Venture Acceleration Networks Report Oct11
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    Venture Acceleration Networks Report Oct11 Venture Acceleration Networks Report Oct11 Presentation Transcript

    • Nurturing Innovation: Venture Acceleration Networks Table of ContentsAcknowledgements _____________________________ 3Overview _____________________________________ 4Objective and Approach of the Study _______________ 9Part I: Drawing Lessons from Existing Models _______ 11 1. The Role of Venture Acceleration Networks ___________________ 12 2. Using Networks to Support Entrepreneurs ____________________ 18 3. Creating Strong Networks _________________________________ 23 4. Selecting Ventures _______________________________________ 32 5. Financing the Program____________________________________ 37 6. Choosing an Organizational Structure ________________________ 42 7. Adapting to the Innovation Ecosystem _______________________ 46 8. A Role for the Public Sector in Russia ________________________ 52Part II: Individual Program Descriptions ____________ 56 Virginia Biosciences Development Center ________________________ 57 TiE Bangalore ______________________________________________ 67 TechStars _________________________________________________ 75 SMART Innovation Center ____________________________________ 93 OCTANTIS ________________________________________________ 105 MIT Venture Mentoring Service _______________________________ 116 MaRS____________________________________________________ 130 Larta Institute _____________________________________________ 142 InnovateVMS _____________________________________________ 160 Innovation Network Corporation Japan _________________________ 166 IMP3rove _________________________________________________ 174 The IC2 Global Commercialization Group ________________________ 197 Endeavor_________________________________________________ 209 U-M Tech Transfer, the Catalyst Resource Network _______________ 221 Carbon Trust ______________________________________________ 234Appendix ___________________________________ 247 2
    • Nurturing Innovation: Venture Acceleration NetworksAcknowledgementsThis report was prepared for the Russian VentureCompany by a World Bank team led by Jean-LouisRacine in collaboration with Alistair Brett, DoinaCebotari, Juan Julio Gutierrez, Naoto Kanehira,Lawrence Kay, Anthony Lambkin, Sebastián Melin,Florian Theus, Christina Tippmann, Alina Tourkova,and Yanina Yermakova.The team would like to thank Leonid Levkovitch-Masluk of Russian Venture Company who providedimportant guidance and shared his invaluableknowledge. The team is also grateful to SophieSirtaine (World Bank Sector Manager), Pedro Alba(World Bank Country Director), Alfred Watkins (WorldBank) and Bob Hodgson (Zernike UK) for commentsreceived on the draft. The team would like to thankYevgeny Kuznetsov (World Bank) for comments on thecase studies. Finally, the team is grateful to ZenaidaKalinger (World Bank) for her support in putting thereport together and Rodrigo de Castro (World Bank)for the cover design.The team would also like to thank all of the staffmembers, mentors, consultants, clients andbeneficiary entrepreneurs of the venture accelerationnetworks who generously gave offered their time forinterviews. In particular, the team would like to thankSidney Burback (IC2), Pete Peters (Innovate VMS),Dave Raval (Carbon Trust), Sayaka Iwase (INC Japan),Howard Califano (SMART Innovation Center), DonDuval (MaRS), Ravindranath. P (TiE Bangalore), DaveGeary (Endeavor), Carlos Gutierrez and Rohit Shukla(Larta Institute), Jerome Smith (MIT VMS), EvaDiedrichs and Sabine Brunswicker (IMP3rove), WesHufstetter (University of Michigan Catalyst ResourceNetwork), Jenny Boyd and Nicole Glaros (TechStars),and Richard Caro (Acceleration Coop). 3
    • Nurturing Innovation: Venture Acceleration Networks management and technical talent from theOverview labor force with the appropriate businesses. They match service providers with potential new clients. And finally, they help create a culture of entrepreneurship by exposingRoles entrepreneurs to role models and by fostering the social capital that accelerates the exchangeVenture acceleration networks consist of of knowledge, ideas and deals in theexperienced, skilled and well-connected community.individuals who provide hands-on support toentrepreneurs. They help propel viable Common Threadsbusiness ideas to the market place byaccelerating the regeneration of ideas and Venture acceleration network programs haveconnecting entrepreneurs to the market. They several basic features in common. In theirachieve this by: current form they are all very recent, having Educating entrepreneurs through on-the- appeared only in the past decade, initially in job training on a broad range of practical the United States, although less structured skills related to the business growth. variations existed before. They are organized Connecting entrepreneurs to markets, around a professionally-staffed nucleus, capital, customers, partners, experts, typically supported by a core network of information and role models through mentors or brokers, and an extended network introductions, brokering and by creating of service providers and technical experts. bonds of trust and credibility. Often, they offer learning and networking events for the entrepreneurs and their Validating business ideas through strategic communities of mentors, brokers, service advice and direction, and by creating a providers and