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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.

Obama pitching reform in IowaIngenuity and innovation have been mainstays of the American economy since Thomas Jefferson issued the first patent. Discoveries made by American inventors and research institutions, produced by our companies and protected and promoted by our patent laws, have made our system the envy of the world.

Despite our patent system’s importance to the U.S. economy and job creation, Congress has not passed major reforms in more than 55 years. During that time, advances in technology and manufacturing have changed the way our patent system is used.

Innovation has been impeded in recent years by a patent system that too often grants low-quality patents with overly broad claims, which have been used by opportunists to extort royalty fees from manufacturers — particularly in the high-tech sector. The problem of low-quality patents is exacerbated by a litigation system that yields unpredictable and often overcompensating damages determinations, which divert investment and resources from innovation.

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You’ve done everything that your coaches have told you. You’ve written a convincing business plan. Your financial projections outline a reasonable investment opportunity for someone. You have piles upon piles of legal documentation making you compliant with securities laws. You have letters of intent, letters of endorsement and some high-powered personal references. Your PowerPoint presentation is professional. You have your presentation down pat. You’re getting in front of people with money, but no one is writing checks.

If this sounds like your frustrating situation, you’re definitely not alone! Raising capital is not an easy task. In the majority of cases, the first investors are by far the hardest to win. You may have all of the tangible requirements in place, and they may be in a first class presentation. But when you’re approaching friends, family and others to be angel investors, it often takes more than just numbers and a slick sales pitch to win them over.

Here are some less obvious observations that may be causing you to have a challenge:

1. You’re not passionate about your business. People can tell when you’re just going through the motions. It doesn’t matter if the numbers show a huge financial windfall for potential investors. Many people want to see the fire in your eyes before they open their checkbooks.

2. You’re passionate about your business, but it is not being conveyed strongly enough. This could happen for several reasons. Maybe you’ve rehearsed your pitch so much that it sounds canned. Maybe you are so anxious to get the money that you come across as desperate. It may be as simple as trying so hard to be professional that you hide your excitement about what you’re doing. Let loose, have fun, and let your excitement become contagious!

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The financial crisis has highlighted deficiencies in knowledge-based skills in Europe and unless they’re tackled now, the region could get left behind. That was one of the key messages from an event held recently at INSEAD’s Europe campus in France.

The crisis has masked these deficiencies due to the drop in demand, says Bruno Lanvin, Executive Director of INSEAD’s eLab. This, however, makes the issue more urgent “because if we don’t do it now in terms of the crisis, when the recovery starts, the lag of Europe may be significant.”

Lanvin and his team, which includes senior research fellow Nils Fonstad, have been working on a European Commission-funded project, aimed at developing a set of guidelines for building knowledge-based skills, increasing the number of tech- and business-savvy practitioners and managers, and consequently strengthen Europe’s capacity to innovate.

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Australian innovators now have access to an extra $40 million in venture capital funding with the establishment of new fund manager OneVentures.

Senator Kim Carr, Minister for Innovation, Industry, Science and Research, has congratulated OneVentures on being awarded a licence under the Australian Government’s Innovation Investment Fund (IIF) program.

The IIF program provides fund managers with $20 million which they must match with private sector capital to establish new funds to invest in promising early-stage Australian companies commercialising Australian research.

OneVentures, headquartered in Sydney, will invest in emerging Australian companies in the cleantech, new media / information technology and life sciences sectors.  

“The successful raising of $20 million in private sector investor capital to be channelled into early-stage technology-based businesses is remarkable considering it is being done against the backdrop of the global financial crisis.  

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carrotsLarge companies can be strange sometimes. As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. Plus, we’re all allured by the false sense that our contract with BigCo is going to “make us” because once they start using us it will spread like wildfire and the revenue will flow in. Sometimes it actually does. Usually it goes more slowly than we hope.

But I say they can be strange because of their behavior in working with startups. I’ve observed the following scenario in both of my companies and in countless others I’ve advised or invested in:

  • your company becomes moderately high profile in a few press articles
  • BigCo calls you to review your product and decides they want to use you
  • They negotiate a “master agreement” to work with your company with some maybe minimum guarantees in terms of revenue
  • Somebody high up in the company reads the agreement and says, “if we’re going to work with these guys and make them successful then we better share in the upside.”
  • What they mean specifically is ownership in your company. I’ve heard the following so many times that it still makes me scratch my head, “if those guys are going to get rich off of our backs then we’re going to look like fools if we don’t have equity.”
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Gov Monitor logoSome people argue that immigrants to the United States are more likely than the native-born to become entrepreneurs, and that to enhance entrepreneurial activity America needs to bring in more immigrants.

For instance, Jonathan Ortmans, president of the Public Forum Institute, wrote on the Kauffman Foundation blog, “Evidence shows that immigrants start a disproportionately high number of new U.S. firms.”

Others counter that the data don’t show that pattern and that we should not change public policy toward immigration on the basis of these data.

It turns out that who is more likely to be an entrepreneur—the foreign- or native-born—depends a lot on what you measure and when you look at it.

According to data from the 2008 Global Entrepreneur Monitor Report (GEM) for the United States, when entrepreneurship is measured as starting a new business, immigrants appear more entrepreneurial than the native-born. But when entrepreneurship is measured as owning a more mature business, the native-born score higher. The GEM figures show that immigrants have a slightly higher rate of “total entrepreneurial activity”—a composite of the share of the population that is either “actively planning a new venture” or is an owner-manager of a business of between 4 and 42 months old—than the native-born (9.43 versus 8.81 percent). However, the native-born have a higher “percentage of individuals in a population who have set up businesses that they continue to own and manage and who have paid wages or salaries for more than 42 months”: 7.90 for the native-born as compared to 6.74 for immigrants.

