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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.

 IN THE old days, the job of eradicating disease fell to governments and inter-governmental bodies. Then charities, often led by celebrities or entrepreneurs, joined in. Finally, in the Western world at least, governments accepted the need to pool their efforts with those of private donors, big and small. The effort still seems unequal to the task. Every year, nearly 11m children die before the age of five because of a mixture of poor nutrition and preventable disease. Many of the United Nations’ Millennium Development Goals (calling, for example, for a plunge in child and maternal mortality by 2015) look unattainable.

The good news is that more imaginative ways of raising and spending money are now on the horizon. How well they do will depend on many details—like the quality of information flowing between poor places and the governments, firms and individuals that want to help.
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MADISON - Wisconsin entrepreneurs and researchers do a world-class job of coming up with ideas that will transform health care, energy, manufacturing and other industries. Finding the investors who can move those ideas forward is too often the problem.

While Wisconsin's angel capital investments have climbed steadily, the state continues to lag in the next stage of private equity investments - venture capital. These rounds of investment, which begin around $2 million and build upon smaller investments by individual “angels” or networks of such investors, can help turn a start-up into a thriving company.
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SOE 2010 coverCarl Schramm, president and CEO of the Ewing Marion Kauffman Foundation, delivered the "2010 State of Entrepreneurship Address" on January 19, 2010, on the heels of alarming unemployment numbers and citing sobering new data that show a majority of American entrepreneurs do not expect to create jobs in 2010. He called on policymakers to make this cornerstone of American capitalism a priority.

During an event at the National Press Club in Washington, D.C. that included perspectives from entrepreneurs and remarks from U.S. Secretary of Commerce Gary Locke, Schramm underscored the importance of entrepreneurs to economic recovery, emphasizing that hundreds of new companies are being created each day.

Schramm also unveiled a new survey of entrepreneurs, commissioned by the Kauffman Foundation and conducted by Douglas Schoen, LLC that shows entrepreneurs are optimistic about their companies but are struggling to expand and create jobs in the current economy. Highlights from the survey include the following:

  • 36 percent of entrepreneurs reported reductions in head count in the past year; only 8 percent have added employees.
  • Nearly two-thirds have seen their sales volume and their profitability decrease.
  • 71 percent of entrepreneurs do not expect to add any new jobs in 2010.
  • 61 percent of entrepreneurs think the economy is on the wrong track.

KauffmanTo catalyze job creation and to ease the burden that entrepreneurs feel in today's economic climate, Schramm presented a number of policy recommendations that he said would help set the country on a path toward economic recovery:

  • Reform immigration policy, granting citizenship for foreign students graduating from American universities and other immigrants who want to start new companies and create jobs.
  • Revise Sarbanes-Oxley regulations to allow company shareholders to choose whether their companies must fulfill some of the most onerous reporting requirements if they think the costs of compliance outweigh the benefits.
  • Provide a temporary payroll tax holiday to companies less than five years old.
  • Give academic entrepreneurs the choice of multiple avenues to commercialize their research so their innovations can reach consumers more quickly.
  • Offer fellowships for doctoral graduates in scientific fields to educate them about how to start companies.
  • Provide entrepreneurship education and training to students in high school and college.
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This whitepaper begins with the Department of Commerce report that 100% of net job growth over the last 20 years can be attributed to startup companies - and goes deeper, exploring the three main drivers of startup companies: investment, innovation, and entrepreneurship - and how cities across the country measure up in terms of these metrics. Then finally, we explain what cities can do to help jumpstart the growth of startup companies, focusing on an exciting new economic development tool called crowdsourcing. We take a by-the-numbers look at regional innovation competitions as a cost-effective way to drive real growth in local startups, innovation, and investment.
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At the completion of his keynote address at the Global Urban Summit in Rotterdam on the 4th December 2009, Prof. Chris Ryan was joined by Prof. Han Brezet, from the Technical University of Delft in the Netherlands, to announce the creation of the Rotterdam Eco-Innovation Lab: REIL. REIL will follow the methodology, and build on and adapt the outcomes, of VEIL within the development around the immense harbour of Rotterdam city. This development responds to the opening up of land for housing and commercial activity as the functions of the old harbour move ‘outwards’ towards the ocean. The Harbour development aims to set new environmental standards as part of an innovative new zone, known now as the “Clean Tech Delta”. In announcing the creation of REIL, with its collaboration with VEIL, Prof Brezet also announced that the Clean Tech Delta will send a staff member to Melbourne for several months (starting in Feb 2010) to work with the VEIL team to better understand the potential for similar projects in REIL.
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Startups during recessionsDo people start businesses more frequently as a result of recessions? You might think so, but a new study just released by the Ewing Marion Kauffman Foundation suggests otherwise.

