Stanford high tech entrepreneurs-lebret

STANFORD UNIVERSITY AND HIGH TECH ENTREPRENEURSHIP HIGH-TECH ENTREPRENEURSHIP:

AN EMPIRICAL STUDY

Hervé LebretEPFL

Babson College EntrepreneurshipResearch ConferenceResearch Conference

1BCERC 2010Hervé Lebret

Motivation

High-tech entrepreneurship and innovation are important topics

Whereas Silicon Valley, the Boston Area and MIT have been extensively studied, Stanford University is not really well-known, y , y y ,with the exceptions of (many) famous success stories (Sun, Cisco, Yahoo, Google, etc)g )

Basic motivation is a description of high-tech entrepreneurship gand founders from Stanford university

Another important motivation is that data on Stanford may induce new studies and results on the topic


Spin-off and start-up


1991 study

The full set of data (2727 companies)

1991 study406

234234

149 4149

19

4

571242140

2368 Stanford spin-offs204

57


204

Stanford spin-offsStanford spin offs204 companies204 companies


Stanford spin-offs - distribution1%

35%20%

1%5% Nb of companies

Biotechnology35%20% Biotechnology

Medtech

Computers

Electronics

17%

21%

IT & SW

Energy ‐ Env

Unknown

1%

26%

1% 1%

Biotechnology

VC-Backed

38%26% gy

Medtech

Computers

Electronics

19%

IT & SW

Energy ‐ Env

Unknown


13%

2%

Stanford spin-offs – VC funding

100 in total, 4 VC-backed start-ups per year since 1985$120M / year of VC money, $30M per company since 1985

18

20

12

14

16

8

10

12

VC Backed

4

6No VC or unknown

0

2

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08


198

198

198

198

198

198

198

198

198

198

199

199

199

199

199

199

199

199

199

199

200

200

200

200

200

200

200

200

200

Stanford spin-offs - success$2 9B invested $2.9B invested, $8.2B of M&A, $22.4B of public value exc.

Cisco ($131B) and

14'000

Cisco ($131B) and Google ($153B)

10'000

12'000

14 000

6'000

8'000

VC

$M

2'000

4'000 Public

M&A

‐


Stanford spin-offs - status

18

20

Status All start-ups VC- backed

Public 8% 14%

P i 39% 37%

14

16Private 39% 37%

M&A 29% 36%

Ceased 16% 13%

Unknown 8%

10

12Unknown

Public

Total 204 100

8

10Private

M&A

Ceased

4

6

0

2


1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Stanford spin-offs – time to liquidityNb. of companies VC backed No VC or unknown

Unknown 2

Energy – env. 3

IT & SW 16 5

Electronics 16 6

5.97 years to liquidity when VC-backed6.55 years if no VC or unknown6 16 years overall Electronics 16 6

Computers 2 0

Medtech 2 4

Biotech 25 11

6.16 years overall

Unknown

Total 61 31

IT & SW

Energy ‐ Env

Computers

ElectronicsNo VC or unknown

All

Biotechnology

Medtech VC backed


0.0 2.0 4.0 6.0 8.0 10.0 12.0

A broader pictureA broader picture2140 companies2140 companies

out of the Wellspringout of the Wellspringof Innovationof Innovation


1991 studyThe full set of data

y406

234234

149 4

19

57

1242140Stanford spin-offs

204


204

WellSpring Start-ups (2140) - distribution

3% 1%

0%

2%

Biotech

Medtech5%

1%

5%10%

6%Computers

Semiconductor

Electronics5%

Electronics

Telecom

IT & SW

I t t9%12%

Internet

Energy ‐ Env

Manuf.

14%7%

Eng. Services

Non tech services

Finance

17%1%1%Consumer goods

Others

Unknown


WellSpring High-Tech Start-ups – distributionAll companies

4%8% 2%

%

2% 1% 10% Biotech

Medtech

Computers

p(1467)

7%

8%24%

Semiconductor

Electronics

Telecom

13%

IT & SW

Internet

Energy ‐ Env0% 0%1% VC-backed (737)

21%Manuf.

Eng. Services

6%

9%2%

29%

Biotech

Medtech

Computers

(737)

9%Semiconductor

Electronics

Telecom6%

17%21%

IT & SW

Internet

Energy ‐ Env


17%Manuf.

Eng. Services

Wellspring (2140) – VC funding754 VC backed companies p26 VC-backed start-ups per year over 1980-2004 (35% of all)$360M / year of VC money (81-94), $3.3B (95-00), $41M per company

250

300

200

250

150VC‐backed

Non VC‐backed

100

Non VC backed

0

50


1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004

WellSpring (2140) - success$27 5B invested $27.5B invested, $185B of M&A$287B of public value including eBay ($29.3B) Yahoo ($23.6B), Baidu ($13B)

but also Charles Schwab (Finance) - $21.7BThe Gap (Consumer Goods) - $14.5B

100'000

70'000

80'000

90'000

40'000

50'000

60'000

VC

10'000

20'000

30'000 Public

M&A

‐


WellSpring Start-ups (2140) – status in 2008

300

S ll C b k d

250

Status All start-ups VC- backed

Public 113 5% 142 10%

Private 699 33% 412 16%

M&A 719 34% 120 55%

150

200

unknown

Public

Private

Ceased 456 21% 79 19%

Unknown 153 7% 1 0%

Total 2140 754 35%

100

Private

M&A

Ceased

0

50

0

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


WellSpring Start-ups (2140) – status by field

21% f hi h t h i t 55% f i t h

100%

21% of high-tech are private vs. 55% of services or non-tech

70%

80%

90%

50%

60%

70%

Unknown

30%

40% Public

Private

M&A

0%

10%

20% M&A

Ceased


WellSpring – time to liquidityNb. of companies VC backed No VC or unknown

Consumer Goods 8 45Finance 0 52Non Tech Services 2 67Engineering services 5 37Other tech 0 5Manufacturing 1 10Energy – env. 0 7

5.3 years to liquidity when VC-backed8.0 years if no VC or unknown

0 7Internet 177 102IT & SW 125 93Telecom 107 34Electronics 35 43

6.6 years overall

Consumer goods

35 43Semiconductor 65 26Computers 18 8Medtech 51 27Biotech 36 18

Others

Eng. Services

Non tech services

Finance

g Biotech 36 18Total 630 574

IT & SW

Internet

Energy ‐ Env

Manuf.

