Top 10 Federal Investment Strategies For Maximum Job Creation 4 1 10
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    Top 10 Federal Investment Strategies For Maximum Job Creation 4 1 10 Top 10 Federal Investment Strategies For Maximum Job Creation 4 1 10 Presentation Transcript

    • Top 10 Federal Investment Strategies for Maximizing Americas Proven Net Job Creation Engine: Young Companies
    • Background
        • Investment in startups and young companies creates a sustainable entity that can generate its own revenue and create jobs without constant refunding, and
        • Net job creators are proven to be young companies, not just small businesses (see previous reports), and
        • The biggest challenge facing startups and young companies is a lack of growth capital. (see previous reports).
        • Accordingly, what role can the federal government take to fill the capital void in such a way that fosters more successful startups and small companies?
        • A significant federal benefit is it can point these programs at any group of industries, agencies and applications.
    • Top 10 Ways to Fix Lack of Capital (From tech transfer to startups to growing companies)
        • Fund best practices of tech transfer
        • Require small % of every federal R&D dollar be allocated to tech transfer and startup working capital
        • Revise SBIR programs to shift investment away from research addiction to commercialization activities
        • Leverage huge customer buying power
        • Re-create rapid fielding pilot programs
        • Create MBA Startup seed funds to distribute thru existing university channels
        • Government Venture Fund (GVF) targeting early stage investment
        • Promote existing wealth into smart money angel pools thru alumni angel groups
        • Co-invest federal funds with angels and VCs to stimulate more investment
        • Create “floorplan” financing for government contractors
    • Fund Best Practices of Tech Transfer Create a “Spin Out Engine” Spin Out Engine
    • Immediately Increase Startups Created Annually from Fed R&D Dollars by 200%
          • Currently $150B annual R&D spend averages output of 1 startup per $77M R&D = roughly 2,000 startups
          • Allocate 1% of R&D spend or $1.5B to fund 6,000 startups
            • Use Spin Out Engine to identify
              • unique technologies
              • with large market interest,
              • with short time to market
              • and modest capitalization requirements
            • $25K per startup for tech transfer (incentivizes spin outs)
            • $225K working startup capital per company
            • Tech transfer infrastructure already in place to manage this program
          • 6,000 fed technology startups per year is game changing
    • Revise SBIR Programs to Foster More Startups/Young Companies
          • Currently $2.3B spent thru these programs
          • Average $250K SBIR I and require output is….
            • A working prototype
            • In a small business
          • SBIR I “graduates” eligible for SBIR II averaging $750K and require that the funds….
            • Are allocated to the completion of a pilot test with the sponsoring/funding agency
          • If Pilot is successful,
            • the sponsoring agency is required to buy and implement the technology it funded (sole source allowed for SBIR III companies)
          • The sponsoring agency maximizes its investment
          • Agency procurement provides valuable revenue and credibility for young company that will help them obtain more customers (and investors if necessary)
          • Infrastructure already in place, just modify funding and result requirements
            • Ensure adoption of 1,000s of new technologies helping the agencies fulfill their missions, supporting young companies and job growth
    • Leverage Huge Customer Buying Power
          • Federal Government huge source of procurement
          • Purchasing infrastructure already in place
          • Leverage federal funding by purchasing the fruits of its investment
    • Re-create Rapid Fielding Programs
          • Numerous successful Rapid Fielding, Rapid Prototyping and Pilot programs in private and public markets
          • Allows customer to “test-drive” product in small controlled environment similar to real world needs
          • Substantially accelerates procurement timeframe making new technology purchases while technology still new
          • Would require modest new organizational staffing and infrastructure but many successful models in place with modest overhead
    • MBA Startup Seed Funds
        • Provide equity capital to MBA graduate students to fund new business plans as final credit for business course
          • Student works with other students, faculty and advisors to build business plan
          • Target business to an industry pegged by federal government as national priority in need of innovation and growth (energy, healthcare, defense, transportation, education, manufacturing)