experts. They typically include supportive environment for business some level of screening, tied to the development experiments. Validation entrepreneur’s affiliation, the venture’s profile provides the critical value-added of or its potential for success. None of the venture acceleration networks. It builds on programs are financed to any significant extent the two other pillars, educating and through upfront user fees. connecting, to help ideas fail early, often and inexpensively. ApproachThe impact of venture acceleration networkprograms extends beyond the entrepreneurs Around this set of common features, venturethey serve directly to the wider community of acceleration networks experiment with a wideentrepreneurs, investors, and business service range of approaches to financing,providers. They provide investment-ready or management, network creation, selectivity,screened opportunities for potential investors. service delivery and structure. Three mainThey reduce public and private resources approaches emerge from this variety,invested in nonviable business ideas by although most of the programs do not fallaccelerating their path to failure through neatly into any single category. A firstmarket validation. They help match approach aims to commercialize technology 4
    • Nurturing Innovation: Venture Acceleration Networksprojects for short-term payoffs (e.g. creating financials, and relatively open in structure andspin-offs). A second approach aims to build a timeline.local self-sustainable innovation ecosystemwith broad medium to long-term payoffs (e.g. Programs aiming to build innovation-relatedcreating linkages in the entrepreneurship consultancy markets do not aspire to pickcommunity). A third approach aims to foster a winners but to help businesses grow bymarket for innovation-related services by connecting them to qualified and vettedbuilding capacity, transparency and efficiency commercial sources of support. They follow ain the service provider market, and raising “hands-off” approach to supportingawareness among SMEs. entrepreneurs, creating analytical tools, and training qualification tools to supportPrograms aiming to foster short-term R&D innovation-related consultancy, and bycommercialization select technology projects marketing the network. Hence, they generallyon the basis of their (assumed) technical and operate with small teams. Their light-touchmarket potential. They often include funding approach means that their models are easilyfor feasibility testing. Some rely on full-time scalable, although they are also less rich inprofessional mentors and brokers to provide content.bare-bones project teams with rapid anddedicated support. Because they target Success Factorstechnologies that are not yet fully out of thelab, they also focus on team-building, bringing Experiments with venture accelerationin management talent from the outside to networks highlight many success factors.complement the technical talent of the project Critical factors include:team. These many roles make these programs The programs are managed by highly-relatively staff and resource-intensive. To networked “magnetic” individual who areminimize costs these programs are structured able to attract mentors, business servicesaround clear milestones and timelines. providers, experts and ventures by virtue of their position in the businessPrograms aiming to build innovation community. They are well-knownecosystems select projects on the basis of their overachiever entrepreneurs and businessventure teams, and their perceived capacity to leaders with significant convening power.benefit from the program and create high-impact ventures. Many have elements of self- The programs start with small “high-selection whereby unfit entrepreneurs are value” networks with very limitedmade to opt out of the programs. The numbers of high-quality entrepreneurialprograms focus on building the skills of the teams and mentors. High-quality networksventure team, recognizing this as a long-term can be self-perpetuating.investment for society. The programs also The programs select mentors who valuefocus on nurturing and leveraging external their participation in the networks beyondmentor and advisory networks to support the immediate financial reward. They areventures, rather than rely on in-house capacity. motivated by giving-back to theirThey are light-weight in terms of staffing and communities, networking with ventures and other mentors, potential investment 5
    • Nurturing Innovation: Venture Acceleration Networkspositions in the ventures and potential Challengesmanagement positions. Mentors whoderive personal satisfaction from their Venture acceleration network experimentsinvolvements are “sticky” and stay highlight a multitude of challenges. Some faceconnected with the program and with the challenges linked to the environments whereventures. Giving flexibility to mentors and they operate. Where there is no local pipelineentrepreneurs to select each other creates of coachable ventures or of mentors with thelong-lasting relationships and thus expands right mix of skills, experience and connections,the size and sustainability of an programs do not succeed. Programs also faceentrepreneurship network. an uphill challenge where there is no local access to complementary forms of public andThe programs offer consulting services private support, financial and other.and match-making as a package withmentoring, not as standalone services. This Some venture acceleration networks