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Copyright: Alberto Sangiovanni Vincentelli 2011
Alberto Sangiovanni-VincentelliThe Edgar L. and Harold H. Buttner Chair of EECSUniversity of California at Berkeley
Co-Founder, CTA and Member of the BoardCadence Design Systems
Comitato Esecutivo, Istituto Italiano di Tecnologia
Comitato Scientifico, CNR
Advisory Board (Walden International, Sofinnova, Innogest, Xseed (MDV))
Investment Committee (Fondo Atlante, Fondo Next)
COLLABORAZIONE, INNOVAZIONE, RICERCA E IMPRENDITORIALITA'COLLABORAZIONE, INNOVAZIONE, RICERCA E IMPRENDITORIALITA'
Copyright: Alberto Sangiovanni Vincentelli 2011
OUTLINEOUTLINE
• Collaboration, Research, Innovation and Venture Capital
• Technological Opportunities driven by Collaboration and Research: The New Innovator!
Copyright: Alberto Sangiovanni Vincentelli 2011
Collaborate to Innovate: the Quest for the Virtual Corporation ManagerCollaborate to Innovate: the Quest for the Virtual Corporation Manager
• Firms will focus more sharply on what they do best, and they will enlist a growing diversity of suppliers for the rest. Organizations will increasingly look outside their walls not just to reduce costs but for innovation – in processes, product and service differentiation – to free up resources, transform their businesses, and facilitate sustainable competitive advantage. As supply networks become more global and complex, winning will depend on transparency, trustworthiness, and reciprocity. In a word: collaboration. (Alan McCormack et al. (HBS))
• The ideal collaboration model is the Virtual Corporation where the different firms involved in collaboration act as if they were division of the same corporation (or even better!!).
Copyright: Alberto Sangiovanni Vincentelli 2011
Silicon Valley: The Land of InnovationSilicon Valley: The Land of Innovation
Copyright: Alberto Sangiovanni Vincentelli 2011
Silicon Valley: Role of UniversitiesSilicon Valley: Role of Universities
Copyright: Alberto Sangiovanni Vincentelli 20116
Factors in Success Factors in Success
Infrastructure – Legal and financial services– Excellent Universities– The simultaneous presence of large, medium and small companies– The “network”: both inside and outside company boundaries
Copyright: Alberto Sangiovanni Vincentelli 2011
The role of VCs in the Industrial Innovation LandscapeThe role of VCs in the Industrial Innovation Landscape
• As a complementary lens on technological and market change– VCs see the world differently
• As a window on global technology development– Technology is global and driven by local/regional needs
• As a supplement to or portfolio hedge against internal R&D programs– Not even the best and biggest corporate R&D can cover all possibilities
• To drive new/expanded market development or other strategic (non-R&D) objectives (Intel; Microsoft)
• Explicitly to develop risky new ideas that will initially flourish better outside the corporation (Cisco)– A form of outsourcing of innovation
• The best VCs adhere to "simple" fundamentals:– world-class leadership and team; – large, growing market; – defensible big idea; – rigorous application of best innovation practices
Copyright: Alberto Sangiovanni Vincentelli 2011
Risk Factors in Evaluating Startup OpportunitiesRisk Factors in Evaluating Startup Opportunities
• Execution Risk• Market Risk• Technology Risk• Variable Factors (dependent on sector or specific opportunity):
– Future Financing Risk– Regulatory Risk
Copyright: Alberto Sangiovanni Vincentelli 2011
Liquidity and ReturnsLiquidity and Returns
• Exit options– IPO vs. M&A (see chart, next slide)– Bankruptcy vs Shut-down
• Typical venture portfolio performance: – Historical data: – Out of every 10 investments
• Half do not return capital• 1 returns >10X• Rest return 1-10X
Source: M. Borrus, Xseed
Copyright: Alberto Sangiovanni Vincentelli 2011
U.S. Venture Capital Investment1995–2008U.S. Venture Capital Investment1995–2008
28,29829,40626,44922,96822,42219,73021,941
40,609
105,140
54,102
21,10014,894
8,031 11,271
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
$ M
illio
n In
ve
ste
d
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; Data: Thomson Financial
Copyright: Alberto Sangiovanni Vincentelli 2011
91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08
IPO 156 181 220 166 202 270 136 77 260 264 41 22 29 93 57 57 86 6
M&A 17 76 74 100 97 116 164 209 240 317 353 318 290 339 350 368 355 260
50
150
250
350
450
550M&A
IPO
Year
Nu
mb
er o
f Is
sues
Source: NVCA, Thomson Reuters
Venture Exits—IPOs and M&A by Year, 1991–2008Venture Exits—IPOs and M&A by Year, 1991–2008
Copyright: Alberto Sangiovanni Vincentelli 2011
2008-2010 Exits: Heating up Again (LinkedIn Story)2008-2010 Exits: Heating up Again (LinkedIn Story)
[ 13 ]
Portfolio Progress
18 Companies funded
1,700+ ideas/researchers canvassed
~950 resulting start-up ideas analyzed in detail
16 Live
2Shut Down
DigitAB
StemCor
8 companies past seed
stage
Copyright: Alberto Sangiovanni Vincentelli 2011
What Drives Venture Returns?What Drives Venture Returns?
