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LEADING GLOBAL
ECOSYSTEMS
REPORT 2013
Think l Build l Engage
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As the world becomes increasingly inter-connected, wealth and ideas have greater
opportunities to travel anywhere, and the boundaries between countries that we
are accustomed to have become increasing blurred. The key players in this newlyconnected world are those who have harnessed the ability to attract talented people,
who encourage them in sharing and trying new ideas, and who attract organizations
with all the resources and knowledge required.
This is known to work best on a regional scale, as shown by the most successful
and best-known case of such a breeding ground of innovation, Silicon Valley. Only
at this level is it possible to touch upon all the aspects of innovation both by contact
with entire institutions and by dealing with individual people and companies, all whilst
remaining relevant on a national scale.
Here at Opinno we want to identify the most promising regions whilst they remain at
their embryonic stages, and then become the enabler of their growth. To do this, we
need not only to understand how these regions function, but also to identify the main
key factors that make the main innovation ecosystem in the world work at the top
innovation level.
Within this context, we at Opinno decided to study a sample of the most innovative
ecosystems that have arisen within varying contexts, with our objective being to draw
conclusions upon their strengths, how they have come to be innovative, and the best
practices they used that could be translated to other regions. For this task, we joined
forces with students of ESCP Europe and IED Madrid (Instituto Europeo de Deseño).
Ultimately, we are seeking to open new ground in Europe and in Hispanic countries,
by becoming the “new Silicon Valley”. We aim to do this by analyzing the local context,
adapting the best practices in line with the particular strengths we find, and by allying
with strong, established partners, as only they have the capabilities to leverage the
investment required for such an enterprise and to secure strong growth.		
			
We would like to give special thanks to all the people that helped us bring this white
paper together:

Anna Lobkowicz, ESCP Europe Student
Kirstin Naeve, ESCP Europe Student
Sarah Pedroza, ESCP Europe Student
Vsevolod Batishchev, ESCP Europe Student
Saumitra Das, ESCP Europe Student
Mercedes Riba Michaus, IED Student
We at Opinno hope that you will find this piece of work illuminating, and that you will
enjoy reading it as much as we have enjoyed creating it.

3
OPINNO
Opinno is a global network of open innovation which uses lean development
methodology to transform organizations through design, prototyping and the validation
of new products, services and business models.
			
Opinno was born as an answer to three quandaries affecting all organizations:
the enhanced complexity that products and services require in order to become
competitive; the increased influence that technological innovation has upon the market
place and globalization, and the direct effect such innovation has upon ideation
processes, production and the marketing of products and services.		
Opinno has responded to these challenges with three strategies which, when
combined, make up our business model:

- Open innovation as an engine of response to rapidly moving markets, enabling
the transfer of knowledge, personnel and financial support among innovation
ecosystem agents.
- Lean development as a tool to design, implement, and to correct our ideas, giving
our model a practical and tangible character.		
- Building a global network that brings together the best talent in the world, as
well as linking major multinational companies, universities, research centres,
entrepreneurs, investors and public administrations.
Opinno is divided into three business lines:

Think

: Groups together all the business consulting activities that we offer to
large organizations and governments. We work to generate and implement new
management models and we serve as a technological intelligence network in order
to detect possible partnerships, investment opportunities and emerging competitors.
We also provide training for entrepreneurs and executives, and we both create and
manage innovation centres orientated towards such fields as entrepreneurship, smart
cities and different industrial sectors.

Build

: This unit, in collaboration with our clients and partners, is focused upon the
implementation of our client’s projects. We offer a technological development laboratory
(Labs), which is a tool for Venture Capital investment projects (Capital) that supports
outside projects as well as our own. We also have a foundation (Opinno.org), which
seeks to create social impact through our ideas, network and products.

Engage: Does an important job in spreading innovation and entrepreneurship by

means of our digital communication strategies, technology conferences, entrepreneur
competitions and market prospecting explorations. This allows us to stay in constant
contact with emerging new talent, new technologies and new business models.
Methodology
Input (Analysis)
Our study started with an
assessment of the subject matter,
studying as widely as possible the
ecosystems, the main stakeholders
and their key personnel, the
relationships between them, and
the practices that exemplified how
these systems performed. Ten
ecosystems were first studied in this
way, which were then ranked using
both established criteria through
existing indexes that measured their
specific attributes, as well as our
own expert’s assessment of them.
Finally, through the in-depth study
of specific cases, we were able to
extract best practices and global
conclusions that could be applied to
other ecosystems in order to boost
their chances of success.

