testimony to european parliament - burton lee - brussels - feb 10 2011 - final
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Testimony before the European ParliamentObservations on EU Innovation Policy
Mini Hearing:
Innovation Union – Transforming Europe for a Post-Crisis World
Industry, Research and Energy (ITRE) Committee
Dr. Burton H. Lee PhD MBALecturer, European Entrepreneurship & Innovation, Stanford School of Engineering
Managing Director, Innovarium Ventures | Silicon Valley, [email protected]
Brussels, BelgiumFebruary 10 2011
The opinions presented herein are those of the speaker alone, and do not represent official policies or statements of Stanford University
February 10 2011 2Copyright 2011 Burton H. Lee and Innovarium Ventures
Topics
• Professional Background
• Connecting Europe to Silicon Valley
• Commercialization of FP Research Outcomes
• Financing Innovation
• Other Issues that Deserve Attention
February 10 2011 3Copyright 2011 Burton H. Lee and Innovarium Ventures
Professional Experience
European and US Innovation Policy• Lecturer in European Entrepreneurship & Innovation, Stanford Engineering School• FP7 Expert Evaluator
– FP7 Space evaluations (2nd year)
• Cooperation projects with European Commission @ Silicon Valley– DG ENTR “Innovation Bridges” conference, May 2010
• Irish National Innovation Taskforce, Dublin, Ireland– June 2009 – March 2010
• Recent Talks on Innovation Policy– Office of the Prime Minister, Tallinn, Estonia– National Research & Innovation Council - Helsinki, Finland– Agency for Science, Technology & Innovation - Copenhagen, Denmark
• Recent Professional Engagements– Denmark’s Central “Midt” Regional Authority – innovation ecosystem assessment– Angel Investor Training Workshop, Finland
• University: University of Munich (LMU)• SBIR Program Reviewer (Small Business Innovative Research)
– National Science Foundation (NSF)– National Institutes of Health (NIH)
• Innovation Policy Advisor, Gov. Bill Richardson, Presidential Campaign (2008)
February 10 2011 4Copyright 2011 Burton H. Lee and Innovarium Ventures
February 10 2011 5
http://www.europeanentrepreneursatstanford.comhttp://me421.stanford.edu
European Partner Countries, Regions & CompaniesSpeakers in Stanford Engineering ME421 Graduate Course
2009 - 2010 - 2011
Connecting Europe to Silicon Valley
What is Silicon Valley, Precisely ??
• 2.9 Mn inhabitants
• 4 Counties, 40 municipalities
• 1.3 Mn jobs
• Growth areas:– Industrial/Energy
– Media & Entertainment
– Biotechnology
– Medical Devices
• 40% of US Venture Capital investment in 2010
January 17 2011
Silicon ValleyGlobal Center for Innovation
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Silicon Valley
ChinaIndia
Europe
LatinAmerica
The world – countries, regions, cities, universities and companies – all come to Silicon Valley to learn new innovation models, new technologies and new ideas.
We lead the world in innovation finance, new innovation models, disruptive ideas, and rapid scaling of technologies and companies to a global level.