The study Exploring Firm Formation: Why Is the Number of New Firms Constant? shows that the level of new firm formation has remained virtually consistent from year to year for more than 30 years.

Authors Dane Stangler and Paul Kedrosky of the Kauffman Foundation researched several types of data on company formation, beginning in 1977. These included employer firms as tracked by the U.S. Census Bureau and the Small Business Administration, firm startups tabulated by the Census Bureau, and new establishments (including existing firms adding locations) as tracked by the Census Bureau and the Bureau of Labor Statistics. No matter which type of data the authors studied, they found that the number of new companies launched each year varied by just 3 to 6 percent. In fact, the number of startups stayed fairly consistent even from quarter to quarter within a given year.
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pluGGd.inHype drives Hype – that’s what one gets to believe after reading Gartner’s Prediction for 2010 and beyond.

By 2012, 20 percent of businesses will own no IT assets.

The need for computing hardware, either in a data center or on an employee’s desk, will not go away. However, if the ownership of hardware shifts to third parties, then there will be major shifts throughout every facet of the IT hardware industry.

By 2012, India-centric IT services companies will represent 20 percent of the leading cloud aggregators in the market (through cloud service offerings).
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EurActiv Logo Europe's incoming innovation commissioner is pledging to tap the EU's structural funds to build research infrastructure and capacity. Máire Geoghegan-Quinn also revealed she would chair meetings of EU commissioners with responsibilities for innovation as part of her new "cross-cutting" portfolio.

Geoghegan-Quinn, who will take up the role of European commissioner for research, innovation and science if approved by MEPs, said she hoped to use €86bn of EU structural funds to beef up the so-called knowledge economy.
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GREG MIRONCHUCK/FOR THE STAR-LEDGER John Campbell survives on just five hours of sleep — and that’s on a good night.

But it’s apparently enough to fuel the 20-year-old college junior, who divides his time between running a successful sneaker shop in Boston and attending classes at nearby Babson College, where he heads the student government and maintains good grades.

"It’s tough to balance," said Campbell, a Plainfield native. "I never go out, pretty much, but I don’t mind."
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Will A Fear Of Going Public End The Innovation Boom?We've seen similar articles a few times in the past, but the NY Times has yet another story about how startup execs are less interested in going public than in the past, and suggests two key reasons:

1. The regulatory nightmare of going public, means that it's all paperwork and lawyers, rather than focusing on growth, innovation and markets. Sarbanes-Oxley remains a key problem here.
2. For startup founders, it's become a lot more tempting to just sell out to someone big -- because it's a lot easier, but can still earn you enough money to totally change your life.

Again, neither of these issues are all that new, but a decade ago, the focus for most startups was very much on building companies that could go public and standalone. Admittedly, in the dot com insanity, a ton of startups went public that had no business whatsoever being public standalone companies, but there's reason to fear that we've gone too far in the other direction.
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In this case, I am talking about early-stage investors and the sins that they sometimes commit when they decide to back a start-up company. I spend a lot of time engaged with such companies – and much of that time is spent working to set right things that were set in place when the first round of angel funding occurred. What follows is a partial list of ’sins’ and a few suggestions that might both mitigate their impact and improve the investors’ prospects.

CEO Compensation: I regularly come across pre-revenue companies that are paying the CEO at levels that would only be prudent if the company was generating a run-rate in the twenty to thirty million ranges. As a result, lots of the investment capital is going out the door in the form of a fat monthly check. CEO compensation should reflect the condition of the company and the unavoidable fact that, in start-up situations, cash is a very rarest of commodities and needs to be conserved.
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SEATTLE — Investors in technology start-ups have been trying to end the drought in initial public offerings of tech companies. But for entrepreneurs, has taking a company public lost its allure?

That question is growing louder among those who start, invest in and advise Silicon Valley start-ups. “I.P.O. has become a bad word in the Valley,” said Richard Barton, a founder and the chief executive of, a real estate site, and a venture partner at Benchmark Capital.

