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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.

Evan Bayh said it true. The process Congress uses is flawed. It's more about partisan deal making than the public interest. Back room deals. Sneaking legislative provisions into sometimes unrelated bills to serve private interests and avoid scrutiny and discussion.

We have new evidence today, as they're at it again. With SBIR the victim! And they do it with smug satisfaction, unabashedly sanctimonious. They talk up the little guy (small business) but serve big money (VC) interests instead.

Basically, the House, via Rep Jason Altmire (D-PA), is attempting to bypass the SBIR reauthorization negotiations with the Senate and force the House version of the bill (S.2965) through the back door. If he succeeds in including it in the Job Stimulus bill, it will be difficult for the Senate to oppose it, especially since the President wants this legislation passed quickly.

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The Emergence of VC/Angel SyndicatesSo I’ve been spending a bit more time than usual talking to entrepreneurs raising capital and venture capital firms investing in early stage companies, and there is a trend that I am trying to wrap my head around.

The trend: large venture capital firms are issuing term sheets committing to invest between $500K and $1.5M in early stage companies, and then offloading anywhere from $100K-$500K of the round to professional angels and seed funds.

So the question is, why are they doing all the work to find/negotiate/invest/and then shepherd these investments, only to let smaller guys piggy back on their deals?

I’ve got a couple potential answers:

1) They want to reduce their exposure to the investment by syndicating the deal, but as capital requirements come down for building companies, there isn’t really room for the syndicate of yesteryear. It used to be that a Series A round would frequently be split between two large venture firms, each invest half the capital with the confidence that future funding requirements would be high enough that they’d both be able to put real money to work behind their bet. But now that the $2M A round is being replaced by $500K seed rounds, and the $10M B round looks more like a $2-5M A round…VC’s are choosing to syndicate with partners who can afford to invest in the first round, but whose coffers aren’t deep enough to go heads up in the second. What that means is that the VC leading the deal, should this deal be a winner, doesn’t have to fight with another deep pocketed investor for an outsized portion of the next round (read: they’ll have an early option to increase their ownership).

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Job creation relies on innovation. A laser blasts into metal at IPG Photonics in Oxford, Mass.  Mary Knox Merrill/StaffInnovation is necessary to build new jobs to replace those lost in the recession. So how do you innovate? Consider the integrated circuit. It was just a matter of taking the next logical step.

Innovation is a beautiful word. Innovators are rightly revered. We owe our jobs to them, build statues to them, read their books, and listen to their sage words. How do they do it? What special food were they raised on? Did they hear the angels sing?

Management gurus break down innovation into five steps or three paradigms or six PowerPoint slides. But the more you know about innovators, the less they seem like genius wizards with secret formulas. Which is good. It means innovation is something inside us all.

I’ll let Jack St. Clair Kilby be the example. Mr. Kilby was a man of few words. I sat down with him in Dallas in 1978 to ask how he had come up with his revolutionary invention, which even then – in the pre-personal computer era – had led to billions of dollars’ worth of new electronics and tens of thousands of new jobs.

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The Federal Communications Commission is poised to hand a big victory to the cell phone industry by allocating more airwaves for mobile broadband services.

The FCC's goal is to make available 500 megahertz of spectrum for commercial broadband providers over time, according to sources with knowledge of the matter.

Under pressure from the Obama administration to make broadband service ubiquitous across the country, the agency is in the final stages of putting together its long-awaited National Broadband Plan, which is due to Congress March 17. The plan is expected to outline the spectrum goal, sources said.


FCC Chairman Julius Genachowski has repeatedly warned of an impending spectrum shortage that could hinder the United States' efforts to stay competitive in the broadband market. He and Blair Levin, who leads the FCC's broadband task force, have said the agency is considering reallocating spectrum licensed to broadcasters and government agencies.

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SoundsYou're probably among the millions who have experienced it: driving in a car, listening to the radio, and suddenly this song comes on. It is not just any song--this was your favorite song when you were a teenager. As the first few notes strike up, you’re transported back in time. Everything is so vivid, and your mind wanders to parties, first kisses and sweaty palms. It's as if time stands still and you suddenly realize that for the entire duration of the song, you haven’t seen a single thing on the road.

There's no doubt about it, sound is immensely powerful. And yet 83% of all the advertising communication we're exposed to daily (bearing in mind that we will see two million TV commercials in a single lifetime) focuses, almost exclusively, on the sense of sight. That leaves just 17% for the remaining four senses. Think about how much we rely on sound. It confirms a connection when dialing or texting on cell phones and alerts us to emergencies. When the sound was removed from slot machines in Las Vegas, revenue fell by 24%. Experiments undertaken in restaurants show that when slow music (slower than the rhythm of a heartbeat) is played, we eat slower--and we eat more!

Is this just coincidence, or does sound make us buy more, want more, dream more and eat more? Any 50-year-old American can sing a whole range of television jingles from the 1970s--they are all well stored in the recesses of our brain. Yet if you were to ask the same of those who have come of age recently, you will find them stumped. Has the magic of a television tune disappeared, or has the advertising world lost sight of the fact that people do indeed have speakers at home? I decided to put these questions to the test.

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It’s a rough time to be a start-up seeking funding. More and more entrepreneurs are looking for angel or VC capital, but the number of firms out there looking to invest is shrinking.

The numbers are startling. 90 percent of the VCs polled in a recent survey by the National Venture Capital Association predicted that the number of venture capital firms will decline, with 72 percent predicting the industry will shrink between one and 30 percent.