alsoensures that the ventures seek relevant suffer from design issues. Common problemsconsulting services and are well-prepared are linked to top-down match-making ofbefore prospective meetings. Mentors act mentors and entrepreneurs, which typicallyas gateways or network hubs to other leads to a mismatch, poor screening offorms of support and as connectors. mentors and advisors, and building programsThe programs ensure that non-performing based on pure financial incentives for advisors.entrepreneurs are filtered out. This iseither done through extensive screening The Role of the Public Sectorprocesses or by admitting a wide pool ofventures and putting indirect pressure on Venture acceleration networks can address anon-performers to self-select out during number of market and system failures thatthe course of the program. hamper innovation and entrepreneurship. These market failures are linked to theThe programs actively manage trust. They transaction costs, search costs and informationachieve this by setting and enforcing clear asymmetries that lead to a less-than-optimalguidelines and expectations for amount of innovation-related services suppliedentrepreneurs and advisors. In addition, and sold on the market. They are also linked tothey leverage personal networks in tight- the positive externalities of investing in theknit entrepreneurial communities with skills of an investee, since part of those skillsabundant social capital, where ethical will be captured by future investors. Theviolations would cause reputational risk. system failures are linked to capabilitiesWhere there is no such community, they failures -i.e. inadequacies in entrepreneurs’use self-policing through mentor groups. abilities to act in their own best interest - andPrograms supporting ventures far from framework failures related to cultural andrelevant markets, sources of financing and social norms.specialized knowledge build bridges torelevant global networks. The public sector can help address these gaps by supporting venture acceleration network experiments. Venture acceleration network 6
    • Nurturing Innovation: Venture Acceleration Networksprograms grow in different ways, requiredifferent institutional structures and servedifferent functions depending on the localcontext. Hence there is no single approach tobuilding these programs and only throughexperimentation can effective models beidentified.The public sector can ensure that it quicklyconverges to appropriate models bysupporting existing network initiatives andpartnering with regional stakeholders tocreate new ones. Support can come in theform of facilitating partnerships betweenrelevant stakeholders, providing financing on acompetitive basis, and creating mechanismsfor programs to adopt good practices and learnfrom one another. 7
    • Nurturing Innovation: Venture Acceleration NetworksTable 1: Success factors of venture acceleration networks Beneficiaries Human Network Innovation Ecosystem Management Quality of the Network quality Some Mentors as Prerequisites team before size entrepreneurship gateways to Commitment to Connectedness culture and other support the venture to relevant community Screening Quality of the markets Critical mass of mentors idea/technology Connectedness deal flow Mentorship code Connectedness to the entrepreneurship to the Universities of conduct and community entrepreneurship Business trust community environment management Business Complementary Social capital of experience innovation support staff programs Entrepreneurship Screening and Existing filtering-out experience entrepreneurship beneficiaries Motives networks Staff profile Local market demand Dedication to the Complementary program Business partners services Industry sector expertise Venture funding Public-private- Private donor funding sources academic partnerships Public program funding sources Match-making of Quality of innovation advisors & management entrepreneurs consultants Activities that enhance the value of the network Program length and meeting periodicity Meeting coordination & facilitation Host institution brandEnablers Communication of success 8
    • Nurturing Innovation: Venture Acceleration Networks Objective andApproach of the StudyThe objective of this report is to understand the role,operational models and identify good practices ofprograms that seek to accelerate innovativeentrepreneurship by managing, nurturing andleveraging social and business networks. This report isbased on 15 case studies of venture accelerationnetwork programs spanning 43 countries (Table 2).The general findings are presented in Part I while theindividual case studies can be found in Part II. Theconclusion suggests next steps for operationalizing aventure acceleration network in Russia.The basic selection criteria for the case studies werethat the programs rely on networks to helpentrepreneurs innovate. The 15 case studies wereselected so that as a whole, they representedprograms with: Sufficient track record to observe their output, understand their impact and draw lessons from the challenges they faced. A wide variety of business models. Distinct innovation ecosystems, in terms of their geography, enabling environment and supportive institutions. Serve ventures in a variety of sectors and growth stages. 9
