Startups at Universities - UniZagreb FER - Croatia - Apr 16 2015

The Role of Universi/es and Student-‐led Companies for the Future Growth of Croa/a and Europe

Entrepreneurship and Startups at Universi1es

Dr. Burton H. Lee PhD MBA Lecturer, European Entrepreneurship & Innova4on, Stanford Engineering [email protected] | www.StanfordEuropreneurs.org | @Europreneurs

University of Zagreb Faculty of Electrical Engineering & Compu/ng (FER)

April 16 2015

Gree1ngs from Silicon Valley

(and the Republic of California)

Today’s Topics

•  America’s Experience in Star4ng New Companies Out of Universi4es – Students and Professors

•  The role of universi4es in economic development

•  Lessons for Croa4a

Apr 16 2015 Copyright 2015 Burton H. Lee and Innovarium Ventures 3

ABOUT THE SPEAKER

DR. BURTON LEE PHD MBA

STANFORD SCHOOL OF ENGINEERING | INNOVARIUM VENTURES

[email protected]

WWW.STANFORDEUROPRENEURS.ORG

@EUROPRENEURS

Map of Founders & Investors Invited as Speakers

European Entrepreneurship & Innova/on @ Stanford Engineering

(ME421)

Winter 2014 – Year Six January 6 – March 10 2014

Enterprise Estonia Silicon Valley

Gent, Flanders Region Belgium

iMinds ICT Institute

hRp://www.europeanentrepreneursatstanford.com | hRp://me421.stanford.edu Apr 16 2015 Copyright 2015 Burton H. Lee and Innovarium Ventures 6

February 10 2014 @ Stanford Engineering Jeff Lynn, Seedrs (UK) & Matija Kopic, Farmeron (HR)

March 10 @ Stanford Engineering Gyula Feher, Ustream (HU); Marcin Treder, UXPin (PL)

March 3 @ Stanford Engineering Wim De Waele, iMinds (BE); Martin Hauge, Creandum (SE) & Lieven Vermaele, SDNsquare (BE)

February 24 @ Stanford Engineering Giuseppe Zocco, Index Ventures (CH) & Emrah Yalaz, String Ventures (TR)

January 27 @ Stanford Engineering Vassil Terziev, Telerik (BG) & Japec Jakopin, Seaway Design (SI)

Topics Covered

Apr 16 2015

Equity Crowdfunding

European Entry Strategies for Valley Startups

East v West Europe

Copyright 2015 Burton H. Lee and Innovarium Ventures | Silicon Valley 12

The Story of European Entrepreneurship in Europe Europe vs Silicon Valley

Apr 16 2015

Entrepreneurship and Innova/on in Europe Today

Europe vs Silicon Valley

Europeans in Silicon Valley

Arts, Culture, Design, Language

& Tradi4ons

History & Poli4cs

Law & Policy

Ins4tu4ons & Personali4es

Copyright 2015 Burton H. Lee and Innovarium Ventures | Silicon Valley 13

University Advisory & Academic Engagements USA – Europe – La/n America


Selected Industry Experience


Co-‐Founder Member, Advisory Board Co-‐Founder

Irish Na4onal Innova4on Taskforce with Prime Minister Brian Cowen -‐ Dublin, Ireland

Prime Minister B. Cowen


Great Tech Startups from Croa/a










Apr 20 2015 Copyright 2015 Burton H. Lee and Innovarium Ventures | Silicon Valley 27 World Class Startups Out of Croa/a

Rimac Automobili Zagreb, Croa/a

America’s Experience in Crea/ng Technology Companies Out of Universi/es

The Stanford Example

The Cri/cal Role of Students and

Professors

Lessons for Croa/a

Big Picture

Stanford Budget FY14-15:

$5.1B Total

$1.33B for research

$928.5M of gifts (FY14)

$21.4B Endowment

OTL $108.6M income in FY14

Stanford has over 15,000 students and over 2,000 faculty members that teach and conduct research.

