the United States appeared gloomy. Yet America did not collapse; instead, the economy surged. The late 1970s and early 1980s turned out to mark an inflection point as technological advances building for two decades were catalyzed by new entrepreneurial firms in the seventies, eighties, and nineties.

This pattern of innovation and job creation in new firms has characterized the last 30 years, with firms less than five years old accounting for nearly all net job creation since 1980. Yet the recession of 2007-09—as severe if not worse than the 1981-82 recession—has once again called into question U.S. economic prospects and, in particular, the fate of entrepreneurs. As the world celebrates Global Entrepreneurship Week this week, what is the state of entrepreneurship?
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WSJAccording to the golden rule, he who has the gold makes the rule. In the land of venture capital, however, the question is: Who actually has the gold?

Advertised as a celebration of entrepreneurs, last week’s Ernst & Young Strategic Growth Forum mostly served as a networking junket for venture capital managers to meet the small businesses of their investing future. Between the glad-handing there were business proposal swaps and face-to-face meetings that could serve as the first step in a multi-year process.
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Red HerringElectric-auto maker Tesla is quietly revving up plans to file its widely expected initial public offering, according to reports.

San Carlos, California, Tesla is known for its Roadster electric two-seater sports car built on a Lotus platform that costs $109,000. Company founder Elon Musk indicated last year that an IPO was in the offing by 2008 or 2009, but economic conditions have likely delayed the company's S-1 filing.
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NASVFWASHINGTON, DC - The seed capital industry has revaluated return expectations and fund-raising outlooks, according to a new national survey conducted by the Fox School of Business and the National Association of Seed Venture Funds(NASVF).

Survey respondents indicated that most are planning to make an exit within the next six months, and that they expect four times the return on capital from that exit. In addition, more than half indicate they are in the process of securing follow-on funding over the next six months.

 

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I [Mark Suster] had a picture in the office of my first company with the logo above and the capital letters JFDI. (In case it’s not obvious it’s a play on the Nike slogan, “Just Do It.”) I believe that being successful as an entrepreneur requires you to get lots of things done. You are constantly faced with decisions and there is always incomplete information. This paralyzes most people. Not you.

Entrepreneurs make fast decisions and move forward knowing that at best 70% of their decisions are going to be right. They move the ball forward every day. They are quick to spot their mistakes and correct. Good entrepreneurs can admit when their course of action was wrong and learn from it. Good entrepreneurs are wrong often. If you’re not then you’re not trying hard enough. Good entrepreneurs have a penchant for doing vs. over-analyzing. (obviously don’t read this as zero analysis)
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A program that would make Iowa a center of medical innovation was kicked off Friday by state leaders and Richard Gephardt, the former congressman from Missouri.

"This is the most exciting thing I've ever done. I've come out of every one of these meetings just uplifted with what can happen here. It's really optimistic, it's possible, doable and feasible," said Gephardt, chairman of the Council for American Medical Innovation.
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Even non-football fans probably heard about Bill Belichick's "blunder" of a call on Sunday night. Believe it or not, the call — and the firestorm that followed — has important lessons for innovation managers.

A quick recap. The New England Patriots led the Indianapolis Colts by six points with two minutes to go. It was fourth down, the ball was on the New England 28 yard line, and the Patriots needed just two yards for a first down that would almost certainly have sealed a victory. Conventional wisdom called for a punt, but Coach Belichick decided to go for it. After the Patriots fell just short of the first down, the Colts marched into the end zone and won the game.
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SBIR CoachThe headline and subtitle of the Newsweek story got my attention: "The Decline of Western Innovation -- Why America is falling behind and how to fix it."

Innovation. What is that anyhow? Webster says it's "(1) the introduction of something new. (2) a new idea, method, or device."

OK. That's simple enough. SBIR is supposed to provide funding for small businesses to develop new ideas, methods or devices for solving Federal agency defined problems. That's why the "I" is in SBIR, isn't it?

Has SBIR been effective in producing innovation? YES! The evidence is overwhelming.

A 2008 study done by two University of California at Davis professors, Fred Block and Matt Keller, addressed the subject of "Where Do Innovations Come From?"
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BWWhen people around the world try to explain the American system of entrepreneurship, they often point to venture capital. True enough, the venture capital ecosystem has nurtured startups that became household names—among them Apple (AAPL), Cisco (CSCO), Google (GOOG), Microsoft (MSFT), and Starbucks (SBUX). For much of the 1990s and thereafter, venture capital was seen as the "secret sauce" of American entrepreneurship and an engine of job growth. In its heyday in 2000, VC investing reached an astonishing 1.1% of U.S. GDP.

But what if the prominence of venture capital—its branding as the essence of American innovation—turns out to be a phenomenon of the past?
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Isaac Asimov once said "The most exciting phrase to hear in science, the one that heralds new discoveries, is not Eureka! (I found it!) but rather, "hmm.... that's funny….". Based on a 30 year study across 300 product categories and 225 countries, the phrase might actually be "Hmmm…. that's what I thought."

A new whitepaper from Phillip Roos from GFK sums up 30 years of findings started by product guru Robert McMath. The paper deserves a deeper dive - (which will be coming in some form or another) but I'll try to share the highlights with you at least:

The Chord of Familiarity - Great innovation builds on what comes before it. This lines up with something I have long believed – there is no such thing as revolutionary innovation, just a series of incremental evolutionary innovations that at some point reaches a tipping point and appears to be revolutionary. I've used the iPhone as an example before.
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Newswise - Entrepreneurial activity shows positive signs during these hard times, according to the Global Entrepreneurship Monitor (GEM) 2008 National Entrepreneurial Assessment for the United States of America, produced by Babson College and Baruch College. To view the report, visit www.gemconsortium.org.

* Entrepreneurship Increases: Total entrepreneurial activity (TEA) increased to 10.8% in 2008 from 9.6% in 2007.

* Opportunity Obsessed: Opportunity continues to be the main driver for entrepreneurs in the United States - 87% started their businesses because of a business opportunity while only 13% started their businesses out of necessity.
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NYTLani Hay, daughter of Vietnamese immigrants, retired from the Navy as an intelligence officer, and then with her American Express card and some savings, opened a technology consulting business serving the federal government. By 2007, just four years after it opened its doors, Lanmark Technology had grown to bring in $12 million in annual revenue and employ 100 people.* Then the recession hit. “Along with L.M.T.’s annual revenues dropping, L.M.T.’s line of credit was also dropped, by a bank that bought out the bank that I was working with,” Ms. Hay said Wednesday in a conference in Washington, convened by the Obama administration to address the problems small businesses have had finding capital during the recession. Worse, she said, the bank canceled the credit line just before she was to receive a $500,000 contract from the Defense Department — and she had needed the credit to tide her firm over until the government paid its bills.

Ms. Hay’s story, which she recounted to an audience of government officials, small businesses, lenders and interested trade associations, had a punchline. “That bank is actually here today,” she said. “I’m not going to name them, but they are here.”
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