start-up nations - milken...
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Start-Up Nations:Building Co-Innovation Teams for Developing Economies &
Scaling Technology for Sustainable Development
Milken Institute Global ConferenceMay 3, 2017
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Developed and emerging markets trading places
Source: World Bank.
0
10
20
30
40
50
60
70
1990 1995 2000 2005 2010 2015
GNI (purchasing power parity international $, trillions)
Developed Markets
Emerging & Frontier Markets $60.3 trillion
$54.8 trillion
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InterdependenceGlobal economic growth is driven by both developed and emerging markets
Source: World Bank; growth weighted by GDP measured in PPP international $.
0
20
40
60
80
100
1990 1995 2000 2005 2010 2015
Share of Global GDP Growth (%) Emerging & Frontier Markets Developed Markets
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Socioeconomic leapfrogging
Source: World Bank.
0
0.2
0.4
0.6
0.8
1
1.2
1960 1970 1980 1990 2000 2010
Israel
Income per Capita Relative to the U.S.
Portugal
Korea, Rep.
Singapore
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But to leapfrog is the exceptionStuck in the middle-income trap
0
0.2
0.4
0.6
0.8
1
1.2
1960 1970 1980 1990 2000 2010
Malaysia
Income per Capita Relative to the U.S.
South Africa
BrazilMexico
Source: World Bank.
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Emerging markets at various stages of demographic change
50
60
70
80
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Israel
Working-Age Share of Population (%), Historical Estimates (1980-2015) and Projected (2020-2050)
IndiaChina
Nigeria
IndonesiaSouth Africa
Source: United Nations Population Division; projections are the “medium variant.”Note: MSCI classifies Israel as a developed country, not an emerging market
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Pre/early dividend countries need: job creation, human capital investment
Late/post dividend countries need: productivity gains (all factors of production), sustainable support systems for elderly
Demographic dividend or demographic bomb?
Source: World Bank, Global Monitoring Report 2015–16: Development in an Era of Demographic Change.
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The climate change investment financing gap
Source: Climate Policy Initiative Source: World Economic Forum
From an annual average of US$ 367 billion in 2013-2014
To a needed US$ 5.7 trillion annually
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According to analysis prepared by CITI
The sustainable development goals financing gap
Source: Jay Collins, “Closing the Gap”, September 2016, presented to Milken Institute-IFC Capital Markets Program, Center for Financial Markets.
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Yield gap for institutional investorsSources of capital for development finance
-1
0
1
2
3
4
5
6
2001 2003 2005 2007 2009 2011 2013 2015 2017
Government Bond 10-Year Yield
UK
U.S.
Germany
Source: Thomson Reuters (04/19/2017).
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Sources of capital for SD finance
Global fixed income market ($ trillion)
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U.S. public pension deficit is $3.4 trillion
UK aggregate pension deficit is £383 billion
U.S. defined benefit pension funds (cumulative returns rebased)
Underfunded contingent pension liabilities
Source: Financial Times, “Pensions: Low Yields, High Stress,” (August 2016); “Pensions & Bonds: the Problem Explained,” (August 2016).
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Major challenges of developing countries
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Why Israel? From challenges to expertise
Local challenges Acquired (niche) expertise
High-end R&D Capabilities
Technological Agro Sector
Innovative Industry
Globally competitive
Land scarcity
Water scarcity
Climate Adversity
Rural Development
Our challenges became global!
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What are we?
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Milken Innovation Center is a financial innovation think tank, deploying appropriate financial technologies and translating smart practices into scalable, market-oriented (pull) solutions.
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Based at the Jerusalem Institute for Policy Research, we focus on building financial solutions to enable Israel to move from the “start-up nation” to the “scale-up nation.”
What are we?
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What is our market?
What?
Why?How?
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How to finance? How to build? How to organize? How to manage?
What is the impact of poverty? What is benefit from education? What is cost of income inequality? What is impact of technologies on various sectors?