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Economic Times BusinessXerox Corp, the $22-billion iconic inventor of products like computer mouse and laser printer whose name has come to be synonymous with
photocopy, has finally set up an innovation lab in India, a move that some analysts have dubbed as a little late in the day. But Xerox’s global CTO Sophie Vandebroek calls it a timely move as the company’s sixth innovation hub in Chennai will be different, based on a new model of collaborative research and open innovation. She discusses the model, future of work and the new technologies for emerging markets that the lab will focus on in an interview with ET. Excerpts:

Microsoft, Intel, GE and IBM have set up research centres in India long ago. Xerox seems to have discovered India only now. Why so?

We have research labs in California, Rochester (in the US) Canada, Grenoble (France) and a joint venture in Japan. We have had Indians working in our labs across the world. On an average, we have filed 10 patents a week. We wanted to understand how a research centre in India can truly add value to our work being done in the five labs across the world.

More recently, Xerox moved into research for global services business. Now with the acquisition of ACS (a BPO company bought in 2009 for $6.4 billion), that focus on services has increased. India has a lot of expertise in IT and services to allow us to tap the talent and this was the best time to launch here.

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There is no greater country on Earth for entrepreneurship than America. In every category, from the high-tech world of Silicon Valley, where I live, to University R&D labs, to countless Main Street small business owners, Americans are taking risks, embracing new ideas and -- most importantly -- creating jobs.

America's future prosperity depends on our ability to maintain this lead. But today, it is getting harder and harder to maintain. A quick glance is the rear-view mirror reveals that other countries are catching up and at an alarming rate. Part of this is due to their determination to overtake us, but part is due to structural changes in the nature of entrepreneurship.

Startups are the lifeblood of our economy. In the past two decades, they have accounted for nearly all the net job growth in our country. Many of these companies are started by entrepreneurs, and are now household names: Google, Yahoo, eBay and Intel. But many more are true American success stories, out of the limelight, quietly creating jobs and securing our future.

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The other day, one of my colleagues asked me, "What exactly do you mean when you use the word 'innovation?'" Answering the question led to a productive discussion about what really inhibits innovation inside large organizations.

When I use the word innovation, I think of three interlocking components:

  • Insight or inspiration suggesting an opportunity to do something different to create value
  • An idea or plan to build an offering based on that insight or inspiration
  • The translation of that plan into a successful business (in simple terms, commercialization)

Obviously, each of these components carries significant complexity, but more often than not, they cover the basics of innovation.

The senior leaders I talk to believe that the bulk of their innovation challenges lie in the first two components. I suspect this is because the third piece looks like execution, and of course, large organizations know all about execution. And yet, my field experience suggests that it's this third component, not the first two, that actually blocks innovation.

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THOMAS L. FRIEDMANWent to a big Washington dinner last week. You know the kind: Large hall; black ties; long dresses. But this was no ordinary dinner. There were 40 guests of honor. So here’s my Sunday news quiz: I’ll give you the names of most of the honorees, and you tell me what dinner I was at. Ready?

Linda Zhou, Alice Wei Zhao, Lori Ying, Angela Yu-Yun Yeung, Lynnelle Lin Ye, Kevin Young Xu, Benjamin Chang Sun, Jane Yoonhae Suh, Katheryn Cheng Shi, Sunanda Sharma, Sarine Gayaneh Shahmirian, Arjun Ranganath Puranik, Raman Venkat Nelakant, Akhil Mathew, Paul Masih Das, David Chienyun Liu, Elisa Bisi Lin, Yifan Li, Lanair Amaad Lett, Ruoyi Jiang, Otana Agape Jakpor, Peter Danming Hu, Yale Wang Fan, Yuval Yaacov Calev, Levent Alpoge, John Vincenzo Capodilupo and Namrata Anand.

No, sorry, it was not a dinner of the China-India Friendship League. Give up?

O.K. All these kids are American high school students. They were the majority of the 40 finalists in the 2010 Intel Science Talent Search, which, through a national contest, identifies and honors the top math and science high school students in America, based on their solutions to scientific problems. The awards dinner was Tuesday, and, as you can see from the above list, most finalists hailed from immigrant families, largely from Asia.

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altState research and development budgets were challenged last year by an international recession but as I look across the nation, a handful of innovation-based state agencies continue to make progress even in difficult times. The Oklahoma Center for the Advancement of Science and Technology is one of those.

In my role as president and CEO of Innovation America, a national organization with a mission to accelerate the growth of the entrepreneurial innovation economy in America, I look for best practice technology-based economic development agencies that are "game changers” in their respective states. OCAST is one of the best examples I have seen for carrying out a state’s initiative to develop its innovation economy.

OCAST has a robust pipeline of programs that includes applied research, health research, small-business innovation research (SBIR), research and development intern partnerships, nanotechnology, plant research, manufacturing excellence and technology commercialization. This pipeline is vital to the infrastructure that can help transform a state’s economy.

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altYale University, which has the second largest endowment behind Harvard and is the top performing endowment in the U.S., has increased its allocation to private equity, including venture capital, according to a report released yesterday. The endowment is boosting its private-equity allocation from 21 percent to 26 percent, despite having lost 26% of the value of its private-equity investments in 2009.

The decision, made at a June 2009 committee meeting, is a pleasant surprise for venture capital firms. The consensus in the industry has been that pullback from endowments, pension funds, and other big institutions that keep funds flowing to the global Silicon Valley will leave the venture industry at half its size within five years. But those were the optimistic folks. Others argued that poor returns in the VC industry was the main reason the for the pullback, and that as a result, the VC industry could be cut even further – or possibly even go away.

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