          • Students receiving an A also receive a $100,000 seed loan
          • Students receive $100,000 additional funding if they license technology from their university tech transfer office
        • University network has existing faculty infrastructure and capacity to fund tens of thousands of startups per year
          • Have data and investments managed by Federal ANGEL Network
        • $2.2B = 20,000 startups (2,000 with licenses)
    • Government Venture Funds
          • Follow and improve proven federal models: In-Q-Tel and OnPoint
            • Proven federal models learning best practices from successful corporate venture capital funds
            • Leverage the huge purchasing power of the federal government to generate valuable revenue for young companies
            • Take to market new technology in healthcare IT, renewable energy, energy conservation, cyber security, defense
            • GSA, VA Systems, DOD, State Department, DHS best candidates
            • Establish multiple 3 rd party funds with full time proven corporate VCs
          • Add $1B of investment capital into the market
            • Substantial and immediate impact
            • 26,000-80,000 permanent jobs per $1B
          • Would require new but small/agile teams to be built
            • Next generation of federal and corporate venture capital best practices
    • Support Creation of Alumni Angel Groups
        • Examples- Irish Angel Network at Notre Dame and Wisconsin Badger Alumni Capital Network model (BACN)- Alumni group members provide:
          • leadership to startups
          • Introductions to customers, strategic partners, investors, mentors, etc
          • Vital working capital
          • Corporate partnerships
          • Corporate customers
        • Turn $5M of alumni participation into
          • Alumni ROI and future giving
          • Supporting passionate entrepreneurs is personally rewarding
          • New generation of CEO Alumni givers (successful entrepreneurs)
        • $1B Federal matching funds for qualified alumni angel groups
          • Manage through SBA, or create national Federal Alumni Network Government Eligible Leaders Network (Federal ANGEL Network)
        • 40 Alumni Groups = create/support 100 young companies per year!
    • Co-invest Federal Funds With States, Angels and VC’s
          • Reverse declining trends of available early stage investment capital by…
            • Annually distribute $1B among states as matching investment dollars for young companies
            • Annually invest $1B as LP into early stage VC funds
    • Create “Floorplanning” Funding for Government Contracts
          • Small businesses obtain contracts with govt agency but need working capital to build products and/or staff up to service new contract
          • Investor capital very expensive
          • Business does not have the credit scoring for adequate loan
          • Business owners do not have the credit scoring and/or assets to personally guarantee a loan
          • Asset based lenders or “receivables” lender cannot lend because product/service has not been delivered and there is no receivable yet
          • A “floorplanning” funding vehicle, similar to the way car dealers have their vehicle inventory funded would fill this significant capital void for small businesses
          • Existing banking industry could provide the lending infrastructure similar to how it works with government for SBA loans
          • Add $1B of investment capital into the market
            • Substantial and immediate impact
    • How Do We Prevent Déjà Vu? Use Proven Models
        • Cover Valley of Death with more early stage investment $$
          • Proven federal venture funds and alumni angel groups
        • Recycle proven entrepreneurs and provide them with fertile growth environment
          • Product (technology) + customers + investment capital
        • Use proven competition model to match technologies and young companies to investors and customers
          • X-Prizes
          • NASA Challenges
          • American Security Challenge
        • Support unproven entrepreneurs
          • Mentors + product + customers + investment capital
        • Build farm system of future entrepreneurs
          • Shadow programs, inject more life experienced experts into curriculum, internships, Entrepreneurs in Residences, etc
        • Leverage existing assets
          • Successful early stage angels, VC’s and state funds
          • Existing university MBA infrastructure
          • Huge inventory of intellectual property and technology from government research funding
          • Existing banking infrastructure
          • Existing Alumni Angel networks
          • Existing SBIR infrastructure
    • How much $ creates how many new jobs?
    • Thank You Chairman American Security Challenge Moving Innovation to Market Innovation Director Chesapeake Crescent Initiative Roger London 6031 University Blvd. Suite 180 Ellicott City, Maryland 21043 410-340-5335 Email: LinkedIn Profile: