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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 old mechanism for funding the commercialization of new technologies is in trouble.

In the summer of 1996, Silicon Valley venture capitalists put a few million dollars into a telecom-equipment startup called Juniper Networks. Three years later, after a few more rounds of funding and the release of its first product, Juniper enjoyed an initial public offering of shares, or IPO. At the end of its first day of trading, it was worth nearly $5 billion, and within nine months, it was worth almost 10 times that. The original venture investors, meanwhile, were able to walk away with profits of better than 10,000 percent.

Around the same time Juniper went public, Silicon Valley venture capitalists were putting money into a new networking startup, Procket Networks. This time, the initial investments were bigger, and over successive rounds of financing, Procket collected almost $300 million in venture money. Three years after it started, though, the company had still not launched a product, and in 2004 its assets were acquired by Cisco in a fire-sale deal. This time the VCs walked away with just a fraction of their original investments.

The difference between those two stories is, of course, the difference between the world of the late-1990s technology-stock bubble and the world after that bubble burst. But of late, it also seems like the difference between the historical image of venture capital and the harsh reality of the current business. A decade ago, venture capitalists seemed like genuine alchemists, able to turn even startup dross into purest gold. In recent years, however, the industry has seemed less magical than mundane. Since 2004, its average five-year return has oscillated around zero. High-priced IPOs have become rare events, even as VCs have continued to pour tens of billions of dollars into new companies every year. As Fred Wilson, a principal at Union Square Ventures, bluntly puts it, "Venture capital funds, as a whole, basically made no money the entire decade."

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EurActiv LogoThe fruits of EU research are not being converted into marketable products due to difficulties in funding expensive "demonstration" projects, according to Bernhard Schleich of SusChem, a European technology platform for sustainable chemistry.

Schleich says Europe's research funds are geared towards pre-competitive research but stops short of backing new technology when it approaches the demonstration phrase.

He said most funding opportunities in Europe are still "research-oriented".

But it is a big step from a research result to a final, marketable product. Here, companies are often left alone because this phase is no longer considered pre-competitive – which is not always the case. Often excellent research will not be developed further because no 'risk funding' is available, Schleich said in an interview with EurActiv.

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R&D Credit Coalition - The research and development tax credit is a jobs credit – the Senate should act quickly to revive it, strengthen it, and make it permanent. When the credit expired on January 1st of this year, the cost of hiring R&D workers in the U.S. went up. Now, by expanding and permanently extending the credit, Congress could help to create over 100,000 jobs in a single stroke. An expanded credit would also add billions to our GDP and tax coffers, spur thousands of patents, and give companies one more reason to invest in America. More than 70 percent of the credit allowed to expire in December went to U.S. wages. Why leave a proven jobs credit on the table?

The R&D Credit Coalition is a group of more than 100 trade and professional associations [including NACFAM] along with small, medium and large companies that collectively represent millions of American workers engaged in U.S.-based research throughout major sectors of the U.S. economy, including aerospace, agriculture, biotechnology, chemicals, electronics, energy, information technology, manufacturing, medical technology, pharmaceuticals, software and telecommunications.

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THE government will provide up to $250 million as initial seed capital for public-private co-investment funds to be set up later this year to invest in Singapore firms, part of a broader initiative to help Singapore businesses attract more private capital to grow.

In an unexpected move, it also announced tax incentives to encourage rich individuals, or 'angel investors', to invest in start-up companies.

In addition, the government confirmed that it was studying how best to set up a specialised financial institution to plug gaps in the supply of cross-border financing for Singapore firms, similar to the export credit agencies or export-import (Exim) banks elsewhere - as recommended by the Economic Strategies Committee (ESC) earlier this month.

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In an earlier post, we posed the question, “Is College Necessary for Entrepreneurs?” While there are certainly good arguments for both sides, it’s a fact that a college degree does not guarantee success. And there are countless determined entrepreneurs who have proven that success can be achieved despite a lack of higher education.

We have compiled a list of 100 amazing “degreeless” entrepreneurs who have risen to the top. Some high-profile entrepreneurs you will recognize immediately, while others you may be discovering for the first time. Many of them didn’t complete elementary school, and still more are considered high school dropouts. Their backgrounds and industries run the gamut; however, they all have at least two things in common. Incredible success and no college degree.

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At a time when we need risk-takers to start companies and create jobs, we need to do everything we can to remove unnecessarily burdensome regulations that dampen entrepreneurship. A high-impact, low-cost reform would be to make some of the more onerous requirements of the Sarbanes-Oxley Act of 2002 optional. This would permit companies whose shareholders don’t feel that the benefits of “SOX” requirements outweigh compliance costs to access public capital more quickly and less expensively. This kind of access to capital is critical for the survival of young firms, which have accounted for all net job growth in the United States in the past two decades.

The logic behind this recommendation, laid out cogently in the Kauffman Foundation’s State of Entrepreneurship Address, is that SOX was enacted in the aftermath of corporate financial reporting scandals, after all, to protect shareholders. So why not allow shareholders to vote on whether their companies will fulfill certain SOX requirements?