History of Entrepreneurship at Stanford

•  First spin-‐out: – HewleR Packard (1939)

•  Other Famous Stanford Companies – Google – Cisco – Yahoo – VMWare


History of Entrepreneurship at Stanford

•  During 2007-‐2011, Stanford University students, alumni and professors raised $4.1Bn in venture capital for startups

•  Since 1930, Stanford students, alumni and professors have built: – 40,000 companies – 5,400,000 jobs (globally) – $2.7 Trillion in annual revenues


Entrepreneurship @ Stanford Major Centers and Programs

•  Engineering School –  Stanford Technology Ventures Program (MS&E) –  Electrical Engineering (Asian entrepreneurship) – Mechanical Engineering (European entrepreneurship)

•  Business School –  Center for Entrepreneurship Studies

•  Medical School –  ‘BioDesign’ Medical Device Entrepreneurship Program

•  Stanford Entrepreneurship Network (SEN)



Student Entrepreneurship @ Stanford


~ 7 – 10% of Stanford students are engaged in an entrepreneurship-‐related ac4vity (Source: BHL es4mate)

BASES Student Entrepreneurship Club Engineering School

MBA Student Entrepreneurship Club GSB Business School

Post-‐doc Entrepreneurship Club Medical + Engineering + Other

Stanford’s Accelerator Founded by Students

Stanford Student Enterprises Run by Students

Why are Many Stanford Students Passionate About Entrepreneurship ?? •  Be your own ‘boss’ •  Challenging and fun – and cool •  Autonomy and Independence •  A chance to realize your dreams and create change •  Best way to realize one’s full poten4al •  Medium-‐ and large-‐sized companies can be bureaucra4c and slow-‐to-‐innovate

•  Can no longer rely on established companies for permanent employment

•  LiRle downside risk – students can s4ll find a very good job with a corpora4on even if their startup fails


“T Model” vs “I Model” of Educa/on Which is Most Effec4ve for Suppor4ng Entrepreneurship & Innova4on?

Apr 16 2015 37

Design | Inter-‐disciplinarity | Leadership Cri/cal Thinking | Crea/vity | Entrepreneurship

Ability to Understand Mul4ple Disciplines Depth of Topic Knowledge

Depth of Top

ic Kno

wledge

“WISSENSCHAFT ONLY” APPROACH

“WISSENSCHAFT +++” APPROACH

Copyright 2015 Burton H. Lee and Innovarium Ventures

Origins of New Startups Created Out of Stanford

•  Research

•  Teaching || Classroom Ac4vi4es

•  Student Residences

•  StartX Accelerator Apr 16 2015 Copyright 2015 Burton H. Lee and Innovarium Ventures 38

Research and

Intellectual Property – based Startups

The Office of Technology

Licensing (OTL) is responsible for…

the formal transfer of patents, copyrights and

other technology through license agreements.

OTL’s Mission: To promote the transfer

of Stanford technology for society’s use and benefit while generating unrestricted income to support research and education.

Functional Antibodies

FM Sound Synthesis

Recombinant DNA

Google

Notable Stanford Inventions

Timeline of Stanford Inventions

•  1970 – OTL Established

•  1971 – FM Sound Synthesis ($22.9M)

•  1974 – Recombinant DNA ($255M)

•  1981 – Fiber Optic Amplifier ($48.4M), MINOS ($4.3M)

•  1984 – Functional Antibodies ($486.2M)

•  1990-1992 – Discrete Multi-tone Technologies for DSL ($29.7M)

•  1993 – MIMO for Wireless Broadcast ($1.6M)

•  1996 – Improved Hypertext Searching - GoogleTM ($340.1M)

•  2001-2003 – Data Visualization Software ($14.8M)

•  2001-2007 – Treatment for Celiac Disease ($0.6M)

•  2002 – Code Error Detection Software ($9.7M)

•  2010-2012 – Education Program for Gifted Youth ($1.8M)

•  2016 – the next big thing ???

Stanford inventions begin as nascent ideas

supported by over $1 billion per year of funding for research across 7 schools and SLAC.

How are Stanford innovations transferred to others to develop into new products and companies?

Most Inventions are Never Licensed

9-10 invention disclosures/week

50% have patent applications filed

20-25% are licensed* *some inventions such as software and biological materials are licensed without patent protection

Invention Disclosures

Then. . .

28 in 1970

Now. . .

483 in 2014

10,380 cumulative

How Does OTL Decide What To License?

Licensing teams try to decide which inventions can make an impact.