    • Nurturing Innovation: Venture Acceleration NetworksTable 2: Case study organizations, program and geographic coverage Shorthand name Metro Program Organizations Case study programs used in this Location population launch report (million) date Metropolitan Coverage MaRS Discovery Toronto, Advisory Services MaRS 5.1 2005 District Canada Singapore-MIT Alliance for Research and Technology Catalyst Program SMART Singapore 5.1 2009 (SMART) Innovation Center Santiago, Octantis Mentoring Program Octantis 7.2 2004 ChileUniversity of Michigan Catalyst Resource Ann Arbor, Catalyst RN 0.3 2007 Tech Transfer Networks USA Boulder*, TechStars TechStars TechStars 0.3 2007 USA MIT Venture MIT Venture MIT VMS Boston, USA 4.6 2000 Mentoring Service Mentoring Service Kitchen Cabinet Virginia Biosciences Richmond, Business Advisory VBDC 1.2 2003 Development Center USA Board St. Louis, Innovate VMS Innovate VMS Innovate VMS 2.8 2007 USA The Indus Entrepreneurship Bangalore, Entrepreneurs (TiE), Acceleration Program TiE EAP 6.6 2006 India Bangalore (EAP) National Coverage Entrepreneurship Fast United Carbon Trust Carbon Trust - 2001 Track Kingdom Innovation Network Open Innovation INC Japan Japan - 2010 Corporation Japan Platform DST-Lockheed Martin 2 2 IC India Innovation IC India India - 2007 Growth Multinational Coverage 3 3 European IMP rove All IMP rove - 2006 Union 11 emerging Endeavor All Endeavor - 1998 countries Commercialization USA + Larta Institute Larta - 2004 Assistance Program others*other locations include New York, Seattle and Boston.Source: US Census; Statistics Canada; Department of Statistics Singapore; http://www.world-gazetteer.com. 10
    • Nurturing Innovation: Venture Acceleration Networks network members (MaRS). These internal network members can be mobilized quickly and intensively when a need arises, and are usually pro-active, acting as “project scouts” 1. The Role of Venture within a research institution. At the other extreme, one program, IMP3rove, adopts a Acceleration hands-off approach to network facilitation by Networks creating incentives to join a network in the form of standardization of service offerings, professional certifications and market visibility. In between those two extremes lie programsKey findings that draw individuals from existing networks – either from social networks (TechStars) or Venture acceleration networks address alumni networks (MIT VMS) – and formalize market gaps associated with skills, them into networks that serve their specific transaction costs, resource efficiency objectives. Where there are no such pre- and network externalities. existing networks to draw from, other programs assemble and manage new external networks. New networks are necessary inObjectives communities where the entrepreneurship community is not dense (Octantis), and whereThe venture acceleration networks in the case the networks need to span vast geographicstudies can be classified according to their areas (INC Japan nationally, and Endeavorobjectives (Figure 1). A first category of globally).programs helps accelerate thecommercialization of technology issued from Addressing Market and System FailuresR&D, often still at the pre-venture stage(Catalyst RN). A second category focuses on The programs in the case studies play theaccelerating the growth of early stage following four roles in promoting innovationventures, hence on “commercializing” and entrepreneurship:entrepreneurs rather than commercializing Improve entrepreneurial capacity throughR&D (TechStars). Yet, a third focuses on experiential learning.accelerating growth in revenue-generatingsmall and medium enterprises (SMEs) Reduce transaction costs and improve(IMP3rove). Many serve more than one of search efficiency between entrepreneursthese objectives. and the resources they need to succeed. Increase public and private resourcePrograms vary in their level of engagement efficiency by helping business ideas failwith network creation, coordination and early, often and inexpensively.management. At one extreme some programsfocus on building strong internal pools of Leverage network externalities byprofessionalized mentors, brokers and expanding and strengthening networks.advisors, who they complement with external 12
    • Nurturing Innovation: Venture Acceleration NetworksFigure 1: Program objectives and business concrete entrepreneurial skills such as businessmodels planning, business plan development, business management, accounting and legal, marketing, Program objective financing, and hiring staff, but also more tacit skills such as negotiating with investors and commercialization acceleration SME growth approaching potential customers (Box 1). In Venture R&D the case of IMP3rove, capacity for innovative entrepreneurship is not built through learning as much as it is through building more effective internal business processes (Box 2). Several of Internalize the network the programs in the case studies have Catalyst RN & education as their primary objectives (MIT consolidate MaRS VMS). The educational role of all mentor informal 2 IC India networks has high externalities. It is not networks possible for any single investor to fully capture SMART the returns of mentoring an entrepreneur. Carbon Trust Most entrepreneurs fail several times before Larta building a successful business. Future investors OctantisIntensity of program engagement with network Create & will thus free-ride on any investment in skills manage new Innovate VMS acquired through mentoring during previous networks INC Japan ventures. This relates to the public good aspect VBDC of building entrepreneurial capacity. Endeavor MIT VMS Consolidate VV existing TiE EAP networks TechStars Facilitate new networks 3 IMP rove through standards & certificationBuilding capacity for innovativeentrepreneurship mostly translates toproviding business skills through experientiallearning and improving internal businessprocesses. Although some programs such asMaRS have classroom learning events andtraining workshops, most learning takes placethrough mentorship. Learning involves both 13