Output (Our point of view)

Broad Overview

Mapping the Ecosystem

•	
•	
•	
•	

A visual description of how the main actors in the

Global Innovation Index Report
Government websites (Chamber of Commerce)
Innovation Ecosystems Case Studies
Global Competitiveness Report

ecosystem interact

Current Situation Analysis
Criteria for Innovation/
City facts & figures

A depiction of the most salient aspects that have a
positive or negative impact and therefore need to
be reinforced or respectively reduced

•	 Start-­ p Ecosystem Report
u
•	 Regional Innovation Index Report
•	 Silicon Valley Index Report

SWOT Analysis

Specific Best Practices

A synthesis of the traditional analysis of Strengths,
Weaknesses, Opportunities and Threats to the
Ecosystem

•	 Case Studies

Opinno Recommends
Best practices extracted from specific exemplary
practices that have had a substantial long term
impact on the success of the ecosystem
6 ecosystems
London
Londres

Silicon Valley

Strong Focus on
Tertiary Education

Berlin
Future Oriented
Sector Clusters

Transparency in
Venture Capitalism

Tel Aviv
Highly Organized
R&D Cooperation

Santiago de Chile
Global Entrepreneurship
Community

Silicon Valley

London

Berlin

Tel Aviv

Santiago

With extremely standardized
legal documents and a
large number of VC (Venture
Capital) experts, Silicon
Valley offers entrepreneurs
a whole host of options
that enables them to easily
access the resources
required to develop a
start-up as quickly and as
efficiently as possible.

With 40 excellent Higher
Education Institutes and
with 43 percent of its
population possessing a
tertiary degree, London
has an outstanding pool of
skilled workers.

Berlin serves as an
exemplary role model that
displays the positive impact
that strategic clustering
can have upon a city’s
ecosystem. The city gathers
together exceptional R&D
centers, international
human capital and sizable
enterprises. It’s the city’s
way of achieving excellence
within their future sectors.

The Government
encourages highly
intertwined activities and cooperation between its R&D
centers, universities, MNCs
and SMEs, mainly through
enabling risks for VCs and
organizing sizable multi
and bilateral R&D research
funds.

Santiago is an excellent
example of how the
public sector can nurture,
sustain and foster an
entrepreneurial mindset in
a short period of time, by
creating a visionary type of
environment for innovation.
Silicon
Valley
TRANSPARENCY IN
VENTURE CAPITAL
Silicon
Valley
Region: North America
Population: 7.5 m
GDP: US$ 535 billion (Bay Area)
GDP/cap: US$ 74,815 (Bay Area)
Patents: 224,505 (USA)
Public R&D Expenditure: 10 %

Strongest Drivers

Silicon Valley is the leading technological hub in the world, and is located in San
Francisco Bay, in the United States. Its beginnings can be first traced back to 1950s
when Hewlett Packard’s growth in Palo Alto became the main driver of the region’s
development. This community of entrepreneurs started developing solutions for
large companies and corporations, who then started investing in these solutions,
thus creating the perfect vehicle for encouraging the creation of new enterprises.
The rest is history. Venture Capitalists began investing in entrepreneurs before the
larger corporations could acquire them. Accelerator programs started supporting
entrepreneurs before VCs invested in them. Angel Investors and Incubators swiftly
followed.