Why should the government be involved in solving social and economic problems?
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What do we work on?
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Environment
Impact Investing
Regional development
Brownfield reuse Infrastructure Regional financing Development finance
Global Competitiveness
Technology development in agritech, water, energy, environment, and health
Human capital development Capital markets International trade and development
Social capital markets Affordable housing Social impact bonds Community development finance Financial inclusion
Ecosystem services River basin financing Solid waste Green building Fuel alternatives
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How do we work?
Applied Research
Fellows Program
Innovation Labs Policy Results
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Skills Smart
practices
ReadinessGlobal reach Networks
Delivery
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Force multiplier: Milken Fellows alumni with former Fellows directing Ministry of Health and National Insurance Institute (2016)
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Research to results –Focusing on current policy challenges and delivering practical strategies that lead to results
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Milken Innovation Center2016 projects and progress
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2015-16 Fellows complete research2015-16 Fellows complete placement
Milken Global Conference in LA
2016-17 Fellows summer research
Global Fellows start placements in Israel
Financial Innovation Course commences at Hebrew
University
Hoover Institute water workshop at Stanford in California
New Tech trade mission on water to CA and LA-Green
Tech Incubator launch in LA
Water Innovations Field trip at UC-Davis
Agritech Financial Innovations Lab in Jerusalem
Innovations in water, agritech, and energy panel at AIPAC
Conference in DC
East Africa’s Capital Market
development Financial Innovations Lab in Kigali
Innovative Finance publication from
Rockefeller’s Bellagio Conference
Sustainable Water Report from Financial Innovations Lab
Kidron Cyber Archeology Field trip published by Oxford
University Press
Green Building alliance Conference – panel presentation
Policy Brief: Zooming out
IFC-MI Global Capital Markets Webinar begins from
Jerusalem
2016-17 Fellows placements begin
Policy Brief: Still Digging Out
MDP Program receives International Certification
Approval
Fellows alumni gather in Jerusalem
Globes Business Conference:
Sustainability and International Development
Panels
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California-Israel Global Innovation Partnership timeline
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2014 2015 2016 2017 2018
Global Fellows intern in Israel at technology companies, June-
August 2015
Milken Fellows interns at Ministry of Economy,
NewTech Office and Office of the Chief Scientist, Oct 2015
– July 2016
Business, research, and financial innovation co-
innovation teams to implement pilot projects, July 2016 to June 2017
Memorandum of Understanding (MOU) signed between California
and Israel, March 2014
Financial Innovations Lab on Sustainable Water
Solutions for California, July
2015
Policy co-innovation team work on program and
financial recommendations, October 2015-April 2016
Global Fellows intern in Israel at technology
companies, July-August 2014
Policy, finance, business, and research stakeholder kick-off workshop in San Diego, June
2014
Policy and industry co-innovation team to visit Israel,
June 2016
Financial Innovations Lab on agritech innovations for California and Israel, June
2016
Global Fellows intern in Israel at technology
companies, June-August 2016
Financial Innovations Lab on energy innovations for
California and Israel, June 2016 MDP Program
commences
Financial Innovations Lab on Accelerating
Biomedical Innovation and
Commercialization, March 2015
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California-Israel Global Innovation Partnership -leveraging in the hub
Israel CaliforniaMOU
Milken Innovation Center
University of California
Biomedical Lab, Mar 2014
Water Lab, July 2015
Agritech Lab, July 2016
Green Building Lab, Sep 2015
Energy Lab, Sep 2017
Master in Development Practice (Israel) Program, 2017-2022
Global Fellows, 2014+
Development Impact Labs
Senior Fellow Exchange Program
UC-Israel Innovation
Authority R&D MOU
Blum Center Practitioner in
Residence
Green Energy Co-innovation
partnership
International Development and
Trade Platform (with Ministry of
Finance/Economy)
Blum Center for Developing Economies (Jerusalem)
California-Israel Water and Agritech co-innovation
partnership
80+ water projects in towns, farms, and water districts in
California
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30 Global MDP programs: none inthe Eastern Mediterranean or Middle East
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Hebrew University’s Global Master’s in Development Practice (MSc-DP)
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Cal-Israel Global