Questions

Is the invention evolutionary or revolutionary?

What is the stage of development?

Is it patentable and could a patent be enforced?

What is the potential market size?

What is the inventor’s track record?

Licensing Teams* Decide Patent and

Licensing Strategy

*Licensing Associate and Liaison teams have technical degrees and are market focused.

“Cradle to Grave”

Evaluate overall potential

Develop intellectual property strategy and manage patent prosecution

Determine when and how to market and license the invention

Negotiate contracts

Maintain and amend agreements

Monitor development and commercialization and track royalty payments

OTL Markets Broadly to Find the Best Fit for the Technology

Recombinant DNA: Many Companies of All Sizes

Functional Antibodies: One Mid-Sized Company

Google: One Start-Up Company

Licenses

Then. . .

3 in 1970

Now. . .

106 in FY14

over 1150 active licenses from ~3500 active inventions

~3400 cumulative licenses

some inventions have many licensees

Equity Can be One Component of the Financial Package

About 10-15% of OTL’s licenses have an equity term.

License Agreements with Equity

20 licenses with equity in FY14

Stanford holds equity in 121 companies as a result of license agreements (as of Aug. 31, 2014)

Managed by Stanford Management Company

Liquidated soon after IPO or at merger/acquisition

Equity Cash-Out at Stanford

$23.2 M in FY14 $393M cumulative from equity vs. $1.7B in total income $57M cumulative from non-Google equity vs. $1.28B in cumulative cash royalties

Licensed Inventions Can Develop into Products

that generate income for the company

and royalty returns to Stanford.

OTL Shares the Royalties

After deductions for overhead (15%) and expenses, the net cash royalties are divided:

1/3 to inventors

1/3 to inventors’ departments

1/3 to inventors’ school

Teaching and

Classroom Ac/vi/es – based Startups

Product Design Courses •  Not the same as ‘engineering design’ !! •  Students learn to develop ideas for new products and services – Work in teams of engineers, medical, business, humani4es students

•  Rapidly develop ‘sor prototypes’ to test product idea

•  Work directly with users outside the classroom to ask their feedback on new product ideas, and to observe how they might use this

•  New companies are oren created by students from these classes

Apr 16 2015 64 Copyright 2015 Burton H. Lee and Innovarium Ventures

Students Observe Real Shoppers

Jan 31 2014 Copyright 2014 Burton H. Lee and Innovarium Ventures | Silicon Valley 68

Product Concepts & Prototypes developed by students in collabora1on with industry partners and sponsors

Jan 31 2014 Copyright 2014 Burton H. Lee and Innovarium Ventures | Silicon Valley 69

Product Design Is *Not* the Same as ‘Engineering Design’

‘Industry Professors’ Also Teach Students •  Stanford uses hundreds of people from industry to teach and develop new courses – Many do not have a PhD – PhD not required – solid industry experience is necessary

•  Important way to bring founders, investors and senior execu4ves into direct contact with students and professors

•  Connects university and industry ecosystems at a very personal level


Student Residences as Informal Startup Incubators

Kirkland House @ Harvard University Where Mark Zuckerberg once resided and created Facebook



Student Housing @ Stanford University

Student Residence Areas

Main Campus Classroom & Research Facili/es

Athle/c Facili/es

Medical School & Hospital

Student Dormitories as University Incubators

•  Student dormitories are the source of many new startups –  Startups created outside of formal university research or classroom structure

–  Students working/socializing together in informal groups and teams

•  Undergraduate, graduate – Most of these startups are ICT-‐based – Most do not go through formal university IP registra4on or TTO processes

–  Difficult for universi4es to count and know how many dormitory startups are created each year


StartX

Stanford Startup Incubator


Lessons for Croa/a

Entrepreneurship in Europe vs Silicon Valley Today

Silicon Valley Style Entrepreneurship

•  Highly Scalable –  Technology, Product Architecture,

Business Model –  Business Processes & Back-‐end IT Systems –  Equity Structure –  Innova4on-‐centric Culture –  Very Rapid Execu4on and Growth

