Entrepreneurial

Innovation is how we make our living: Is China buying?

– Tom Lyon is the director of the Erb Institute for Global Sustainable Enterprise, and Peter Adriaens is a professor of entrepreneurship at the Zell Lurie Institute of Entrepreneurial Studies, both at the University of Michigan. The views expressed are their own. –

President Barack Obama, in his State of the Union speech, called for America to “out-innovate, out-educate, and out-build the rest of the world.” But who is the competition, exactly? Who is presenting “our generation’s Sputnik moment”? Who are we racing against to put a million electric vehicles on the road? The president’s answer: China.

Encouraging American innovation is a major piece of the president’s strategy to win the future. And a global leadership position in innovation is ours to lose.

During another era of innovation, the dot-com boom of the 1990s, the U.S. was perhaps the best market in the world for the launch of the Internet. Now, China is arguably the best market today for deployment of clean technology. China is adding energy production capacity, cars on the road, and new cities faster than any other country in the world. Plus, it has the financial and political power to direct the market to move away from cheaper, legacy technologies.

So how can U.S. researchers, inventors and entrepreneurs profit from the market in China while preserving innovation leadership? That’s a question we first explored during the University of Michigan’s Clean Tech Symposium this past December. In our view, the overwhelming message of the symposium was that the U.S. and China are well matched in bringing together the supply and demand for cleantech innovation.

Keynote speakers Peggy Liu of the Joint U.S.-China Collaboration on Clean Energy (JUCCCE), and Professor C.S. Kiang of Beijing University described a cash-rich China hungry to address ballooning energy demand and rampant environmental degradation. At the same time, they said, a shift is occurring in China towards greater acceptance of foreign innovation.

Bolstering our entrepreneurial ecosystem

Reuters Staff

Sep 13, 2010 13:31 EDT

Peter Cohan and U. Srinivasa Rangan teach at Babson College and are authors of “Capital Rising: How Capital Flows Are Changing Business Systems All Over the World”. The views expressed are their own.

Since the “Great Recession” began, at least 8.5 million jobs have vanished. How will we create new ones? The answer lies in improving the entrepreneurial ecosystem (EE).

Everyone looks to entrepreneurs to create jobs. The Kauffman Foundation found that firms five years old and younger created most of the 40 million jobs in the U.S. between 1980 and 2005.

Our research offers a broader and more effective way to think about spurring entrepreneurship. We traced the flow of capital around the world and concluded that countries can boost their share of capital by changing the conditions that attract it. Since job-creating startups need capital, a government seeking to add jobs should make a country’s economic soil the world’s most fertile for capital to plant its roots and grow.

Government can manage what we call the country’s four elements of an EE: transparent and efficient financial markets, reliable and effective corporate governance systems, human capital development systems, and clear and supportive intellectual property protection laws. While the U.S. has a world-leading EE, it could do better.

• Immigration Reform: Researchers from Duke University and UC, Berkeley found that between 1995 and 2005, 52.4 percent of Silicon Valley startups had at least one foreign-born founder. Another report in 2007 found that many of the fastest growing technology firms had been founded by foreign-born (and often U.S.-educated) entrepreneurs. Recently, our broken immigration system has stopped many foreign-born graduate engineers and scientists educated here from staying here and starting hightech firms. This needs to change.
• Intellectual Property Reform: The U.S. has had one of the strongest IP regimes of any country, which draws in capital for technology-intensive investments. But conflicts between two goals – promoting competition and spurring innovation – have created a fog of uncertainty. To boost investment in innovation we ought to burn off the fog.
• Financial Market Reform: Our financial markets have veered from their purpose. Accounting for 70 percent of daily trading volume, high frequency traders – whose computers flip stocks after 11 seconds – have helped turn finance into the tail that wags the economic dog. Current congressional proposals may further impede the U.S. financial markets’ most important function – to help innovative startups find risk capital.
• Venture Capital Reform: Finally, the corporate governance resulting from VC-backed startup investing, while harsh for entrepreneurs who don’t adapt well to VC pressure, generally helps bring new technologies to market. Policymakers have slowed startups by imposing higher compliance costs (e.g., Sarbanes-Oxley requirements). The U.S. should add incentives that boost the odds that VC-backed startups can go public.

This is particularly important now because VC returns plunged in the 2000s as the Initial Public Offering market evaporated. As of June 1999, The National Venture Capital Association reported that VC funds earned 83.4 percent 10-year average returns. In the ensuing 11 years, returns have collapsed so far that the average VC fund is expected to report a 10-year return of negative 5.2 percent (through June 2010).

Let’s work together to boost entrepreneurialism

Reuters Staff

Sep 3, 2009 11:12 EDT

By Michael Gaiss

  Michael Gaiss is a Senior Vice President at venture capital firm Highland Capital Partners. The opinions expressed here are his own.

More than ever, entrepreneurship will continue to play an instrumental role as geographic regions and small businesses contend with today’s rocky business landscape. While the entrepreneurial fire may be well lit, there are opportunities to better coordinate and amplify it into a raging inferno.

Marketing can help this along by playing a key role in nurturing innovation and entrepreneurship. For regions looking to weather the downturn, help small businesses get off the ground and improve their positioning in the long-term, here are a few tips to consider:

1) Connect and enable the next generation of entrepreneurs. Much can be learned from those who have already done it. Barriers preventing the next generation from connecting with the existing entrepreneur community, as well as each other, need to be removed. Gatherings and one-on-one mentoring can be orchestrated to bring entrepreneurs of all stages together to better enable the free flow of ideas and advice. The challenge is to leverage existing institutions such as associations, universities, venture and angel networks, and relevant service providers to get these off the ground, while encouraging the organic emergence of new networking & mentoring platforms over time. As entrepreneurship evolves, what started as forums for sharing insight and advice matures into a vibrant and proven support ecosystem that entrepreneurs can rely on to help get their startups off the ground.

Immigrants: the new, high-tech entrepreneurs

Lara Pingue

Jul 22, 2009 15:57 EDT

Picture the founders of any big-name tech company in the U.S. and you’ll probably think of Twitter’s Biz Stone, or Apple’s Steve Jobs, or Bill Gates from Microsoft.

In other words: white American men.

But a report released this month reveals that 16 percent of high-tech, “high-impact” companies are founded by immigrants.

The study, commissioned by the self-proclaimed “business watchdog” Office of Advocacy of the U.S. Small Business Administration, is significant for a couple reasons. For one, consider the term “high-impact,” which describes firms with sales that have at least doubled over the most recent 4-year period, with notable employment growth. These aren’t fledgling gadget companies with no hope for survival.

Even more importantly, the research underlines the vital role U.S. immigration policy plays in entrepreneurialism — particularly in light of growing competition from emerging economies like China.  As the study points out, immigrant entrepreneurialism isn’t just on the rise, it’s driving job creation in a key industry and growth in the U.S. economy.

But immigration policy has some cracks in it, and it could be costly.  Says the study:

“Even those individuals who have a reasonable prospect of extending their stay in the United States may lack the certainty that they will be here long enough to be able to reap the benefits of taking the entrepreneurial ‘leap’ because of the way the immigration system handles their cases. As a result, their potential entrepreneurial contribution to the nation may be lost.”