Innovation Partnership
Hebrew University of Jerusalem
Milken Innovation
Center
University of California, Berkeley
• Financial Innovation Labs• Israel Fellows Program• MDP Program• Innovative Finance for Developing
Economies Course• Field Seminars (Israel, Cal,
Africa, Asia, Latin America)
• Practitioners in Residence• Israel-UC R&D Partnership (MOU)• Development Impact Labs• Field Work Assignments (Summer
Practicums)• Global Fellows• Curriculum Development
• Faculty/ Senior Fellows Exchange• Co-innovation research teams• Environmental Leadership Program• UCOP-Israel Innovation Authority R&D MOU• Big Ideas @ Hebrew University
• Joint Effort with International School of Agricultural Sciences, Graduate School of Business Administration, and Ag Faculty Department of Environment Economics and Management
• First Master’s of Development Program in Eastern Mediterranean and Middle East
• Aligned with UN Sustainable Development Goals and Climate Smart Agriculture Development (COP-21)
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Hebrew University’s Global Master’s in Development Practice (MSc-DP)
Jerusalem Institute / Milken Innovation Center
Hebrew University / Faculty of Agriculture, Food and Environment /
International School
Overall consulting role on academic content and faculty
Selected mentors, content experts, and faculty specialists
Recruitment Selection Workshops Seminars Skills building Field placements
Registration Academic administration Logistics and operations
support (Visas, residences, travel, etc.)
Academic curriculum
Applied research Financial Innovations Labs Joint venture project development Policy development and consulting
1. Allocate credits for training content 2. Manage receivables and payables3. Coordinate joint advancement
(development)
Roles
Key responsibilities
Participation and Experience
International science and labs Academic/industry research initiatives
Hebrew University / Faculty of
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Global Fellows field studies
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Two-part pilot project in off-grid Burundi
• Street lighting mini-grid• Community mini-grid
• Anchor-Based Consumer Model
• Phase 2: connect school and medical clinic
• Additional SHS component
• Long-term goal: create a replicable model to ultimately reach 1 million Burundians
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Agritech Financial Innovations Lab Jerusalem, June 2017
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Agritech –barriers along the value chain
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Agritech –intervention along the value chain
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Agritech –solutions along the value chain
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Agritech –climate smart solutions
Environmental Impact Bonds Revolving Loan Fund +
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Agritech –climate smart solutions
Guarantees Tax Credits
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Agritech –research backed obligation
Technology Transfer Office Available IPsYissum 16Carmel 2Yeda TTO 9Volcani 3T3 Technion 2Ramot 4Total 36
• IP’s available in Israeli Technology Transfer offices are
• IP’s available with University of California is 142
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Water Sustainability Financial Innovations Lab
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Water sustainability barriers & solutions
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Water Sustainability Solution Concept for Farmer
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Water Sustainability Solution Concept for Municipalities
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Water Sustainability Solution Concept for Industry
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UCOP-Israel Innovation Authority MOU 2.0March 1, 2017 UC Berkeley
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Research to results – case illustrations
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Financial Inclusion
Frame the opportunity Almost 9% of population excluded from banking services; bank alternatives underfunded and risky; limited capacity and fragmented services among community lenders; whole social sector market is 5.6% of GDP; 15% of labor force
Identify barriers, market Credit reporting limited; limited competition; heavily regulated and restricted sector; mobilized social investment in community development
Identify smart practices Community development financial institutions as a model for community-based social investment; crowdsourcing community lending; connect small retail social investorsBuild community note platform to global social investors; create 1st loss reserve structure to wrap investment pool; create sustainable flow of new capital into social capital market
Model solutions Build community note platform to global social investors; create 1st loss reserve structure to wrap investment pool; create sustainable flow of new capital into social capital market