Data: 2012
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

5
Global Innovation Index 2012

Startup Ecosystem Report 2012

The United States

Silicon Valley

Innovation Input Subindex

9º
Institutions

17º

Human &
Research Capital

Infrastructure

Market
Sophistication

Business
Sophistication

1º

2º

Trendsetter
Mindset
Support
Talent
Performance
Funding
Startup Output
Differentiation

9º

22º

Innovation Output Subindex

16º
Knowledge &
Technology Output Creative Output

11º

33º

compared to: 141 countries

compared to: 20 cities
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

6
r
nto

Me

ort
pp

Government
ernm
ent
Sta
Doc ndard
iz
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Fun ment ed Le
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rm
SB
illio
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Ho eregu n of $51
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us lat
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P
De
Po &
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Fo
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Im
ll T
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gr
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Fun

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R&D

R&

D

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R&

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hw

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rc

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D re
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ork

Universities/ R&D
Human Capital

r c h wor k

D
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Re

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R&

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DR

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Flow of L a bo r
ies
ompan
F o r lo w revenue tech c

es
al R

ctu

elle

Int
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Startups

en

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Inve
s
rce

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our

ab
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urc

ark

ia
str

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for

Inn
es

Universities
Silicon Valley has established itself
upon the multidisciplinary and cross
pollination of ideas that both support
failure and create serial entrepreneurs
who are ready to start the next big thing.
Having educational leaders around to
support them and to offer the space to
build this community has been crucial in
supporting the ecosystem.

lP

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Stan
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Hum

Culture

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High amoun orking population)
(25-44 age

w

Skilled workforce

(38% terciary education)

)

ovation

pen inn

urs/ o
rking ho

o

(Long w

Incubators/
Accelerators
There are many Incubators/Accelerators
in Silicon Valley (of which 90 percent
are private) which have helped in
building start-ups like Ycombinator and
TechStars, as well as countless others.

A)

f

an

St

Fu

R

VCs and Angel Investors together
make up around 53 percent of all
funding that’s provided to start-ups.
VCs perform the multiple role of broker,
management consultant and recruiter.
They sometimes even act as lawyers.

Companies

Gov

cuba
(Y Com tors/ Acce
le
binato
r/ Ang rators
Busi
el Pad
ness
)
(IT C
luste Cluste
r
r)

Venture C

(53% Fun apitalism
ding)

Big Corporation MNC

Companies

Venture Capitalism

ters

C en
&D

Spinoffs

s
Startup

The Ecosystem

The number of people between the ages
of 24 and 44 in Silicon Valley is around
a quarter of a million, approximately 38
percent of whom possess a high level
of education. It has been shown that
these people are content to work longer
daily hours and show more commitment
to working full time than in any other
start-up ecosystem. Furthermore, they
continually display an entrepreneurial
spirit and a drive to change the world
with newer and better products.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

7
Current Situation
To Maintain

+ Favourable

Increase Presence
Venture Capitalists
(high density)

Impact of Key Factors

Government Funding
(SBIR/STTR)

- Low

To Reduce the Risk

Spin-offs & Big
MNCs R&D
Incubation & accelerator
environment

Infrastructure Sustainability
(Land and housing)

To Mitigate the Risk

Support from
Universities

People Education
(38% tertiary education)

+ High

Government
Regulation Policy

Debt Funding
Stricter Immigration
Laws/ H1B visas

- Unfavourable
Presence of Key Factors

The main strength of Silicon Valley has
been the level of autonomy allowed
by the US government, and the drive
shown by the private sector and
entrepreneurs to continuously develop
both the ecosystem and the community.
			
The main weakness is the price of
accommodation and property, as with
more and more people coming to
Silicon Valley housing has become very
expensive (average monthly rent is now
$1,750), to the point at which many
businesses are relocating outside the
region.
			
The biggest threat to Silicon Valley
is the US’s strict immigration policy.
Fifty-two percent of start-ups are from
foreign nationals. Some start-ups have
decided to move to major hubs in other
countries. Other entrepreneurs, true to
their creative mindset, are coming up
with solutions such as creating a floating
city in international waters outside the
bay, where entrepreneurs can commute
to and from the Valley.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

8
Strengths

Weaknesses

Government Support

People Culture

Foreign Immigration Laws

Infrastructure

Government is decreasing the payroll tax
to support high head-count low revenue
technological companies.

The 25-to-44 age group is the largest in
Silicon Valley.

Reports show that as many as 52 percent
of Silicon Valley’s start-ups were founded
by foreign nationals, and that non-natives
contribute almost 25 percent of WIPO PCT
applications filed.

One of the most expensive US cities to
live in.

