Building and Growing Innovation
Ecosystems
Dr. Gregory P. Pogue July 30, 2014
Bienvenidos from Austin!!!
Hook ‘em Horns!
©IC2 Institute, The University of Texas at Austin 2
Why Austin?
• According to Geekwire, Austin, TX is THE BEST place to start a company based on key business metrics (see !gure above).
• CNN Money, Under30CEO and other expert business sources rank Austin as THE BEST place to start a business in the US.
• It is the home of The University of Texas, South by Southwest Interactive, Austin City Limits, the “Live Music Capital of the World,” where Formula One and MotoGP happen in North America, and lots more…
• It is a great laboratory for learning entrepreneurship from those who practice it every day! ©IC2 Institute, The University of Texas at Austin 3
2. Seattle S: $96,197 I-‐T: 0.00% S-‐T: 9.50% P-‐T: 1.38% H: $395,800 Sq/Ft: $28.88
7. SF Bay Area S: $144,828 I-‐T: 13.30% S-‐T: 8.75% P-‐T: 1.10% H: $805,500 Sq/Ft: $44.88
3. Boulder S: $93,590 I-‐T: 4.63% S-‐T: 8.21% P-‐T: 0.66% H: $453,000 Sq/Ft: $21.50
5. Boston S: $102,230 I-‐T: 5.3% S-‐T: 6.25% P-‐T: 1.31% H: $396,300 Sq/Ft: $46.26
4. New York S: $98,541 I-‐T: 8.97% S-‐T: 8.88% P-‐T: 1.11% H: $535,900 Sq/Ft: $47.20
6. Washington DC S: $100,488 I-‐T: 8.95% S-‐T: 8.21% P-‐T: 0.85% H: $443,500 Sq/Ft: $49.40
1. AUSTIN, TX S: $93,240 I-‐T: 0.00% S-‐T: 8.25% P-‐T: 1.74% H: $206,300 Sq/Ft: $25.54
S: Average Tech Salary S-‐T: Sales Tax H: Average House Cost I-‐T: State Income Tax P-‐T: Property Tax Sq/Ft: OfOice rental per sq/ft
Overview of Presentation
• Investigation • Innovation
• Pre-Incubation • Technology transfer
• Incubation • Incubators
• Acceleration • In-Country Markets
• Growth • International Markets
©IC2 Institute, The University of Texas at Austin 4
Innovation-Based Economic Process
©IC2 Institute, The University of Texas at Austin 5
Commercialization Ecosystem
Education, Research and
Technology Transfer
Philanthropic Entities
Markets and Business Relationships
Government Policy
and Action
Innovation Economic Impact
Incubation and Wisdom
Funding Institutions
Basic Research
Licensing Start-Up Sponsored Research
The Galapagos Archipelago
©IC2 Institute, The University of Texas at Austin 6
The Galapagos Value
• Projects Ecuador’s leadership in eco-tourism
• Provides unique resources to understanding natural diversity
• Preserves most original biodiversity due to late human influence
• Human impact increases on the archipelago by locals and bio-tourism
• How to conserve the Galapagos as "a natural laboratory of evolution”?