    • Nurturing Innovation: Venture Acceleration NetworksBox 1: Building entrepreneurial capacity Box 2: Building innovative capacity throughthrough experiential learning. management consulting.Brendan McNaughton is the founder and chief Perficable is a metal-cutter and manufacturer oftechnical officer of Lifemagnetics, a biotechnology metal parts for cars, furniture and generalfirm spun out of his research at the University of appliances based in Spain. It was founded in 1999. 3Michigan with the help of Catalyst RN. The Before it approached IMP rove its objective was tocompany has five employees. It is currently become more innovative so that it could expandcommercializing technology for bacteria into new industries.identification and measurement of patientresponses to antibiotics, which will help doctors Perficable had several industry niches that it 3target treatments at patients more quickly. wanted to target and joined IMP rove for the help it could provide in improving its internal processesIn establishing Lifemagnetics Brendan required for encouraging and managing innovation. 3substantial help with starting and managing the IMP rove highlighted two areas for improvement:business, and then getting connected to people the creation of an innovation plan and the needwith the expertise and experience he needed to for collection and analysis of customer feedback ingrow the company. Catalyst RN helped with order to improve customer satisfaction. The first 3Brendan’s and Lifemagnetics’ development in both issue that IMP rove thus helped with was theof these areas. specification of problems that needed solving.While he was at the university Brendan was To try and improve Perficable’s processes in these 3guided by a mentor (who eventually became two areas, IMP rove helped the firm to develop anLifemagnetics’ CEO), and then a business start-up innovation plan that involved all the staff andspecialist who helped him to write a business plan explored the generation, development andand assess the potential market for his research. evaluation of innovative ideas. In order to improve 3He was then connected to consultants and other the flow of customer feedback, IMP rove helpedexperts who were central to the formation of the Perficable to both manage and analyze the clientbusiness and management of the technology. responses that they were receiving but previously not managing adequately.Catalyst RN also helped Brendan to find vitalsources of funding at each stage of the The innovation and feedback management planscommercialization process. At the start he are still being implemented but it is hoped thatreceived USD 150,000 through two funds at the they will have several important effects,University of Michigan that enabled the particularly in Perficable’s ability to encourage thetechnology to be prototyped. The network then creation, selection and marketization of innovativeconnected him to the Walter Coulter Foundation, ideas. It is also hoped that Perficable will soonwhich gave him a total grant of USD 350,000 over have customer satisfaction strategies in place thatthree years for support in growing the business. are based on customer feedback.Finally, the network introduced him to a venturecapitalist, which has invested in the firm. Source: Engel, K., Diedrichs, E. and Brunswicker, S. 3 (2010) IMP rove: A European Project with Impact: 50Source: Interview with Brendan McNaughton. Success Stories on Innovation Management, Europe INNOVA Paper No 14. 14
    • Nurturing Innovation: Venture Acceleration NetworksReducing transaction costs implies connecting improve them or abandon them. They alsoentrepreneurs with relevant and trusted allow for entrepreneurs to quickly recognizeresources (e.g. lawyers, consultants, their own failure if they do not have theinvestors, business partners, potential required willingness or ability to take theiremployees, potential customers). Transaction ventures to the market. Importantly, they helpcosts can be deal-breakers between early- governments minimize the public resourcesstage ventures and the external resources they spent on supporting ventures and businessneed to succeed. Entrepreneurs with limited ideas that do not have a future in the market.experience do not know what types of A comprehensive study of new businessresources they need, how to formulate their development in the United States over a 50needs, and who to trust. The same may hold year period found that 3,000 ideas only lead totrue for SMEs in the area of innovation one market success.1 The role of the programmanagement. From their viewpoints the is hence to reduce the time and resourcesproviders of “resources” see early-stage spent on the 2,999 ideas that never make it toventures and SMEs as a very fragmented the market. They help business ideas fail early,market that requires prohibitive business often and inexpensively.development costs. Moreover, there areinformation asymmetries due to the lack of Market validation plays a particularlyefficient market signals: investors, business important role for young firms and newpartners and customers cannot easily markets. Young firms