State government continues its strong
support of research universities.

•	 The opening of Stanford Industrial
•	

Park has been, to date, its greatest
achievement.
The Carnegie Mellon Innovations
Laboratory – aerospace research with
NASA.

Funding
Venture Capitalists not only provide the
necessary financial resources to start-ups
and spin-offs, but also they often perform
the multiple role of broker, management
consultant, and recruiter.
Venture Capital has the highest
concentration of VC to GDP ratio in the
entire country. Nearly 53 percent of
funding comes from VCs or Investment
Angels.
				
Funded start-ups are more likely to have
a successful exit – through an IPO or
by becoming absorbed into a bigger
company.			

In recent years, the percentage of adults
with Bachelor’s degrees or higher has
increased significantly.	
Nineteen percent of the working population
are more likely to motivate themselves by
their vision of changing the world, rather
than just the thought of building a product.
An open culture where people from all
walks of life and different companies sit
down together to share ideas.

Government and interested groups
support the analysis and study for
a solution that provides international
entrepreneurs a way to legally work in the
country, and so create jobs and wealth.

•	 Five percent of new residential

development in 2011 was classified as
affordable.
•	 Average monthly rent rose to $1,750 in
Silicon Valley (Eight percent increase).
Since there is only a small amount of land
available, more and more companies
are setting up their headquarters away
from the city, thus creating transportation
problems for their employees and also
creating an urban sprawl which may not
be sustainable within the terms of the
innovative ecosystem of Silicon Valley.
Overall job growth is constrained by limited
housing production, as many individual
jurisdictions do not view housing growth as
being within their interests.
Highway congestion results when jobs are
scattered throughout the region, often far
from comfortable transportation routes.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

9
Opportunities

Threats

Development around transit areas Culture

Other upcoming innovative
ecosystems

Focus employment growth near transits in
existing down-town and employment areas
to reduce commuting time and so increase
productivity.

Housing for general population
Build sufficient housing in the right places
for the growing workforce.

Adjusting taxes
Reduction of fiscal inequities among
jurisdictions by sharing taxes among
them, thus reducing the competition for
commercial and industrial development
and making investment decisions depend
upon the broader regional economy, rather
than specific local actions.

Mentoring cities to develop
innovative ecosystems
Mentor other cities and economies to
develop innovative ecosystems.

Silicon Valley has given birth to more
billion dollar companies than any other
ecosystem, mainly due to its plentiful
supply of risk-capital world-class talents,
the inclusion of the headquarters of many
leading public companies, its vibrant
support ecosystem, and an “openminded, trust, pay it forward, change the
world” attitude.
Entrepreneurs are 22 percent less likely to
think of building a new product as a major
challenge.
An entrepreneur’s ambition in Silicon Valley
is more highly-motivated when compared
to entrepreneur’s ambition on average
across all other ecosystems.

Many research papers suggest that there
exists a general belief that the next Silicon
Valley will shift location to somewhere
else as the world becomes further interconnected.

Start-up Chile
Start-up Chile is already taking advantage
of the main weakness of Silicon Valley the strict foreign immigration policy - and
making use of it to promote its own city.
Hence, entrepreneurs are starting to
looking towards other cities to consider
opening their businesses.

New, upcoming innovative ecosystems
– 44 percent believe it’s likely that the
“technology innovation center of the
world,” now in Silicon Valley, will shift to
another country within the next four years KPMG survey of 668 technology business
executives at $1 billion-plus companies in
2012.

Entrepreneurs are 19 percent more likely
to motivate themselves by the vision
of changing the world rather than just
creating a salable product.
Supporting the development of new
“collaborative consumption” start-ups.
This can have an impact on the creation of
new systems that break the status quo.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

10
Best Practices
MNCs Competitions
Puts US $25.000
& gets 10% stake
in Startup

2020 VC

Puts US $25.000
& gets 5% more
stake in Venture

Big MNC’s

(Cisco, Nokia, Siemens)

Expert VC’s
(2020 VC)

Develop
Prototype

6 months

Business
Problem

Hackathon
(4 day competition/
12 teams selected)

6 months

Ideation
Phase
(6 months)

Incubation Period

Second
Phase

Startup with a
Big Client

Funding System

Taking as an example a scenario for
2020vc - large MNCs (Cisco, Intel,
Nokia) will give 2020vc their business
problems in the hope of a solution.
			