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Watch this Kauffman Foundation/National Governors Association Center for Best Practices Event to be Web cast live from the Kauffman Foundation
"Spurring Business Startups and Innovation in Clean Technology"
Wednesday, February 24, 2010
2:00 p.m. - 3:30 p.m. EST
To view webcast go to: www.kauffman.org/NGA

Governors across the country are looking for ways to build their economy by supporting new businesses and spurring entrepreneurship. At the same time, they are looking for ways to build opportunities in emerging industries such as clean energy. This webcast will feature three ways in which states can use existing scientific and business talent to spur the creation of new clean energy companies:

  • By providing scientists and engineers with the skills and knowledge they need to start companies. - Andrew Hargadon, Center for Entrepreneurship, University of California, Davis, will discuss the Green Technology Entrepreneurship Academy, a one-week business development intensive that teaches science and engineering students and faculty how to commercialize research and start new ventures.
  • By transitioning entrepreneurs and executives from other high-tech sectors into the green energy sector. - Peter Rothstein, New England Clean Energy Council, will discuss the Clean Energy Fellowship Program, an entrepreneurial development program that rapidly transitions experienced entrepreneurs and executives into the region's clean energy sector.
  • By working across states to take existing small businesses to scale. - Kimberly Loui, Arizona State University, will present the soon-to-be launched Energy Innovation Network, which aims to catalyze interaction between states and other stakeholders to create the conditions necessary for the growth of existing startups in clean energy.

LoChlorine, a system for purifying polluted water: E-Team, University Of California at BerkeleyYou probably know about the NCAA, the National Collegiate Athletic Association, but did you know that there is a National Collegiate Inventors and Innovators Alliance (NCIIA)?  It has approximately 200 college and university members, and more than 5,000 students at these institutions are on entrepreneurial inventor teams (E-Teams).  Now, 15 of those teams are getting ready for a face-off at the March Madness for the Mind showcase in San Francisco.

The three-day event, March 25 - March 27, 2010 at the San Francisco Hilton, Financial District, will feature lectures and panels but, most importantly, it will bring the "E-Teams" together with venture capitalists who can further the advancement of the student inventions. Additionally, the 15 E-Teams, which received grants from the NCIIA last year, will exhibit their inventions to the public at the March Madness for the Mind showcase at San Francisco's Exploratorium® in the Palace of Fine Arts on March 27, 2010.

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As an entrepreneurship educator at a major university, I agree with much of Robert Kiyosaki's column, "We need two school systems" (The Forum, Feb. 9).

However, I must take issue with the notion that such an approach would have a meaningful impact on our country's ability to "create entrepreneurs."

Casting as wide a net of entrepreneurship education as possible would be far more effective in encouraging a cadre of new entrepreneurs than the creation of a highly selective, exam-based academy.

We need to encourage as large a pool of nascent entrepreneurs as possible. The type of training and exposure to successful entrepreneurs Kiyosaki proposes is already available in virtually all of the better university entrepreneurship programs, and entrepreneurship education is already being extended to both secondary and primary schools.

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Box of Crayons founder, Michael Bungay Stanier, has a pretty awesome job…

He goes into companies and teaches people how to do great work. Not good work, but great, butterfly in the stomach, soaring with delight, serving the world in a powerful way work. In this interview, we spend time exploring how to make this happen in your career and life.

And, we get into some of the exercises from Michael’s new book, Do More Great Work

In our interview, Michael talks about a video he created, called The Eight Irresistible Principles of Fun. It’s a great example of how to seed an idea and create something powerful, useful and delightful with the potential to go viral. To date, it’s been viewed something like 3 million times. Click on the image to play it…

8 irresistible rules of run

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startup women diversity entrepreneurA serious geek I know asked me how many people with gray hair were at Internet conference I had just attended. I answered that there were quite a few. He shook his head and said that when the suits take over, it's the beginning of the end of innovation.

There are two things happening here. First, the suits are taking over and, second, the pioneers are going gray. Together they make up the startup establishment. But things have changed since the early days, and this establishment hasn't kept up with the times. The current startup system essentially excludes the untapped pool of innovators who aren't developers - for example, women who want to launch Internet startups.

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Ask the attorney: Should I hire a pro negotiator now that I have a buyout offer?Question:  We just got an offer to buy our company for a sweet pile of cash, but we don’t know what the next step is.  My father said we should hire an investment banker and let him handle the negotiations.  Do you agree?

Answer:  Congratulations!  Without knowing more about the deal and the proposed purchase price, it’s hard to say.  I practiced law for a number of years in New York City, and it was pretty rare not to have an investment banker involved in an M&A transaction.  Here in California, it’s a little different since most of the deals tend to be relatively small.

A strong investment banker can add a lot of value — not only in connection with negotiating the material terms of the transaction, but also valuing the company and making sure that you’re not selling too low. A strong banker will also create a competitive environment (or the perception of one) and play bidders off of each other to make sure you get the best possible deal terms.

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