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.

©IC2 Institute, The University of Texas at Austin 19

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?

©IC2 Institute, The University of Texas at Austin 22

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

©IC2 Institute, The University of Texas at Austin 23

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  

©IC2 Institute, The University of Texas at Austin 25

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

©IC2 Institute, The University of Texas at Austin 26

Partial Deal Map

The Gyeonggi Innovation Program Results

©IC2 Institute, The University of Texas at Austin 27

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?

©IC2 Institute, The University of Texas at Austin 28

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

 

©IC2 Institute, The University of Texas at Austin 29

30

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

©IC2 Institute, The University of Texas at Austin 30

•   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 gpogue@ic2.utexas.edu +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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