• Market growth not absolute size• Efficiency of capital deployment• Irrational exuberance in exit markets• A handful of big winners
And most of all• Fundamental Innovation—The (Tech) world isn’t “flat” (next
slide). Great Universities play a role!!!
Source: M. Borrus, Xseed
Copyright: Alberto Sangiovanni Vincentelli 2011
The (Tech) World Isn’t Flat: Distribution of most referenced patentsThe (Tech) World Isn’t Flat: Distribution of most referenced patents
Source: ATP and George Mason University
Oregon, Washington(Microsoft, IntelU. Wash, Toronto)
Silicon Valley
LA, S. Diego(Qualcomm, DefenseUCLA, UCSD)
Texas(Houston, TI, FreescaleU. Texas)
Michigan(GM, Ford, Chrysler, U. Michigan)
Illinois(Motorola,U. Illinois)
Boston(Medical, HiTechHarvard, MIT)
Copyright: Alberto Sangiovanni Vincentelli 2011
Consequence: VC Investment by US Region (2008 vs. 2007) California (Especially Silicon Valley) Rules! Consequence: VC Investment by US Region (2008 vs. 2007) California (Especially Silicon Valley) Rules!
0 3,000 6,000 9,000 12,000 15,000
California
Massachusetts
New York
Texas
Washington
Colorado
New Jersey
Pennsylvania
Minnesota
Virginia
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; 2008
1,5521,624
$14,264 $14,735
# ofDeeds
$ in Millions—All Results Rounded
405446
295199
164175
10097
9092
171159
4757
8194
146172
$2,974 $3,714
$1,203$1,130
$1,299 $1,469
$955 $1,382
$813$610
$708$632
$603 $819
$491$489
$499 $557
0 5,000 10,000 15,000 20,000 30,000
Top 10 Total2,0913,110
$23,069 $25,595
2008
2007
Copyright: Alberto Sangiovanni Vincentelli 2011
Human Resources in Highly Innovative Ecosystems:Meritocracy to the Hilt!Human Resources in Highly Innovative Ecosystems:Meritocracy to the Hilt!
• Biggest challenge is to acquire and retain highly-skilled workforce• Play on compensation based on bonuses, restricted stock and options as
well as special claused for acquired talent via acquisitions such as earnouts and no compete agreements
• Hiring and compensation is mostly decided by technical leaders and agreed upon by HR, HR guidelines may be violated if a good case is mounted
• HR mostly focussed on internal issues: administration of the process, say on exec compensation, participate on the compensation plan set up at the Board level
Copyright: Alberto Sangiovanni Vincentelli 201118
Factors in Success 1Factors in Success 1
People and Technology:
• Scientific and Technology education• Centers of excellence in research• Talent pools (people form Universities and companies interested in high-
risk high-reward activities)• Ability to attract the “best” to the region (infrastructure for families and
continuous learning) but attention to moving social and financial costs
Copyright: Alberto Sangiovanni Vincentelli 2011
Pasteur’s QuadrantPasteur’s Quadrant
NO YES
Considerations of Use?
Quest forFundamental
Understanding?