Experts from 2020vc will spend four
days or so screening applicants, who
are typically entrepreneurs with no
company of their own, and then assess
them in a hackathon (competition).
		
After that they will narrow the numbers
down to a dozen or so teams for the
entrepreneur-in-residence program.
			
On average, 2020vc will first inject
$25,000 in the “ideation” phase, for
which it will receive a ten percent
stake in the start-up, and then another
$25,000 in the second phase for which
the team will have to have a preliminary
prototype ready. In addition 2020vc will
receive an additional five percent stake in
the second phase.
			
Subsequently these teams become a
start-up of their own with major MNCs as
their clients.

State Government
•	 Through institutes SBIR & STTR.
•	 89$ million granted to small
companies.
Venture Capitalists
•	 10$ billion dollar investment (2012).
•	 Highest density of VCs (53%).
•	 Invest in clean technology.

Education
•	 Focus to increase the graduation rate

•	

from the previous academic year and
a decrease in the drop-out rate (38
percent graduates or above in Silicon
Valley area).
Develop institutes in collaboration with
government as well as industry.	
Stanford:
- Stanford Industrial Park.
- The Stanford Center for
Professional Development.
CMU:
- The Carnegie Mellon Innovations
Laboratory.
- CyLab Mobility Research Center.

Entrepreneurs

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

11
London
STRONG FOCUS IN
TERTIARY EDUCATION
London

Strongest Drivers

Region: Europe
Population: 8.3 m
GPD: US$ 761 billion
GDP/cap: US$ 38,514
Patents: 7,173

The UK’s capital now houses thousands of entrepreneurs and technology start-ups,
standing true to London’s creative and daring history. The “Tech City” was endorsed
by UK Prime Minister David Cameron in 2010, with a plan to accelerate its growth as
far as the site of the 2012 Olympic village. Facing the difficulties of affordable housing
and spaces, there are plenty of Incubators and Accelerators to support this growth. The
collaboration of government agencies and universities plays an important role, bringing
intellectual resources and grants to entrepreneurs.

Public R&D Expenditure: 1.76 %
Data: 2012

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

13
Global Innovation Index 2012

Startup Ecosystem Report 2012

The United Kingdom

London

Innovation Input Subindex

5º
Institutions

9º

Human &
Research Capital

Infrastructure

Market
Sophistication

Business
Sophistication

6º

3º

Trendsetter
Mindset
Support
Talent
Performance
Funding
Startup Output
Differentiation

15º

21º

Innovation Output Subindex

5º
Knowledge &
Technology Output Creative Output

8º

14º

compared to: 141 countries

compared to: 20 cities
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

14
Companies
& ERDF
($45 m)
National
Higher
Educatio
n Funding
Techn
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($400 logy Strateg
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y
vestm Board
Gran
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($1 m
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(LD lopm
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(Inn owled
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Funding ES
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Shoreditch Silicon Roundabout
(+300 startups)

Startups

The Ecosystem

wi

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Da
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BBC
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ogr
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Huma

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& UC

London’s “Silicon Roundabout” has
become the focal point of London’s
tech-hub over the past five years,
welcoming over 300 start-up companies
such as Lastfm, SoundCloud, and many
others. The UK government has taken
a keen interest in the development of
this hub and has started a Tech City
investment Organization (TCIO) for its
promotion and development, as well as
proposing special visas for international
entrepreneurs or support from the
London Stock Exchange for facilitating
exit strategies for start-ups.

Universities
Universities such as the Imperial College,
the University College of London, the
Macmillan Group and Central Saint
Martins College of Arts and Design have
relocated to areas close by. They offer a
consistent source of cost-effective labor
to entrepreneurs.

force
Skilled work education)
8% terciary
(3

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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Current Situation
To Maintain

+ Favourable

To Increase Presence
Silicon Roundabout

Incubation & Accelerator
Environment in Universities

To Reduce the Risk
LDA funding

Impact of Key Factors

To Mitigate the Risk

People Education
(43% tertiary education)

VCs/Angels
Funding from UK govt.