Without VC

All

Computers

Semiconductor

Electronics

Telecom VC‐backed

19BCERC 2010Hervé Lebret0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

Biotech

Medtech

About the foundersAbout the founders

Reminder: These are Stanford alumni only; the companies may have had other founders, who are not studied here.


may have had other founders, who are not studied here.

A few famous founders

Jerry Yang and David FiloYahoo!

Sergey Brin and Larry Page Google

Dave Hewlett and Bill PackardHP

Sandy Lerner Larry BosackCisco HPCisco


Professors Theresa Meng and John Hennessy, Atheros Communications

Marc Andreessen and Professor James Clark,Netscape

Founders: years from graduation* to foundation

80

90

100

60

70

80

Average:2

40

50 2 years

10

20

30

0

10

‐7 ‐6 ‐5 ‐4 ‐3 ‐2 ‐1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 36

Years

* Stanford professors or staff imply 0 as value If a company has many founders Stanford spin-offs (license), 204 companies


value. If a company has many founders, this is an average by company.62 unknown or no Stanford founder identified

also 1 comp at 23, 27, and 36 years

250


200

250

150 Average:9 3

100

9.3 years

50

0

‐17 ‐15 ‐13 ‐11 ‐9 ‐7 ‐5 ‐3 ‐1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47

Years

1992 study: 383 companies, 42 unknownWellspring study: 2140 companies 162 unknown

* Stanford professors or staff imply 0 as value. If a company has many founders this is an


Wellspring study: 2140 companies, 162 unknown. has many founders, this is an average by company.


13 049.81

8.86

FinanceConsumer goods

Total

9.599.97

12.6313.04

Manuf. Eng. Services

Non tech servicesFinance

9 377.68

6.9511.95

TelecomIT & SWInternet

Energy ‐ Env

6.437.11

8.89.37

ComputersSemiconductor

ElectronicsTelecom

5.717.05

0 2 4 6 8 10 12 14

BiotechMedtech

All 3 groups266 unknown.

* Stanford professors or staff imply 0 as value If a company has many founders


value. If a company has many founders, this is an average by company.

Serial Founders

2’266 founders created only one company445 founders having created more than one company (16%)

including 44 professors (26%)

Nb of companies founded

Nb of founders Nb of professor foundersfounded founders

1 2266 1232 317 243 82 113 82 114 27 35 10 46 68 2 1

16 1 1Total 2711 167

% i l 16% 26%

Q ti l ti b t d i l t ?

% serial 16% 26%


Question: a correlation between success and serial entrepreneur?

How do serial founders do vs. novice founders

Data on non‐serial VC‐backed M&A Public Ceased1739 Number Average Number Average Number Average

474 $36'081'000 253 $520'000'000 102 $4'929'000'000 370Data on serial VC‐backed M&A Public Ceased988 Number Average Number Average Number Average

386 $39'132'000 220 $624'000'000 55 $5'955'000'000 2321st comp VC‐backed M&A Public Ceased445 Number Average Number Average Number Average

147 $28'466'000 120 $900'000'000 30 $11'934'000'000 922nd comp VC‐backed M&A Public Ceased445 Number Average Number Average Number Average

202 $42'042'000 93 $617'000'000 20 $3'371'000'000 1073rd comp VC‐backed M&A Public Ceased128 Number Average Number Average Number Averageg g g

57 $54'251'000 18 $277'000'000 6 $2'324'000'000 394th comp VC‐backed M&A Public Ceased46 Number Average Number Average Number Average

23 $38'867'000 13 $165'000'000 3 $1'109'000'000 1223 $38 867 000 13 $165 000 000 3 $1 109 000 000 12


A summary2’727 companies2’727 companies1’050 were VC backed150 were public in 2008

VC ($M) M&A ($M) Public ($M) Sales ($M) JobsStanford Start‐Ups 2'969 8'214 307'136 65'410 105'281 1991 Study (not including licenses)

1'842 75'406 185'175 171'579 454'082 including licenses)

WellSpring of Innovation (tech. only)

27'125 173'375 183'615 111'696 401'453

Total‐Tech 31'936 256'995 675'926 348'685 960'816 (non tech) 272 11'892 154'413 46'348 204'895 Total 32'208 268'887 830'339 395'033 1'165'711

Top 5 (tech) 1'719 75'800 445'000 115'661 603'528 Top 10 2'794 110'200 497'010 145'377 680'087 Top 20 4'532 148'800 564'040 173'645 762'618 T 50 8'379 194'772 626'037 199'502 872'731Top 50 8'379 194'772 626'037 199'502 872'731 Top 5 5% 29% 66% 33% 63%Top 10 9% 43% 74% 42% 71%Top 20 14% 58% 83% 50% 79%


Sales, jobs and public value in the table come only from the 153 public companies

Top 50 26% 76% 93% 57% 91%

Technology

Stanford high tech entrepreneurs-lebret