University Entrepreneurship The Blue Line Entrepreneur Center at Penn State
Historical Precedence and Need <ul><li>Each of these well known and successful companies were founded by university entrep...
Sand Hill Road <ul><li>It is not a coincidence that the largest concentration of VC firms in the World are across the stre...
Sand Hill Road vs. College Avenue SOURCES: *Sperling’s Best Places, **Simply Hired Penn State/State College compares favor...
Happy Valley twice as cheap as the Silicon Valley
Importance of University Entrepreneurs <ul><li>8%  of all university startups go public, in comparison to a going public r...
University-Entrepreneurs <ul><li>UE’s have access to world class facilities and advice. </li></ul><ul><li>UE’s have low co...
Time in the BIGGEST Enemy for University Entrepreneurs <ul><li>University-Entrepreneurs have a short time on campus with a...
VC’s Only Swing for the Fences <ul><li>VC’s do not like to invest less than  $5 Million  in a company. </li></ul><ul><li>$...
94% of Venture Capital Investments are in Just 12 Metro Areas SOURCE: PriceWaterhouse Coopers MoneyTree Report
Swing Only at Strikes <ul><li>90% of the companies in the U.S. have 20 or fewer employee companies (0.3% vs. 90%). </li></...
Venture Capital IS NOT the Answer for Local Economic Development <ul><li>The odds of a successful venture-funded company i...
Schools in Top 12 Venture Capital Areas 1.89% $  8,431,700  $  445,585,000  Texas 2.54% $  3,349,612  $  131,814,265  Ariz...
Underperforming Schools 0.15% $  947,000  $  652,328,819  Ohio State 0.29% $  1,879,542  $  656,634,000  Penn State 0.32% ...
Economic Impact on Region <ul><li>We incubate  200  companies in a 10 year period, reaching the U.S. averages in size (sho...
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Transcript of "University Entrepreneurship"

  1. 1. University Entrepreneurship The Blue Line Entrepreneur Center at Penn State
  2. 2. Historical Precedence and Need <ul><li>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). </li></ul><ul><li>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. </li></ul>
  3. 3. Sand Hill Road <ul><li>It is not a coincidence that the largest concentration of VC firms in the World are across the street from the Stanford campus. </li></ul>
  4. 4. 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)
  5. 5. Happy Valley twice as cheap as the Silicon Valley
  6. 6. Importance of University Entrepreneurs <ul><li>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! </li></ul><ul><li>Over 400 university startups have been created from nationally based on federally funded R&D . </li></ul><ul><li>University start-ups have twice the survival rate of other U.S. companies. </li></ul>SOURCE: National Council of Entrepreneurial Tech Transfer
  7. 7. University-Entrepreneurs <ul><li>UE’s have access to world class facilities and advice. </li></ul><ul><li>UE’s have low costs of living, healthcare and access to talent. </li></ul><ul><li>PSU UE’s have access to the Blue Line for free office space and equipment. </li></ul><ul><li>What they don’t have is access to capital and time . </li></ul>
  8. 8. Time in the BIGGEST Enemy for University Entrepreneurs <ul><li>University-Entrepreneurs have a short time on campus with access to facilities and experts. </li></ul><ul><li>Upperclassmen will likely start ventures more often than underclassmen, cutting their opportunity to two years or less . </li></ul><ul><li>Seniors and recent graduates have the lure of being recruited for high paying corporate jobs. </li></ul><ul><li>Business Plans take an average of 400 hours (six months) to write. </li></ul><ul><li>Due Diligence from VC’s or Angels could take many months more. </li></ul><ul><li>Business Plan contests usually have only one winner and come around only once a year . </li></ul>
  9. 9. VC’s Only Swing for the Fences <ul><li>VC’s do not like to invest less than $5 Million in a company. </li></ul><ul><li>$5 Million VC investment would require a $100 Million Exit to be deemed a home run. </li></ul><ul><li>Only 0.3% of companies achieve the $100 Million level in the United States. </li></ul><ul><li>VC’s have a regional bias, not wanting to travel further than one hour by plane or car. </li></ul><ul><li>Therefore, the odds of a $100M venture-funded start-up coming out of State College are 600,000 to 1 . </li></ul>SOURCE: U.S. Census Statistics on Business Size
  10. 10. 94% of Venture Capital Investments are in Just 12 Metro Areas SOURCE: PriceWaterhouse Coopers MoneyTree Report
  11. 11. Swing Only at Strikes <ul><li>90% of the companies in the U.S. have 20 or fewer employee companies (0.3% vs. 90%). </li></ul><ul><li>Focus on creating <20 employee companies. </li></ul><ul><li>Mitigate as much risk as possible. </li></ul><ul><li>Provide only the funding they need, only when they need it , to reach sustainability. </li></ul><ul><li>Provide access and resources for the few breakthrough companies. </li></ul><ul><li>Step One: Create the Blue Line </li></ul>SOURCE: U.S. Census Statistics on Business Size
  12. 12. Venture Capital IS NOT the Answer for Local Economic Development <ul><li>The odds of a successful venture-funded company in State College are 1 in 600,000 ! </li></ul><ul><li>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. </li></ul><ul><li>Today exits occur largely from mergers and acquisitions, not IPO’s. </li></ul><ul><li>M&A usually result in the acquired company moving or being consolidated. </li></ul>
  13. 13. 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
  14. 14. 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
  15. 15. Economic Impact on Region <ul><li>We incubate 200 companies in a 10 year period, reaching the U.S. averages in size (shown in the table at the left). </li></ul><ul><li>87% of the incubated companies survive. </li></ul><ul><li>Total employment, including spin-off jobs, would exceed 4000 . </li></ul><ul><li>Total economic impact would be $1.4 Billion. </li></ul><ul><li>Tax revenue would total $160 Million . </li></ul>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

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