University Entrepreneurship The Blue Line Entrepreneur Center at Penn State

Historical Precedence and Need Each of these well known and successful companies were founded by university entrepreneurs at Stanford (Cisco, Sun, Yahoo, Google), Harvard (Facebook, Microsoft) and Texas (Dell). Weebly was founded by Penn State undergraduates who then moved to Silicon Valley during their senior year. I-Conserve’ s IP was sold to a Silicon Valley company.

Each of these well known and successful companies were founded by university entrepreneurs at Stanford (Cisco, Sun, Yahoo, Google), Harvard (Facebook, Microsoft) and Texas (Dell).

Weebly was founded by Penn State undergraduates who then moved to Silicon Valley during their senior year. I-Conserve’ s IP was sold to a Silicon Valley company.

Sand Hill Road It is not a coincidence that the largest concentration of VC firms in the World are across the street from the Stanford campus.

It is not a coincidence that the largest concentration of VC firms in the World are across the street from the Stanford campus.

Sand Hill Road vs. College Avenue SOURCES: *Sperling’s Best Places, **Simply Hired Penn State/State College compares favorably with Stanford/Palo Alto in every measure except risk capital sources 0 85 Venture Capital Firms 6949 5157 College of Engineering Enrollment $607 Million $694 Million University Research Expenditures 40%** 43%** Adults with Graduate Degrees 69%** 74%** Adults with College Degrees $7,303* $7,606* Spending per K-12 Student 45,638 57,809* Population State College Palo Alto 14.1 27.7 Average Commute (Minutes) $324,900* $1,415,100* Median Home Cost 99.08* 234.42* Cost of Living (U.S. Average=100)

Happy Valley twice as cheap as the Silicon Valley

Importance of University Entrepreneurs 8% of all university startups go public, in comparison to a going public rate of 0.07% for other U.S. companies. A 114X difference! Over 400 university startups have been created from nationally based on federally funded R&D . University start-ups have twice the survival rate of other U.S. companies. SOURCE: National Council of Entrepreneurial Tech Transfer

8% of all university startups go public, in comparison to a going public rate of 0.07% for other U.S. companies. A 114X difference!

Over 400 university startups have been created from nationally based on federally funded R&D .

University start-ups have twice the survival rate of other U.S. companies.

University-Entrepreneurs UE’s have access to world class facilities and advice. UE’s have low costs of living, healthcare and access to talent. PSU UE’s have access to the Blue Line for free office space and equipment. What they don’t have is access to capital and time .

UE’s have access to world class facilities and advice.

UE’s have low costs of living, healthcare and access to talent.

PSU UE’s have access to the Blue Line for free office space and equipment.

What they don’t have is access to capital and time .

Time in the BIGGEST Enemy for University Entrepreneurs University-Entrepreneurs have a short time on campus with access to facilities and experts. Upperclassmen will likely start ventures more often than underclassmen, cutting their opportunity to two years or less . Seniors and recent graduates have the lure of being recruited for high paying corporate jobs. Business Plans take an average of 400 hours (six months) to write. Due Diligence from VC’s or Angels could take many months more. Business Plan contests usually have only one winner and come around only once a year .

University-Entrepreneurs have a short time on campus with access to facilities and experts.

Upperclassmen will likely start ventures more often than underclassmen, cutting their opportunity to two years or less .

Seniors and recent graduates have the lure of being recruited for high paying corporate jobs.

Business Plans take an average of 400 hours (six months) to write.

Due Diligence from VC’s or Angels could take many months more.

Business Plan contests usually have only one winner and come around only once a year .

VC’s Only Swing for the Fences VC’s do not like to invest less than $5 Million in a company. $5 Million VC investment would require a $100 Million Exit to be deemed a home run. Only 0.3% of companies achieve the $100 Million level in the United States. VC’s have a regional bias, not wanting to travel further than one hour by plane or car. Therefore, the odds of a $100M venture-funded start-up coming out of State College are 600,000 to 1 . SOURCE: U.S. Census Statistics on Business Size

VC’s do not like to invest less than $5 Million in a company.

$5 Million VC investment would require a $100 Million Exit to be deemed a home run.

Only 0.3% of companies achieve the $100 Million level in the United States.

VC’s have a regional bias, not wanting to travel further than one hour by plane or car.

Therefore, the odds of a $100M venture-funded start-up coming out of State College are 600,000 to 1 .