And they all come to Stanford to see how we do it
What We Do in Silicon Valley
• We build and grow companies to a global level faster –and more efficiently – than anywhere else in the world
• We create more new jobs and industries – faster – than anywhere globally
• We look for disruptive ideas, technologies and intellectual property that can be scaled globally
• We do world class research and technology development
• Silicon Valley is where the World Learns First new approaches to innovation– And where China, Japan, Korea, Singapore and India come to learn
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Silicon ValleyGlobal Center for Innovation
• Silicon Valley is a Strategic Region for Europe– Part of the European Innovation Ecosystem
• Large expat community
– Major center of European govt operations• Ireland, Finland, Denmark, UK, Norway, Estonia, Czech Republic,
Netherlands, selected regions
– Major center of European technology activity• European entrepreneurs and VCs - in large numbers• European enterprises - major multinationals
– Orange, Siemens, Daimler, Bosch, BMW, SAP, Nokia, Roche, etc
• Most European countries and regions, however, are insufficiently engaged in Silicon Valley– Companies – particularly mid-sized firms– Universities – with a few notable exceptions– Research Institutes
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Silicon Valley & European Innovation EcosystemsKey Differences
• Culture– Attitudes towards risk and failure– Attitudes towards work vs play vs private life– Attitudes towards sharing of information– Asking permission before acting vs looking to government for thought leadership– Optimism vs skepticism– Openness vs Closed
• Speed– Processes and decisions much faster in Silicon Valley
• Government role– Minimal intervention from federal, state and local governments
• Institutions– Broader diversity of institutional models and sizes in US; more flexibility of action
• Markets– Lower transaction costs, greater liquidity, larger, more markets
• Scale, Size and Critical Mass• Networks
– Strong hubs, dense and efficient messaging, global, rapid formation
January 17 2011
Why Silicon Valley is Important for Europe
• Quicker scale-up and globalization of new companies– Venture capital, talent, customers, markets
• Customers and markets for existing indigenous companies• Access to latest technology in most domains• Thought leadership at a global scale often starts here• Training of European scientists, entrepreneurs, investors
and executives• Alternative university innovation models and practices• Hub of the global business network• Close ties to Asia
– China, Singapore, Korea, India, Japan
• Importance of Silicon Valley is increasing– New EU regions coming to Silicon Valley on a regular basis
January 17 2011
Major Recommendations
• EU Innovation and Research Strategy should consider how to directly engage with Silicon Valley
• Europe is not on par with China, India and Japan in its engagement with Silicon Valley institutions– The EU is falling behind in the global innovation
race
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Commercializing FP Research Outcomes
Commercialization of FP Research• Major disconnects between research and commercialization exist today
– A broad framework for coupling research and commercialization of related IPR is needed if Europe is to achieve its job creation goals for 2020
– Without explicit connection between research & commercialization, European Union will lose the opportunity to create thousands of new jobs on a sustained basis
– Commercialization is not possible in many FP7 projects (due to nature of basic research), but is possible in projects that are closer to industrial application
– Absence of formal linkages demonstrates lack of understanding of research, and the low value given to research programs and outcomes
– Apparent ideological opposition to linking research and commercialization in academic and policy-making communities seems rooted in attitudes that “public monies should not generate private returns”, & “universities must remain pure”
– Little or no coupling of research program performance assessment with program outcomes
• EU research programs (FP7, etc) must have clearly defined connections, routes and steps to commercialization paths, where appropriate– Coaching and mentoring– Investors: angels, VCs– Incubators
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An FP Commercialization Framework is NeededPaths from Research to Marketplace Introduction
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Research
“Basic” & Pre-Competitive
FP8/FP7
Productization
From LaboratoryConcept toPrototype
Demonstration
[ Not always possible withFP8/FP7 Projects ]
Market Introduction
Startup Companies
Established Firms
These Stages Currently Not In Placewithin EU Research Framework
Example Steps to Bring Commercial Objectives in FP Research Programs
• FP8/FP7 Recommendations– Call criteria and documentation
• Include “commercial potential” as a formal criterion to be considered• May not apply to all FP project areas – should not discourage basic research with no clear
commercial outcomes
– Expert Evaluator directions• Include “commercial potential”
– Expert Evaluator selection• Broaden selection panels to include industry experts:
– Angels, VCs, tech transfer, entrepreneurs, enterprise managers
– Improved Visibility of FP Project Outcomes• Central repository/database that is open to the public
– FP-generated Intellectual Property: patents, licensing opportunities, know how– Other FP-related documentation and information
• Tracking of FP outcomes (within reason)– IPR generated– Companies started– Revenues/sales generated– Private investment raised– Jobs created
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Caveat: FP7/FP8 are complex programs, with substantial differences across the various FP topic areas. This proposal deserves careful study and extensive consultations with stakeholders prior to rollout.
Commercialization of FP ResearchAn Initial Test Case?