NO
YES
Pure BasicResearch(Bohr)
Pure AppliedResearch(Edison)
Use-InspiredBasic Research
(Pasteur)
D. Stokes
Copyright: Alberto Sangiovanni Vincentelli 201120
University-Industry RelationshipsUniversity-Industry Relationships
• Professors are promoted on the basis of their contributions in all areas, including professional activities
• Reciprocal respect and attention to respective roles• Unrestricted grants: “speed not patents”• Transfer of technology through visiting professionals and summer
students• Formation of new companies favored• Companies compete fiercely on talents out of University• Educational agenda left in the hands of University
Copyright: Alberto Sangiovanni Vincentelli 201121
Factors in Success 3:The Valley “Culture”Factors in Success 3:The Valley “Culture”
• Move fast• Leverage all you can • Do not be afraid of making mistakes• Learn from your errors• If you fail, try again• Re-invent yourself and your company constantly• Grow grow grow ……
Copyright: Alberto Sangiovanni Vincentelli 201122
IsraeleIsraele
Sistema scolastico e
universitario di eccellenza
Cultura orientata
all’innovazione e alla crescita
globale
Imprenditorialità
• Più alto numero di Nobel pro capite (più che tutta l’area euro)
• 4 università nelle top 100 in scienze- N° 3 in pubblicazioni scientifiche pro
capite- N° 1 in laureati pro capite
• Più di 1.700 laureati all’anno in Life Sciences
• Più alto numero di aziende quotate al Nasdaq dopo USA
• Più alta spesa di R&D sul PIL
• PIL 1948-2008: x50 (come Cina, >Giappone, Corea)
• Global view
• Più start-ups dopo USA (più seed investments di USA in valore assoluto)
• Quasi 100 VC, ~10 miliardi di dollari under management
• Governo imprenditore (Yozma, incubatori, Life Science VC)
Copyright: Alberto Sangiovanni Vincentelli 2011
90 KM: Stesso
Range as in Silicon Valley
Herzliyya
Tel Aviv
Gerusalemme
Haifa
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Copyright: Alberto Sangiovanni Vincentelli 201124
Italy Innovation 40-60% below comparable nationsItaly Innovation 40-60% below comparable nations
EU 27 “European Innovation Scoreboard”
0,35
0,50 0,55
Source: European Community:“European Innovation Scoreboard 2008”
Copyright: Alberto Sangiovanni Vincentelli 201125
))
R&D Gap is in the Private Sector
Fonte: Intesa Sanpaolo, Servizio Innovazione della Divisione Corporate su dati OECD 2005 - The Economist - August 2007
R&D as% of GNL
0 1 2 3 4
Italia
UK
Canada
Francia
Germania
Stati Uniti
Giappone
Svezia
Private Companies State and P.A.
Copyright: Alberto Sangiovanni Vincentelli 2011
Why should we worry about High Tech?Why should we worry about High Tech?
SUNRISE INDUSTRIES?SUNRISE INDUSTRIES?
SUNSET INDUSTRIES?SUNSET INDUSTRIES?
Innovation and high tech can be as high in New economy as in old economy! Process vs Produc!
Copyright: Alberto Sangiovanni Vincentelli 2011
OUTLINEOUTLINE
• Research, Innovation and Venture Capital
• Technological Opportunities driven by Collaboration and Research: The New Innovator!
Copyright: Alberto Sangiovanni Vincentelli 2011
The Enabling Technology: The Emerging IT SceneThe Enabling Technology: The Emerging IT Scene
Infrastructuralcore
Sensory swarm
Mobileaccess
Copyright: Alberto Sangiovanni Vincentelli 2011
PredictionsPredictions
• 5 Billion people to be connected by 2015 (Source: NSN)• Web2.0
– The “always connected” community network
• 7 trillion wireless devices serving 7 billion people in 2017(Source: WirelessWorldResearchForum (WWRF)– 1000 wireless devices per person?
[Courtesy: Niko Kiukkonen, Nokia]
EE Times,January 07, 2008
Copyright: Alberto Sangiovanni Vincentelli 2011
The Birth of Societal IT Systems:The Birth of Societal IT Systems:
Complex collections of sensors, controllers, compute and storage nodes, and actuators that work
together to improve our daily lives
Copyright: Alberto Sangiovanni Vincentelli 2011
The CloudThe Cloud
• A multi-year tectonic and disruptive shift• Proprietary Bottoms up analysis leads to $100bn opportunity• Themes driving the shift:
1. Cloud and Mobile…made for each other
2. Cloud interoperability
3. Security as a Service
4. Mega-bandwidth and Intelligent Networks
5. Collaboration & Social Networking
6. Platform as a Service
7. Private Clouds: Old wine in new bottle
Copyright: Alberto Sangiovanni Vincentelli 2011
The Cloud!The Cloud!
• Going back to centralized computing from distributed computing…like utilities• Delivering personal (e.g., email, word processing, presentations) and business apps
(e.g., sales force automation, customer service, accounting) over the internet via a subscription model.