do not have the start-updistinguish promising opportunities from poor capital or time for careful market research (Boxopportunities. All programs include 3). And for disruptive innovation, classicalmechanisms to reduce transaction costs. Some approaches to market research are often notare passive (IMP3rove’s consultant database) very informative since the markets to bewhile others are active (IC2’s brokers). researched do not yet exist. Rather what isPrograms centering around mentors ensure needed is testing the idea quickly to havethat transaction costs are minimized on both market judgment from individuals with uniquethe supply and demand sides. For example, abilities to “interpret” the market. This maythey will only connect a venture to a trusted include talking to potential customers,investor if and when the venture is investment- investors, peers and experts at an early stage,ready. which can be accelerated by tapping into a mentor’s network to help identify potentialRapid market validation leads to increased customers and markets.public and private resource efficiency. Therole of the programs is to continuously connect Resource efficiency is best exemplified by theentrepreneurs to resources (experienced “sounding boards” in the program casesentrepreneurs, industry leaders, potential studies. These groups of individuals providecustomers, potential investors, technical earnest and rapid feedback to entrepreneurs.experts, consultants, etc.) that can provide These boards are different from the typicalthem with rapid feedback on their business advisory boards that individual companiesideas and on their ventures. The programs have.allow entrepreneurs to limit the time and 1 Stevens G and Burley J. (1997) 3,000 Raw Ideas = 1resources they spend on bad ideas, and commercial Success , Industrial Research Institute. 15
    • Nurturing Innovation: Venture Acceleration Networks roles stated above on a sustained basis. SocialBox 3: Market validation versus marketresearch networks help entrepreneurs improve their skills, reduce their transaction costs and In a seminal study on the origin and evolution of validate their ideas. Mentors are the key the fastest growing businesses in the United States gateway to entrepreneurial networks. They Amar Bidhé found that they often employ fast- develop the trust relationships with their paced strategies of opportunistic adaptation based mentees that are required for network entry. on rapid market validation: “Entrepreneurs who As network members themselves, mentors start uncertain businesses with limited funds have epitomize the benefits of leveraging networks: little reason to devote much effort to prior planning and research. They cannot afford to they sometimes keep their roles as mentors spend much time or money on the research; the after the program, they sometimes invest in modest likely profits doesn’t merit much; and, the their mentees, they sometimes join their high uncertainty of the business limits its value. ventures as managers, and they sometimes help them broker relationships with investors, Sketchy planning and high uncertainty requires customers, business partners or service entrepreneurs to adapt to many unanticipated providers. In programs with mentors in problems and opportunities. One entrepreneur residence, such as the University of Michigan likens the process of starting a new business to Catalyst Resource Network, a mentor will jumping from rock to rock up a stream rather than frequently serve as the start-up company’s constructing the Golden Gate Bridge from a detailed blueprint. Often, to borrow from Elster’s “acting CEO”. discussion of biological evolution, entrepreneurs adapt to unexpected circumstances in an Impact “opportunistic fashion: their response derives from a spur of the moment calculation made with The rationale for venture acceleration the intention of maximizing immediate cash-flow. networks is grounded on market failures, and Capital-constrained entrepreneurs cannot afford studies on angel investing suggest that to sacrifice short term cash for long term profits. mentoring has a positive effect on investment They have to play rapid-fire pinball rather than a returns (Box 4), but there has yet to be a strategic game of chess.” rigorous evaluation of their economic impact. Source: Amar Bidhé (2000) The Origin and Evolution of Only a few of the programs in the case studies New Businesses. make any attempt to measure impact. Larta is the only program to publish its impactLeveraging networking externalities implies assessments. They suggest that the programsabsorbing entrepreneurs into high-value do make contributions to the progress of thenetworks. Social networks can be difficult to venture in several areas. These include formingpenetrate for newcomer entrepreneurs, even new partnerships and deals, raising investmentin dense and highly-connected clusters such as and raising revenue. Anecdotal evidence fromSilicon Valley.2 Connections to entrepreneurial the case studies suggests that many of thenetworks help to achieve the three program entrepreneurs benefited in similar ways from other programs.2 There are now numerous “bridging organizations” inSilicon Valley whose role is to connect outsiderentrepreneurs or inexperienced entrepreneurs torelevant networks. 16
    • Nurturing Innovation: Venture Acceleration NetworksBox 4: The effect of mentoring on angel investment returnsAttracting investment is a key part of the growth of any startup, but so is the expertise