• FP7 Space and European Space Agency– Early and “easy” test case of FP commercialization?– ESA Innovation Ecosystem
• Incubators• Angel Investors – EBAN Relationship• Venture Capital
– Open Skies Technology Fund
– Link FP7 Space to ESA Network
• SBIR (Small Business Innovative Research)– US model for rapid commercialization of research-
derived IPR into small companies
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Financing Innovation
• Angel Investing– Incentives to seed stage investment in technology startups– European Business Angel Network (EBAN) trade association policy
recommendations have broad merit
• Venture Capital– Incentives to capital formation are needed– European Venture Capital Association (EVCA) policy recommendations
deserve serious scrutiny by European Union institutions
• Innovation Incentive Prizes– Extensively used by US govt agencies to accelerate breakthroughs in
key technologies• NASA, NSF, DARPA, White House
– European Innovation Incentive Prizes Foundation• Model after US X-Prize Foundation?
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EU Innovation PolicyOther Issues that Deserve Attention
• Product design teaching and research programs in engineering and medical schools– Elevate status of product design to formal engineering discipline & domain– Not taken seriously in many European universities and companies
• Exceptions: Germany, Netherlands, Denmark, Sweden, Finland, UK
• Provide financial support to Student Entrepreneurship Societies at top 100 universities in Europe– Develop stronger innovation stakeholder communities inside universities
• University reform– Current university models are major bottleneck to innovation in Europe– Accelerated shift to innovation-centric models is needed– Generally is ignored as part of innovation policy, currently outside EU purview
• EU Innovation Center in Silicon Valley– Support for Internationalization of European SME’s (DG ENTR)– Long term base for understanding Silicon Valley innovation ecosystem, & developing
relationships with other US and Asian clusters
• Studies that are needed– Silicon Valley impact on job creation in Europe– Impact of ICT utilization and social media use & firm valuations/performance
February 10 2011 21Copyright 2011 Burton H. Lee and Innovarium Ventures
Follow On Reading/InquiriesIrish Innovation Taskforce Final Report
• Complete text of Final Report available online:– http://www.taoiseach.gov.ie/eng/Inno
vation_Taskforce/
• European Entrepreneurship & Innovation @ Stanford
– http://me421.stanford.edu
February 10 2011 Copyright Burton H. Lee/Innovarium Ventures 2010 22
Working in Silicon Valley, Europe, Latin America and Washington DC
• Senior financial, technical and strategy advisory services for global technology innovation organizations• Professional Services
– Technology startup and growth companies• Interim CXO and Advisory Board roles• Expert guidance & decision-making at the interface between market/customers, technology and finance• Business development – industrial and government• Business plan preparation/research/review; Government Grant proposal preparation/review• Coaching and mentoring of CEOs and other CXO-level managers• Assistance with government regulatory and policy agencies
– Angel, venture capital and private equity Investors• Fund strategy, team selection and market positioning• Due diligence: technical, financial, strategy and business models
– Public and non-profit R&D laboratories• Technology transfer & partnerships; venturing and spin-out of companies; strategy and business development; grant applications
– Research universities• Innovation-related models, policies and practices• Technology transfer and licensing; industry partnerships and relations; development and strategy; grant applications
– National and regional government agencies• Innovation policy formulation, analysis and review; cluster development strategy; economic impact studies• Science & technology policy formulation, analysis & review: space, aviation, nanotechnology, software/AI/robotics, manufacturing
• Selected recent clients– US/European technology startup companies – alternative energy, robotics/AI, software, Internet, nanotech– Venture and private equity funds – aerospace, nanotechnology, ICT, computing, advanced materials, clean tech– Office of the Prime Minister, Ireland; European Commission; National Science Foundation; NASA, National Academies
• Dr. Burton Lee PhD MBA, Managing Director– Contact: [email protected] Based in Palo Alto, CA near Stanford University– Bio/References: LinkedIn Profile– Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering
February 10 2011 23Copyright 2010 Burton H. Lee and Innovarium Ventures
• Thank You !!
• Dr. Burton H. Lee PhD MBA
– http://me421.stanford.edu
February 10 2011 24Copyright 2011 Burton H. Lee and Innovarium Ventures