• Cloud computing has been made possible by the shift to Internet built on Web-based standards and improvements in hard drives, processors, and Internet speed
• Transfer of capital, implementation and maintenance risk
Copyright: Alberto Sangiovanni Vincentelli 201133
Massive Resources are VirtualizedMassive Resources are Virtualized
Copyright: Alberto Sangiovanni Vincentelli 2011
Challenge of Integrating Intermittent SourcesChallenge of Integrating Intermittent Sources
34
Sun and windaren’t wherethe people – and the current grid – are located!
www.technologyreview.com
T. Boone Pickens Wind Farm
Copyright: Alberto Sangiovanni Vincentelli 2011
The Big Switch: Clouds + Smart GridsThe Big Switch: Clouds + Smart Grids
Computing as a Utility
Computing in the UtilityLarge-scale industrializationof computing
EnergyEfficient
Computing
EmbeddedIntelligence in
CivilianInfrastructures
Copyright: Alberto Sangiovanni Vincentelli 2011
Energy + Information =Third Industrial RevolutionEnergy + Information =Third Industrial Revolution
“The coming together of distributed communication technologies and distributed renewable energies via an open access, intelligent power grid, represents “power to the people”. For a younger generation that’s growing up in a less hierarchical and more networked world, the ability to produce and share their own energy, like they produce and share their own information, in an open access intergrid, will seem both natural and commonplace.”
Jeremy Rifkin
Copyright: Alberto Sangiovanni Vincentelli 2011
Towards Integrated Wireless Implanted InterfacesTowards Integrated Wireless Implanted Interfaces
[Illustration art: Subbu Venkatraman]Power budget: mWs
to 1 mW
Moving the state-of-the-artin wireless sensing
ADCLNA
electrodes
DSP
memory
Tx
regulator
clock
Copyright: Alberto Sangiovanni Vincentelli 2011
Engineering Tomorrow’s DesignsSynthetic BiologyEngineering Tomorrow’s DesignsSynthetic Biology
The creation of novel biological functions and tools by modifyingor integrating well-characterized biological components intohigher-order systems using mathematical modeling to direct
the construction towards the desired end product.
“Building life from the ground up” (Jay Keasling, UCB)Keynote presentation, World Congress on Industrial Biotechnology and Bioprocessing,
March 2007.
Development of foundational technologies:
Tools for hiding information and managing complexity
Core components that can be used in combination reliably
38
Copyright: Alberto Sangiovanni Vincentelli 2011
idi
Microbial Synthesis of ArtemisininMicrobial Synthesis of Artemisinin
AcCoA
AcAcCoA
HMG-CoA
Mev-P
Mev-PP
IPP
PMK
MPDMK ispA
HMGS
atoB tHMGR
DMAPPMev
FPP
AMO
ADS
CPR
Artemisinin
Off-the-shelf parts?
BioShack
39
Copyright: Alberto Sangiovanni Vincentelli 2011
A Roadmap for Synthetic BiologyA Roadmap for Synthetic Biology
• An educational program (Berkeley (lead), Harvard, MIT and Stanford)– To train the next generation of bioengineers
• A research program– To determine how to set standards– To learn how to develop standard components
• A BioFAB– To construct biological components and offer them open source
• Applications
40
Copyright: Alberto Sangiovanni Vincentelli 2011
Applications of Synthetic BiologyApplications of Synthetic Biology
Energy Crop• Water saving• No fertilizer• Doubled photosynthetic efficiency
Biodiesel and biojet fuel• No compromise
• Fully compatible with existing infrastructure
Natural product drugs• Capture all of the chemistry in nature
• Construct a microbe that canproduce any natural product
41
Copyright: Alberto Sangiovanni Vincentelli 2011
AmyrisAmyris
• Amyris had its technological foundation in 2001 in the Keasling lab at Berkeley, when Jay Keasling and his team of post-docs pioneered a methodology to produce isopentenyl pyrophosphate, at rates with commercial potential, from yeast-fermented sugars.
• Keasling’s magic bug, genetically enhanced from a soup of DNA obtained from bacteria and the plant world, is a five-carbon base chemical and a high-value target in the world of what is now known as the field of renewable chemicals — its a path to isoprenoids, which are themselves a family of some 50,000 molecules that have applications or pathways for pharmaceuticals, fragrances, cosmetics and fuels.
• Keasling filed the patent in 2001, and Amyris itself was eventually formed and funded by 2006 with $14.1 million in Series A investments from Kleiner Perkins and Khosla Ventures among other early backers.
Copyright: Alberto Sangiovanni Vincentelli 2011
• IPO in 4° Quarter 2010• From 680Mil cap to 1.265Bil today
Copyright: Alberto Sangiovanni Vincentelli 2011
The SCIENCE-Application DilemmaThe SCIENCE-Application Dilemma
Raffaello Sanzio, The Athens School
Copyright: Alberto Sangiovanni Vincentelli 2011
Teamwork!!!Teamwork!!!
Copyright: Alberto Sangiovanni Vincentelli 2011
Educational ChallengeEducational Challenge
46