Talk given by Burton Lee at University of Zagreb, FER Faculty, April 16 2015, in Zagreb, Croatia. Website: www.StanfordEuropreneurs.org Twitter: @burtonlee, @europreneurs

1. 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
Burton.Lee@stanford.edu
|
www.StanfordEuropreneurs.org
|
@Europreneurs
University
of
Zagreb
Faculty
of
Electrical
Engineering
&
Compu/ng
(FER)
April
16
2015

2. Gree1ngs
from
Silicon
Valley
(and
the
Republic
of
California)

3. 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
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2015
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4. ABOUT
THE SPEAKER
DR. BURTON LEE PHD MBA
STANFORD SCHOOL OF ENGINEERING | INNOVARIUM VENTURES
BURTON.LEE@INNOVARIUM.NET
WWW.STANFORDEUROPRENEURS.ORG
@EUROPRENEURS

5. 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

6. hRp://www.europeanentrepreneursatstanford.com
|
hRp://me421.stanford.edu
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7. February 10 2014 @ Stanford Engineering
Jeff Lynn, Seedrs (UK) & Matija Kopic, Farmeron (HR)

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

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

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

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

12. Topics Covered
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16
2015
Equity
Crowdfunding
European Entry Strategies
for Valley Startups
East v West Europe
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13. The Story of European Entrepreneurship in Europe
Europe vs Silicon Valley
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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
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14. University
Advisory
&
Academic
Engagements
USA
–
Europe
–
La/n
America
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15. Selected
Industry
Experience
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Co-­‐Founder
Member,
Advisory
Board
Co-­‐Founder

16. Irish
Na4onal
Innova4on
Taskforce
with
Prime
Minister
Brian
Cowen
-­‐
Dublin,
Ireland
Prime
Minister
B.
Cowen
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16
2015
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17. Great
Tech
Startups
from
Croa/a

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World
Class
Startups
Out
of
Croa/a
Rimac
Automobili
Zagreb,
Croa/a

28. 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

29. 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

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

31. History
of
Entrepreneurship
at
Stanford
• First
spin-­‐out:
– HewleR
Packard
(1939)
• Other
Famous
Stanford
Companies
– Google
– Cisco
– Yahoo
– VMWare
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32. 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
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33. 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)
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35. Student
Entrepreneurship
@
Stanford
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~
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

36. 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
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37. “T
Model”
vs
“I
Model”
of
Educa/on
Which
is
Most
Effec4ve
for
Suppor4ng
Entrepreneurship
&
Innova4on?
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Design
|
Inter-­‐disciplinarity
|
Leadership
Cri/cal
Thinking
|
Crea/vity
|
Entrepreneurship
Ability
to
Understand
Mul4ple
Disciplines
Depth
of
Topic
Knowledge
Depth
of
Topic
Knowledge
“WISSENSCHAFT
ONLY”
APPROACH
“WISSENSCHAFT
+++”
APPROACH
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38. Origins
of
New
Startups
Created
Out
of
Stanford
• Research
• Teaching
||
Classroom
Ac4vi4es
• Student
Residences
• StartX
Accelerator
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39. Research
and
Intellectual
Property
–
based
Startups

40. The Office of
Technology
Licensing (OTL) is
responsible for…
the formal transfer of
patents, copyrights and
other technology through
license agreements.

41. 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.

42. Functional
Antibodies
FM Sound
Synthesis
Recombinant
DNA
Google
Notable Stanford Inventions

43. 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 ???

44. Stanford inventions begin as nascent ideas
supported by over $1 billion per year of funding
for research across 7 schools and SLAC.

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

47. 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

48. Invention Disclosures
Then. . .
28 in 1970
Now. . .
483 in 2014
10,380 cumulative

49. How Does OTL Decide What To License?
Licensing teams try to decide which inventions can make an impact.

50. 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?

51. Licensing Teams* Decide Patent and
Licensing Strategy
*Licensing Associate and Liaison teams have technical
degrees and are market focused.

52. “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

53. OTL Markets Broadly to Find the Best Fit
for the Technology

54. Recombinant DNA:
Many Companies of All Sizes

55. Functional Antibodies:
One Mid-Sized Company

56. Google:
One Start-Up Company

57. 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

58. Equity Can be One Component of the
Financial Package
About 10-15% of OTL’s licenses have an equity term.

59. 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

60. 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

61. Licensed Inventions Can Develop into Products
that generate income
for the company
and royalty returns to
Stanford.

62. 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

63. Teaching
and
Classroom
Ac/vi/es
–
based
Startups

64. 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
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67. Students
Observe
Real
Shoppers

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31
2014
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Product
Concepts
&
Prototypes
developed
by
students
in
collabora1on
with
industry
partners
and
sponsors

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31
2014
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70.
Product
Design
Is
*Not*
the
Same
as
‘Engineering
Design’

71. ‘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
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72. Student
Residences
as
Informal
Startup
Incubators

73. Kirkland
House
@
Harvard
University
Where
Mark
Zuckerberg
once
resided
and
created
Facebook
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Student
Housing
@
Stanford
University
Student
Residence
Areas
Main
Campus
Classroom
&
Research
Facili/es
Athle/c
Facili/es
Medical
School
&
Hospital

75. 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
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76. StartX
Stanford
Startup
Incubator

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78. Lessons
for
Croa/a

79. 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
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80. 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

81. 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
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82. 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
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83. Finland’s
University
Reform
Vision
2020
83

84. 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
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85. 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

86. THANK
YOU
Dr.
Burton
Lee
PhD
MBA
Stanford
School
of
Engineering
Burton.Lee@Innovarium.net
WWW.STANFORDEUROPRENEURS.ORG
@EUROPRENEURS

87.
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:
Burton.Lee@innovarium.net
Based
in
Palo
Alto,
CA
near
Stanford
University
– Bio/References:
LinkedIn
Profile
– Lecturer,
European
Entrepreneurship
&
Innova/on,
Stanford
School
of
Engineering
Apr
16
2015
87
Copyright
2015
Burton
H.
Lee
and
Innovarium
Ventures