©IC2 Institute, The University of Texas at Austin 7
Protecting the Value of the Asset
Protect the Asset
with Policies: • Policy for visitors,
boats, & tourists
• Policy for ecology conservation
• National sovereignty & governance
• Share value
Define the Asset:
• Land reserve:
7,882 sq km • Marine reserve:
50,000 sq km • 95% of island is
protected lands
©IC2 Institute, The University of Texas at Austin 8
Define the
Asset
Protect the
Asset
Value Creation • Tourism
• Fishing
• Job creation
• Economic impact
• National reputation
• National resources
From Asset to Value
©IC2 Institute, The University of Texas at Austin 9
Protecting Intangible Assets – Knowledge, Innovation
Protect the Asset
with Policies: • Intellectual property
policy and compliance
• Determine regions to seek protection
• Court protection rules
• Share value
Define the Asset:
• Unique design,
process, composition or steps
• Compare with
literature and product • Determine best
monetization strategy ©IC2 Institute, The University of Texas at Austin 10
Define the
Asset
Protect the
Asset
Value Creation • Company-university
relationships • Technology or
product licensing income
• New companies • New jobs • Tax revenues • Shared value
From Asset to Value
©IC2 Institute, The University of Texas at Austin 11
The Innovation Reef: the IC2 Institute Ecosystem
• Business acceleration is not as much about space or services as proximity
• Proximity to a high diversity of wisdom, business, and capital providers
• Impact is ~$150M/year in economy – from Central Texas to the world
• Our focus: learning how the ecosystem works and how and what to replicate in other locations ©IC2 Institute, The University of Texas at Austin 12
Incubation Ecosystem Analogy: The Coral Reef
• Aggregate dilute resources to form complex ecosystem
• Structure to build complex environment
• Provides protection from large predators
• Form mutualistic interactions among ecosystem players
• Grow and expand through recruitment and structural mechanisms
Coral Reef Analogy
Dilute, low diversity life
Nexus point: maximum life and diversity
Dilute, large life forms
©IC2 Institute, The University of Texas at Austin 13
Austin Technology Incubator: Explicit ROI
We Get You Funded!!! ©IC2 Institute, The University of Texas at Austin 14
ATI Network Structure
• ATI Cluster – 27 persons on average (full time and student associates)
• ATI Entrepreneur Alumni Reunion Cluster – 223 individuals
• ATI Core Advisor Cluster – 338 individuals • 553 defined individuals (526 outside ATI) • Broader access to Austin Community
©IC2 Institute, The University of Texas at Austin 15
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Operationalizing the ATI Network
Core Advisor Cluster
ATI Alumni Cluster
Shared between Clusters
Broader Community
ATI Constituents
©IC2 Institute, The University of Texas at Austin 16
Refined Analysis
• Success Committees Analyzed: 9 • Participants: 85 (less ATI – 63 persons) • Average number of outside participants: ~8 • Proportion drawn from Core Advisor Cluster: ~60% • Proportion drawn from ATI Entrepreneur Alumni Cluster:
~10% • Proportion drawn from Broader Community: ~30% • Reuse of talent: 1.14 attendees attending other events • ATI builds a rich and diverse talent network uniquely
fitted for its companies to facilitate funding from four distinct clusters: – the ATI team, Advisor Core, Alumni and broader Austin Community
©IC2 Institute, The University of Texas at Austin 17
Reef Efficacy: Acceleration of Companies to Capital
(2010-2014)
• Worked/Trained 70 companies (admitted ~1/15 applicants)
• Find funding for 85% companies in incubator • Facilitated >$500M investor capital raised (7years)
• Saw >$500M in local company exits (7 years)
• Produced >880M in local economic impact (10 years)
• Created >6,500 jobs/year, direct and indirect (10 years)
• Returned $67 for every public $1 invested in ATI (4 years)
• Worked with 80 student entrepreneurial teams (4 years)
©IC2 Institute, The University of Texas at Austin 18
ATI Funding Map – Class of 2012
• ATI brings Central Texas innovations to the world and the world’s investors to Central Texas.
• Efficiency Example: 2013 Q1: Out of the $37M in VC and Angel Capital raised among Austin organizations, $35M came to ATI-associated companies.
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Developing an International Reef Strategy
Austin, TX Costa Rica
Turkey
Chile
Korea Colombia
Mexico
Portugal
India
US
Network-based strategy for incubation of companies to accelerate commercial success. ©IC2 Institute, The University of Texas at Austin 20
Facilitating Technology Transfer in Colombia
• Development of Technology Transfer Offices in: – Medellin, – Bucaramanga, – Bogota
• Accelerating SMEs in Medellin to international markets • Development of Collaborative Technology Transfer
Model: Medellin and Bogota • Launch of Collaborative Technology Transfer Model
training: Colciencias • Developing “Go to Market” and “Dealmaking” training:
Innpulsa ©IC2 Institute, The University of Texas at Austin 21
Need for International orientation
Shifting from agricultural to industrialized mindset
Foster environment for SME creation and growth
Sustained revenue for growth for SMEs.