94% of Venture Capital Investments are in Just 12 Metro Areas SOURCE: PriceWaterhouse Coopers MoneyTree Report

Swing Only at Strikes 90% of the companies in the U.S. have 20 or fewer employee companies (0.3% vs. 90%). Focus on creating <20 employee companies. Mitigate as much risk as possible. Provide only the funding they need, only when they need it , to reach sustainability. Provide access and resources for the few breakthrough companies. Step One: Create the Blue Line SOURCE: U.S. Census Statistics on Business Size

90% of the companies in the U.S. have 20 or fewer employee companies (0.3% vs. 90%).

Focus on creating <20 employee companies.

Mitigate as much risk as possible.

Provide only the funding they need, only when they need it , to reach sustainability.

Provide access and resources for the few breakthrough companies.

Step One: Create the Blue Line

Venture Capital IS NOT the Answer for Local Economic Development The odds of a successful venture-funded company in State College are 1 in 600,000 ! Even if that should happen, Venture Capital firms and Angel Groups who operate like VC’s seek and return on their invested capital within 5 years. Today exits occur largely from mergers and acquisitions, not IPO’s. M&A usually result in the acquired company moving or being consolidated.

The odds of a successful venture-funded company in State College are 1 in 600,000 !

Even if that should happen, Venture Capital firms and Angel Groups who operate like VC’s seek and return on their invested capital within 5 years.

Today exits occur largely from mergers and acquisitions, not IPO’s.

M&A usually result in the acquired company moving or being consolidated.

Schools in Top 12 Venture Capital Areas 1.89% $ 8,431,700 $ 445,585,000 Texas 2.54% $ 3,349,612 $ 131,814,265 Arizona State 3.22% $ 13,234,235 $ 411,126,907 CalTech 3.34% $ 20,849,993 $ 623,958,100 Harvard 3.35% $ 21,233,214 $ 632,973,484 Colorado 3.59% $ 43,500,000 $ 1,212,800,000 MIT 3.87% $ 36,199,485 $ 936,360,325 Washington 4.29% $ 8,478,309 $ 197,683,529 Georgetown 5.19% $ 16,805,484 $ 323,843,000 Georgia 6.37% $ 193,499,879 $ 3,035,949,000 UC System 6.71% $ 27,183,583 $ 404,962,000 UMass 8.61% $ 29,990,550 $ 348,439,588 Northwestern 8.77% $ 61,310,739 $ 699,211,807 Stanford 9.34% $ 42,900,000 $ 459,114,540 Florida 69.93% $ 147,412,824 $ 210,804,000 NYU ROI Licensing Revenue Research Expenditures

Underperforming Schools 0.15% $ 947,000 $ 652,328,819 Ohio State 0.29% $ 1,879,542 $ 656,634,000 Penn State 0.32% $ 1,688,857 $ 535,846,792 Arizona 0.39% $ 1,817,319 $ 467,724,048 Georgia Tech 0.39% $ 1,277,420 $ 323,861,560 Nebraska 0.41% $ 2,400,184 $ 583,996,531 North Carolina 0.53% $ 1,282,913 $ 240,280,186 Tennessee 0.60% $ 1,873,489 $ 313,826,837 Maryland 0.70% $ 4,124,547 $ 589,637,000 Duke 0.98% $ 3,823,581 $ 388,500,000 Purdue 1.01% $ 6,125,000 $ 605,341,000 Cornell ROI Licensing Revenue Research Expenditures

Economic Impact on Region We incubate 200 companies in a 10 year period, reaching the U.S. averages in size (shown in the table at the left). 87% of the incubated companies survive. Total employment, including spin-off jobs, would exceed 4000 . Total economic impact would be $1.4 Billion. Tax revenue would total $160 Million . SOURCES: Kentucky Cabinet for Economic Development U.S. Census Bureau Current U.S. Companies Employees Percentage Average Revenue $105.395M + 0.21% 750+ $105.395M 0.10% 500 to 749 $30.940M 1.45% 100 to 499 $5.676M 8.92% 20 to 99 $1.768M 10.77% 10 to 19 $0.879M 17.74% 5 to 9 $0.348M 60.82% 1 to 4

We incubate 200 companies in a 10 year period, reaching the U.S. averages in size (shown in the table at the left).

87% of the incubated companies survive.

Total employment, including spin-off jobs, would exceed 4000 .

Total economic impact would be $1.4 Billion.

Tax revenue would total $160 Million .