•  “Lean” –  Mostly sorware-‐based + some hardware

•  Serial •  Parallel •  Build-‐to-‐sell

European Style Entrepreneurship

•  Highly Scalable –  Skype, Spo4fy, Soundcloud, Rovio

•  Tradi4onal SMEs –  > 20 Mn firms; 92.2 % with < 10 employees

(2012) –  Food, agriculture, tourism, construc4on,

real estate, services

•  Family-‐based Entrepreneurship –  German MiRelstand, Italy, France

•  “Black” Entrepreneurship –  Black market – Belarus, Greece, Italy, etc

•  “Sustainable” Entrepreneurship –  Corporate entrepreneurship

•  Export-‐oriented •  One-‐4me entrepreneurship


Innova/on & Entrepreneurship Ecosystem Gaps in Europe

•  Startup Forma4on Rates •  Product Design Skills •  Sales & Marke4ng •  Product Management •  IT Systems Architecture

•  Many European companies and universi4es show substan4al weakness in these areas

University Reform in Europe Problem Statement

•  Majority of European public universi4es are under-‐performing their full poten4al –  Excep4ons: Germany, Switzerland, Netherlands, UK and some Nordic countries

•  Generally under-‐funded •  Many are mis-‐aligned and disconnected from na4onal innova4on systems

•  Generally poor representa4on in global rankings •  Jurisdic4on over universi4es resides at na4onal/regional level, not at EU level

Apr 16 2015 Copyright 2015 Burton H. Lee and Innovarium Ventures | Silicon Valley 81

University Reform in Europe Problem Statement

•  Most European universi4es are geared to teaching as primary mission, not research –  Important excep4ons in Germany, Switzerland, UK, Netherlands and some Nordic countries

•  Generate rela4vely liRle intellectual property •  Do not work well with industry •  Generally poor at commercializa4on of research •  Professors have liRle industry experience, and see liRle value in acquiring same

•  LiRle encouragement of entrepreneurship by students

Apr 16 2015 Copyright 2015 Burton H. Lee and Innovarium Ventures | Silicon Valley 82

Finland’s University Reform Vision 2020

83

Lessons for Croa/a’s Universi/es •  Develop product design programs in engineering and medical

schools •  Encourage students to engage in entrepreneurship in its

many forms •  Bring founders, CEOs and investors to universi4es to speak

with students about entrepreneurship and business •  Help students find internships with startups and established

companies •  Increase of ‘industry professors’ to teach entrepreneurship

and business •  Strongly support student entrepreneurship and robo4cs clubs •  Reduce bureaucracy and 4me to license intellectual property

to companies Apr 16 2015 84 Copyright 2015 Burton H. Lee and Innovarium Ventures

85

Join Our Online Community

@Europreneurs

Speaker Presentation Slides

www.slideshare.net/burtonlee1

Speaker Videos

‘StanfordEuropreneurs’ ‘European Innovation @Stanford’

www.StanfordEuropreneurs.org me421.stanford.edu

THANK YOU Dr. Burton Lee PhD MBA Stanford School of Engineering [email protected]

WWW.STANFORDEUROPRENEURS.ORG

@EUROPRENEURS

Working in Silicon Valley, Europe and Washington DC

•  Senior financial, technical and strategy advisory services for global technology innova4on organiza4ons •  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 prepara4on/research/review; Government Grant proposal prepara4on/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 selec4on and market posi4oning •  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 applica4ons

–  Research universi4es •  Innova4on-‐related models, policies and prac4ces •  Technology transfer and licensing; industry partnerships and rela4ons; development and strategy; grant applica4ons

–  Na4onal and regional government agencies •  Innova4on policy formula4on, analysis and review; cluster development strategy; economic impact studies •  Science & technology policy formula4on, analysis & review: space, avia4on, nanotechnology, sorware/AI/robo4cs, manufacturing

•  Selected recent clients –  US/European technology startup companies – alterna4ve energy, robo4cs/AI, sorware, Internet, nanotech –  Venture and private equity funds – aerospace, nanotechnology, ICT, compu4ng, advanced materials, clean tech –  Office of the Prime Minister, Ireland; European Commission; Na4onal Science Founda4on; NASA, Na4onal 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 & Innova/on, Stanford School of Engineering


Small Business & Entrepreneurship

Startups at Universities - UniZagreb FER - Croatia - Apr 16 2015