Testimony to European Parliament

Testimony to European Parliament Mini Hearing on: Innovation Union Transforming Europe for a Post-Crisis World ITRE Committee Dr. Burton H. Lee PhD MBA Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering Managing Director, Innovarium Ventures Silicon Valley, CA Burton.Lee@innovarium.net Brussels, Belgium February 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 Copyright 2011 Burton H. Lee and Innovarium Ventures 2

Topics Professional Background Connecting Europe to Silicon Valley Commercialization of FP Research Outcomes Financing Innovation Other Issues that Deserve Attention February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 3

Professional Experience European and US Innovation Policy Lecturer in European Entrepreneurship & Innovation, Stanford Engineering School FP7 Expert Evaluator FP7 Space evaluations (2 nd 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 Copyright 2011 Burton H. Lee and Innovarium Ventures 4

http://www.europeanentrepreneursatstanford.com http://me421.stanford.edu February 10 2011 5

European Partner Countries, Regions & Companies Speakers 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 Valley Global Center for Innovation Europe We lead the world in innovation finance, new innovation models, disruptive ideas, and rapid scaling of technologies and companies to a global level. India Silicon Valley China The world countries, regions, cities, universities and companies all come to Silicon Valley to learn new innovation models, new technologies and new ideas. Latin America And they all come to Stanford to see how we do it February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 9

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 February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 10

Silicon Valley Global 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 February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 11

Silicon Valley & European Innovation Ecosystems Key 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 February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 14

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 February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 16

An FP Commercialization Framework is Needed Paths from Research to Marketplace Introduction These Stages Currently Not In Place within EU Research Framework Research Basic & Pre-Competitive FP8/FP7 Productization From Laboratory Concept to Prototype Demonstration [ Not always possible with FP8/FP7 Projects ] Market Introduction Startup Companies Established Firms February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 17

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 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. February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 18

Commercialization of FP Research An 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 researchderived IPR into small companies February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 19

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? February 10 2011 Copyright 2011 Burton H. Lee and Innovarium Ventures 20

EU Innovation Policy Other 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 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 Copyright 2011 Burton H. Lee and Innovarium Ventures 21

Follow On Reading/Inquiries Irish Innovation Taskforce Final Report Complete text of Final Report available online: http://www.taoiseach.gov.ie/eng/inno vation_taskforce/ Stanford program on European Entrepreneurship & Innovation 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: Burton.Lee@innovarium.net Based in Palo Alto, CA near Stanford University Bio/References: LinkedIn Profile Lecturer, European Entrepreneurship & Innovation, Stanford School of Engineering February 10 2011 Copyright 2010 Burton H. Lee and Innovarium Ventures 23