When start-ups grow up, the founders pay back their investors by selling the business to a bigger company or selling shares to the public. Public offerings have long been the more desirable option. They earn the founders and investors more money and the promise of continuing returns, and enable them to keep expanding the company.
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Some sweet deals and a bevy of venture financings marked a hectic week of presentations and networking at several conferences in San Francisco, including the annual JPMorgan Healthcare Conference. While many small biotech executives were buoyed by an upbeat mood compared to last year’s event, they are mindful that times are still tough, good deal terms are hard to get, and they must focus on those compounds in their pipeline that offer the most potential for near term revenue. Several executives also expressed cautious optimism that the capital markets will continue to grow more favorable, keeping the possibility of a successful IPO alive.

In the biggest deal of the week, Belgian biotech Galapagos (GLPGF.PK) entered into a $580 million global multi-year strategic alliance with Swiss biopharmaceutical powerhouse Roche (RHHBY.PK) to develop potential new therapies in chronic obstructive pulmonary disease, or COPD. Their agreement calls for Galapagos to apply its target discovery platform to discover novel COPD targets and assume the discovery and development of new small molecule candidate drugs against these targets.
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SINGAPORE: Plans are underway for Asia's first social stock exchange to be set up in Singapore.

US philanthropic organisation, the Rockefeller Foundation, is donating a sum of money to support the establishment of the social stock exchange. It is awarding US$495,000 to the Singapore-based agency, Impact Investment Exchange (IIX).

The grant will support research and proof-of-concept analysis that IIX will undertake prior to launch of the exchange.
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TThe Nation: Travelhis year Seoul is officially designated as the "World Design Capital" by the International Council of Societies of Industrial Design. The credit has to go to Seoul Mayor Oh Se-hoon who, under his leadership since 2006, introduced reforms that have turned Seoul into a design-driven city from where the Korean Wave continues to spread to other parts of Asia and beyond.

For Mayor Oh, Seoul is more than a design city. For him, Seoul is seeking to become a city of arts and culture too through his vision of "culturenomics", or promoting the city's creative economy. It will be the city where culture, modernity and tradition harmonise.

"Seoul boasts an endless series of beautiful mountains and an abundance of rivers and streams that harmonise wonderfully together with its 600 years of tradition in existence.
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( - India’s Minister for Human Resources Development, Kapil Sibal, visited Imperial College London yesterday to explore university innovation and the process of translating research into new technologies and applications.

The visit formed part of a five-day tour of the UK to strengthen educational ties between the two countries. It comes at a time when India is exploring ways to develop its higher education sector, including plans for ‘innovation universities’, the first tranche of which will centre on health, the environment and new technologies for power plants.

The afternoon of activities at Imperial aimed to provide the minister with an insight into the College’s approach to innovation, from pure research right through to its translation to the market place. Key strategies discussed included the creation of interdisciplinary institutes that draw together researchers with a range of expertise to jointly tackle issues such as sustainable energy, climate change, global health and security science. Mr Sibal also explored Imperial’s creation of the UK’s first Academic Health Science Centre, in partnership with Imperial College Healthcare NHS Trust, which integrates the administrative structures of the university and the Trust in a way that enables research findings to be turned into new therapies for patients much more quickly than previously possible.
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Mark GoldbergA paper out of the Public Policy Institute of California (PPIC) examines answers to "Does Broadband Boost Local Economic Development?"

Many might flame PPIC for daring to ask such a question, but with billions of dollars in public funds being spent by governments around the world, it seems appropriate for some science to be applied to study the benefits.

The federal government and the state of California, as well as other states throughout the nation, have made universal access to broadband service a public policy goal, assuming that multiple economic and social benefits will accrue from increasing broadband access.

The study found a positive relationship between broadband expansion and employment growth, but the benefits for local residents are ambiguous.
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Kauffman FoundationTuesday, January 19, 2010, everyone will have the opportunity to watch a live Webcast of the Kauffman Foundation's State of Entrepreneurship Address, taking place at the National Press Club in Washington, DC from 12:30 p.m. to 2:00 p.m. EST

Kauffman President and CEO Carl Schramm will assess the outlook for entrepreneurship in 2010, including the challenges facing new businesses and solutions for fueling job growth as part of the economic recovery.
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What's a second-stage company, you ask? Well, based on research from the Cassopolis, Mich.-based Edward Lowe Foundation, a second-stage company is a small business that has about 10 to 100 employees, and $1 million to $50 million in revenue.

The Lowe Foundation's research - as we explain in print this week - indicates that second-stage businesses are creating jobs, not just in Michigan but across the U.S., and the foundation is suggesting something called "economic gardening" as an economic development stratgey for state and local governments. That means supporting existing companies, not trying to lure new businesses in from outside the state. As the foundation's research has shown, the "hunting" method of economic development doesn't tend to result in net job creation. Gardening, on the other hand, does.
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