Strategies for ICT-enabled Competitiveness and Job Creation Jim Jaffe President and CEO National Association of Seed and Venture Funds March 30, 2011 World Bank ICT Days Washington, DC

The Global Innovation Imperative Innovation is Key to Growing and Maintaining a Country’s Competitive Position in the Global Economy Collaboration among Small and Large Businesses, Incubators, Universities, and Research Institutes is Essential New Institutions and New Incentives, are increasingly important to support collaboration and foster innovation

Innovation Ecosystem Components

Innovation Paradigm Shift

Innovation Capital  Invested before commercial success  $100,000 - $2,500,000  Seed Capital $100,000 - $250,000  Early Stage $250,000 - $2,500,000  High risk - vital to new innovative companies  Scarce for new entrepreneurs  Innovation Capital Providers  Angels  Tech and innovation-based economic development organizations  VC’s

Innovation Capital  Generates 60 to 80% of net new jobs annually  Employs 30% of high-tech scientists, engineers, and computer workers  Produces 13 to 14 times more patents per employee than large firms

Supply Stage Source Demand POR / Pre-Seed Seed/Start-UpEarlyLater Founders, FFF Bootstrapping Crowdfunding Angel Groups, IBED, SBIR Accelerators Seed Funds, Venture Funds M&A, IPO $0K$2.5M$5.0M Funding Gap Secondary Funding Gap Innovation Capital Valley of Death “VALLEY OF DEATH” $500K

Ways To Raise Innovation Capital 8 Self Funded Be Your Own Boss Grow 20% per year Friends and Family People That You Already Know Strategic Partners Non-Recurring Engineering Purchases of Beta Units Angels Clubs / Funds Individuals Grants SBIR Phase II up to $1 million Early Stage Venture Capital About 75 Pre-Revenue VCs left License Royalties Average is $375,000 over 5 years For $9 million of funded research

Funding & Resources for Innovation Capital SeedTBEDFederalAngel/VCEntrepreneur

CategoryCDVCA*State of PA State of MI State of UTAH Stimulus Bill Funds Invested $26M$90M$291M$60M $800B Jobs Created ,15028,8542,047 1,000,000 To 4,000,000 $ Per Job Invested $7,100$11,000$11,728$29,300 $800,000 To $200,000 Public Investment In Job Creation *Community Development Venture Capital Association

I NNOVATION C OALITION The Innovation Coalition is a collaborative group of innovation-based associations supporting the key elements of the continuum for commercialization and job creation. ECOSYSTEM OUTCOME S  Companies  Jobs  Innovation

Its not about TECHNOLOGY! Its about REVENUE SCALABILITY CASH FLOW PROFITS IN TWO YEARS COMPETITIVE ADVANTAGE The Commercialization “Secret”

Summary Ecosystems advance technology commercialization, innovation, funding and economic growth Seed and early-stage funding is critical to success High risk - years to bear fruit Significant job creation BIG potential payoff!

NASVF Today – Our Role

NASVF – OVERVIEW Established in 1995 Non profit Headquarters Philadelphia, PA 175 member organizations 43 states Five countries 800 members 1/3 Equity funds 1/3 Public TBED 1/3 Technology

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