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Presentation by Mike Bartlett, founder of the North Texas Angel Network and President of Vital Art and Sciences Inc.
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Innovation in
Small Companies
Mike Bartlett
MIT Enterprise Forum DFW
2
The Pace of Innovation is Increasing
March 29, 2012 Mike Bartlett 2
Innovation Outsourcing
“No internal R&D group can possibly predict, evaluate or cover all possible designs or competitive positions.”
Outsourcing Innovation: The New Engine of Growth
by James Brian Quinn, July 15, 2000
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Why Outsource Innovation?
• Big company overhead and inertia.
• Keeps the R&D cost off the books.
• Small companies don’t own a factory.
• Buying a company gives good press.
Innovation in most Big Companies is just not working!
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Where Is the Innovation?
• 64% of net new jobs in the US over the last 15 years came from small business and a substantial portion of those new jobs were created by the high growth, high impact small businesses. (Source: Brookings Institution)
• Not to be confused with the Main Street businesses: restaurants, car repair shops, dry cleaners, and the myriad of other small operations who contribute little net job growth.
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Basic Requirements of a High Growth Start-up Company
1. “Fire in the Belly”
2. A great idea!
3. Technical Skills in building and running a company.
4. Funding
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Who Does a Start-Up?
Source: Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity.
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Baby Boomers
• Boomers have broader job skills
• Better access to capital – both their own savings and through personal networks
• Also at a life stage where starting a business is less risky and more attractive.
76M Boomers retiring could drive a new Entrepreneurship Boom on their own!
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Generation Y
• Generation Y may be the most entrepreneurial generation ever.
Percentage of respondents 18 – 29 years of age who wanted to:
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Why the US Leads?
• Culture
• Direct access to the world’s biggest consumer market
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A Great Idea?
• Probably the biggest barrier to a successful new company.
• Need “Domain Knowledge” from working in a field for several years to identify the needs and gaps.
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2011 Angel Investments ($’s)
Source: Angel Resource Institute – 2011 Halo ReportMarch 29, 2012 Mike Bartlett 12
Entrepreneurship Training
• Can Entrepreneurship be taught?
• More than 2,000 college and universities in the United States, about two-thirds of the total, now offer a course in entrepreneurship (Kauffman Foundation).
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Basic Requirements of a High Growth Start-up Company
1. “Fire in the Belly”
2. A great idea!
3. Technical Skills in building and running a company.
4. Funding
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Funding Sources
• Friends & Family – to validate the product
• Angels and Private Investors
• Federal Grants - SBIR
• VC’s (if you can find one)
• The best funding source – Customers!
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Summary
• The pace of innovation is accelerating
• Driven largely by small companies
• Boomers plus Gen Y will lead
• Primary areas: Social and Healthcare
• It will affect the future for all of us!
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How Are You Involved?
• Start or Join a Small Company
• Help a Start-up– Mentoring– Funding
• Teach Entrepreneurship
• Help improve the Innovation climate in Texas & the US
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