What does this mean for start-ups? In a nutshell: It’s more important than ever to stand out from the crowd – especially if you’re running a technology company. At Dolphin Equity, we receive about 500 business plans per year from technology companies. We tend to invest in about one percent of those.

I’ve been in the investing business for over 20 years. Here are five surefire ways I’ve seen to make your company memorable to a Venture Capitalist:

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FDA, U S Food and Drug AdministrationPartnership Combines Strengths to Speed New Treatments to Patients

The U.S. Food and Drug Administration and the National Institutes of Health today unveiled an initiative designed to accelerate the process from scientific breakthrough to the availability of new, innovative medical therapies for patients.

The U.S. Food and Drug Administration and the National Institutes of Health today unveiled an initiative designed to accelerate the process from scientific breakthrough to the availability of new, innovative medical therapies for patients.

The initiative involves two interrelated scientific disciplines: translational science, the shaping of basic scientific discoveries into treatments; and regulatory science, the development and use of new tools, standards and approaches to more efficiently develop products and to more effectively evaluate product safety, efficacy and quality. Both disciplines are needed to turn biomedical discoveries into products that benefit people.

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Made to Stick, Dan, Chip HeathWalk into an urban high school and look around at the kids. Roughly half of them will drop out of school. If you knew which ones, you might be able to steer them toward a different path. But you can't solve a problem until you can spot it, and how do you spot a future dropout?

Some Johns Hopkins University researchers, frustrated by the high-school-dropout rate, went looking for early-warning signs among students in Philadelphia. What were the telltale markers of a student who wouldn't graduate? Their analysis came back with astonishing clarity. Poring over eighth-grade attendance records, they found hundreds of students who had missed more than one out of every five class days. Of those frequent absentees, 78% eventually quit high school. Similarly, of the eighth graders who had failed either English or math, three out of four dropped out. No other factor -- gender, race, age, or standardized-test scores -- had the predictive power of those two patterns.

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25 percent of advanced biofuels capacity by 2013 (421 Mgy, of a total of $1679 Mgy) is expected to be in the form of commercial-scale algal fuel plants, according to company guidance as consolidated in the Digest's Advanced Biofuels production databaseOn the eve of the National Algae Association West Coast meeting in Las Vegas (Thursday and Friday of this week), news from the European Algae Biomass Association as well as presenters at the American Association for the Advancement of Science annual conference in San Diego offered news on business models, new research and timelines for algal fuel commercialization.

The co-location imperative

In California, Scientific American is reporting on co-location schemes for access to carbon dioxide or wastewater. “Various scientists speaking at the American Association for the Advancement of Science annual conference, which wraps up here today, were promoting the notion that algae operations should be located next to industries that can supply one or more of the nutrient streams,” Scientific American’s blog writers reported. The SciAm item focuses on a presentation by Sunrise Ridge Algae in Texas that is operating a pilot plant in Austin, Texas and using wastewater from the nearby Hornsby Bend plant. The article also profiles the co-location of the Seambiotic pilot plant in Israel with a coal-fired power plant.

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The vast majority of American adults -- some 86% -- now own cellphones, according to new research from the Federal Communications Commission. But mobile Internet use is still far less common.

Of cellphone owners, the majority (66%) send or receive text messages, and more than half send or receive photos. But only 28% currently access Web pages, and 20% download apps to their cellphones. (Time frame: Oct.-Nov. 2009.)

No surprise: It's a generational thing. Of cellphone owners ages 18-29, 48% use the mobile Web and 94% use text messages. Of those 50-64, just 15% use the mobile Web and 51% use text messages.

Mobile penetration SAI chart
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One of the biggest obstacles to discussing the concept of innovation is the perception that innovation can only involve unique ideas. Ask someone you define what innovation is, and they'll usually give you an explanation that indicates you have to have a mixture between Edison and Einstein to be considered innovative.

Gladwell on Innovation and Plagiarism: Smells Like Teen Spirit To Me...Of course, that's crap. Some of the best innovators around take the ideas of others and make them better or simply more marketable than others. The ability to tweak a product or service and make it more palatable to the masses is a keyNirvana skill in the world of innovation.

Malcolm Gladwell knows this, and after thinking about it, isn't even convinced that plagiarism, long thought to be a crime of ethics, is a crime at all because there aren't many original ideas left these days.  From What the Dog Saw, Gladwell's latest book that is a compilation of his columns from the New Yorker, specifically a passage where he's talking about the feeling that his work had been stolen for a Broadway play:

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SBA Out of Funds to Facilitate Favorable Small Business LoansFunding ran out on Friday for a Small Business Administration program that increased loan guarantees and reduced or eliminated loan fees for its two largest small-business recovery lending programs -- a week or so earlier than had been expected. The most recent influx of funds for the American Reinvestment and Recovery Act program, $125 million, had been expected to last through February.

This doesn't mean that loans will cease to be available to small businesses, but for now, those that need money will have to accept the relatively less-favorable terms of traditional SBA loans.

The loan guarantees and the reduced fees had a significant impact: By guaranteeing 90% of the loan (rather than the usual 75%), the SBA reduced lenders' risks, making them more willing to lend money at more favorable rates and on less strict terms;
by covering part or all of the fees, the program made loans more affordable for borrowers. Under the Recovery Act terms, a small business could have saved up to $40,000 on a $2 million loan. That savings could be enough to hire an additional employee -- just the sort of thing the country needs right now.

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