Develop roadmap forward Create special purpose vehicle (limited partnerships) with anchor social investment institutions in Israel and abroad and international securities distribution network 43
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Saving water
Frame the opportunity Drought conditions in Israel; California; world - 40% of world’s population in water-stressed regions; majority of hospital admissions world-wide linked to water availability and quality; one-third of world’s aquifers at negative recharge
Identify barriers, market failures Damaged aquifers; long transport; high cost; technology risks; legacy burdens; fragmented ownership; cost versus value
Identify smart practices Integrate IT; leverage new water sources – recycling and desalination; infrastructure as a performance-based service; institute continuous invention and innovation; systems approach; long term perspective
Model solutions Models – bundled solutions create scale and efficiency; create capital structure that incentivizes good performance; demonstrate technology solutions at scale; leverage energy/water connection
Develop roadmap forward Program and policy working groups; LA incubator; irrigation clearinghouse; program and regulatory adjustments; mobilize private public partnerships for new business models44
Research to results – case illustrations
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Accelerating biomedical solutions
Frame the opportunity Demand for focused, orphan drugs solutions; growth in chronic illness in developed and developing world market; large upside on success; long term debt capital sources looking for non-correlated investments; 1,000 companies in sector, one-third since 2010, and almost 40% generating revenues. Israeli pharma IP produced over $29 billion of the $120 billion global bio-pharma industry
Identify barriers, market failures
Long lead time; expensive testing and trial process; premature sales and exits; low probability of success; equity model is impatient
Identify smart practices Portfolio approach; create scale; increase attempts; spread infrastructure costs for testing; involve industry partners; build solutions, not companies; leverage philanthropic investors to leverage market investors
Model solutions Deploy scaled-up debt-based model with long-term, low-cost returns, instead of equity model; recapture royalties and license fees; reinvest in earlier stages to improve throughput
Develop roadmap forward Create pipeline partnerships among technology transfer offices; build demonstration mega fund; create public-private-philanthropic partnership for reserve funding; launch new securities in capital market with international focus (investors and projects) 45
Research to results – case illustrations
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COMPASSION, INNOVATION & THE FIGHT
AGAINST POVERTY
By Richard Blum
Milken Institute Global Conference May 2017
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“Dick masterfully describes guiding principles and examples of what we know works best in the field in the fight against poverty.”
- President Jimmy Carter, from the Foreword
“A rousing, high-octane tour of an extraordinary life. If you’re wondering how to make the world a better pace, this book will inspire you.”
- Jon Krakauer, best-selling author
“His chapter on reviving two moribund financial institutions in Asia is destined to become required reading in courses on strategy and international management.”
- Walter Isaacson, best-selling author
“A moving account of what Richard and his colleagues have achieved in their effort to promote development and happiness. Much to emulate and admire.”
- His Holiness the Dalai Lama
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Looking to the future We take care of people in the Himalaya who are in need and have no one else. How? By working in a way that respects both tradition and innovation. By opening doors to education and health care. By building stronger communities and
developing lasting, trusting partnerships. By giving people opportunity, and hope. www.himalayan-foundation.org
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Training Leaders1,000 students have received the Global Poverty & Practice minor
UC Berkeley’s interdisciplinary hub for poverty action, creating real-world solutions to combat poverty
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Training Leaders1,000 students with Global Poverty & Practice minor
Reinventing Education16,000 students have taken our courses
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Achieving ImpactStudent winners have attracted $200m in venture capital
Spurring InnovationOver 100 projects in 60 countries
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Training Leaders1,000 students w/ Global Poverty & Practice minor
Reinventing Education16,000 students have taken our courses
Spurring InnovationOver 100 projects in 60 countries
Achieving ImpactStudent winners have attracted $200m in venture capital
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THE UC SYSTEM BLUM NETWORK: THE POWER OF 10