What Challenges Do Both Korea and Ecuador Face?
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Having World Class Companies is Not Enough…
• Current Challenges: • 70% of the GDP is
concentrated in 60 companies • These make up ~14% of
companies in Korea • These employ only 5% of the
population • The SME/MME’s are
squeezed by pricing and profit constraints
• New means for revenue and employment are needed
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Small and Medium Size Enterprise Growth Initiative.
Strategy: • Recruit and Evaluate • Simultaneous training • Competition-‐based selection
• Find Oirst international customer(s) for selected companies outside of Korea
• Facilitate new revenue sources through international advocacy.
Gyeonggi Innovation Program • 2008-‐2014 • Partners: Governor’s OfOice and Gyeonggi Small & Medium Business Center
• IC2 Institute of The University of Texas at Austin as key partner
• Program has grown to 2 other states and 3 research centers in Korea ©IC2 Institute, The University of Texas at Austin 24
GDL/sdl SDL/gdl
Changing Entrepreneurs’ Perspectives
B
Value creation
Actor 2 Actor 1 C
Value Creation
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Results
From 2008-2013, • 500 innovation/product/companies reviewed • >110 companies trained, • 66 international business deals accomplished.
• Export revenue cannot be reported due to government request, but estimated at >$80M.
The Gyeonggi Innovation Program Outputs
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Partial Deal Map
The Gyeonggi Innovation Program Results
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Need for International orientation and market access
Shifting from research to innovation mindset
Foster environment for SME creation and growth
Develop innovation culture and technology transfer strategies
What Challenges Do Both Portugal and Ecuador Face?
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1. Development of a globally competitive and sustainable commercialization infrastructure
2. Facilitate networking among researchers, TTO’s, entrepreneurs, commercialization experts, angels/VCs, and academic leaders
3. Provide hands-on training through real-life commercialization experiences
4. Offer U.S. market soft-landing and promote business development activities for Portuguese university-based startups
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Building a Technology Transfer Network
All public universities involved,
as well as those of leading Science
Parks, Incubators, Polytechnic
Schools and Research Laboratories
30+ UTEN Network members
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• 50+ specialized training and networking events (1500+ par4cipants) • 30+ internships in Texas • 100+ startups assessed • 49% increase of inven4on disclosures within universi4es • 1,900% increase of provisional patents from universi4es
• 19.6% increase of patents granted/year
• 26% increase of university executed licenses and agreements/year
• 137% increase license income at universi4es
• 132% increase on new academic spinoffs • Academic startups: 127% annual growth rate in revenue; 37% of startups export
products; 38% annual growth rate in hiring
UTEN overall impact (2007-2010)
Source: UTEN annual report 2010/2011
Learnings: Reef-Based Incubation
• Full Ecosystem Required – Technical expertise, business skill, training, service capabilities provided to develop company readiness
• Networks Essential – relationships decrease the distance between companies and capital/revenue accelerating deals
• Open System – participants can come and go within ecosystem • Expert Generalists – provide added openness and improved
connectivity with outside participants • Stakeholders – participants transition to stakeholder status by
mutual agreement • Business Driven – actual financial outcomes are the measure of
success • Leadership Creates Structure – provides reef environment and
incentives for participants to join and find reward ©IC2 Institute, The University of Texas at Austin 32
Thank You!!!
Gregory P. Pogue, Ph.D. Deputy Director and Senior Research Scientist IC2 Institute The University of Texas at Austin [email protected] +1 (512) 560-3717 (cell) +1 (512) 475-8961 (office) Skype ID: pogo5708 www.ic2.utexas.edu
J. A. Muñoz Orellana University Granada
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