- Low
Matching Labour with
Company needs

Relief schemes
from Govt.

+ High

Financial & Legal
Cluster in London
Investments in R&D
by state

- Unfavourable
Presence of Key Factors

LDA Closed down

London’s strengths commence with the
initiatives in entrepreneurship that are
taking place at Shoreditch-Silicon
Valley. Various innovation schemes have
been carried out each year, first by the
London Development Agency (LDA) and
now by the Greater London Authority
(GLA), with a huge base of educational
institutions providing support in the form
of intellectual resources.
			
The main weaknesses in London
are the lack of private Incubators/
Accelerators and Venture Capitalists
who are willing to invest in anything
other than the financial services.
The all-purpose start-up Incubators/
Accelerators which already exist are the
mostly from outside the UK.
			
The main threat to London is its focus
on knowledge-intensive services (53
percent), due to the strong financial
aspect and the legal clusters which
leeches away the workforce from the
high-tech companies, as well as the
dilution of the LDA’s efficiency by its
assimilation by the GLA, which has
much less focus on innovation.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

16
Strengths

Weaknesses

University Support

Government Support

Lack of Capital

Low Investment in R&D

Has a higher than average level of
education and skills – a high proportion
of London’s population possess tertiary
education.			

Grants in the form of competitions.		

London has a funding gap, with 81
percent less capital raised by startups
before product market fit than startups in
Silicon Valley.

Much of London’s R&D investments
are made in higher education
institutes.

Is home to more than 40 higher education
institutions.			
Intel invests in UK institutes to create a
Global Center for Research in Sustainable
Connected Cities.

Silicon Roundabout

Three years ago, this area housed only
a dozen digital start-ups - now there are
over 300. Last.fm is based there, as are
SoundCloud and TweetDeck.	
Techhub – to nurture start-ups.

Relief schemes for SMEs and large
corporations.	
Tax schemes for start-ups, the London
Stock Exchange’s facilitation, and the
availability and encouragement of highly
trained professionals from traditional
sources.
.

People Culture
They are 9% less likely to work full time.
London has been slow in adopting mobile
platforms.
London entrepreneurs focus 81% more
on consulting as a side activity than SV
entrepreneurs.
London’s technology adoption is slower
than SV.

London has the lowest level of
business investment in R&D in the
UK.

FInancial And Legal Cluster
London has a strong financial and
legal cluster.
London’s population is less likely
to be employed in medium-high
and high technology companies
and more likely to be employed in
knowledge-intensive services than
in the rest of UK and EU27.
Too much focus on knowledgeintensive services and too little
emphasis on medium and hightech companies.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

17
Opportunities
Matching Business with Available
Labour
Under-utilization of the pool of potential
workers is not just economically wasteful –
it will increase London’s inequality gap yet
further.

UK Government Plans
The UK Government is seeking to address
the economic development vacuum
that may be caused by the abolition of
the nine English RDAs, by creating a
three-year Regional Growth Fund that will
invest around €0.5billion a year (around
15% of the RDA budget), through open
competitions and the investment in the
best local projects that cover any topic or
any location.

Threats
Development of Shoreditch

The European crisis

It is the vision of UK Government to
introduce the concept of Tech City – a
theoretical space stretching across
East London, from Old Street’s Silicon
Roundabout to the Olympic Park.

Even though London is currently one of the
hottest start-up cities in Europe, along with
Berlin and Stockholm, there is increasing
start-up activity all over the globe that it
has to contend with.

They will provide support for the
Roundabout’s existing start-ups, as
well as encouraging larger technology
companies to move to the well-equipped
Olympic facilities, vacant after the 2012
Games.	
UK government may also consider
tax breaks, as well as deregulation.
Employees
still have to pay 28 percent, which is
equivalent to what the banking sector
pays. This could be reduced to encourage
entrepreneurship.

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18
Best Practices
LDA

London Development Agency

£1

million capital fund/

£5.4

ERDF

million funding

European Regional
Development Fund

£600.000

every year
Knowledge
Connect
•	 Teams up businesses with experts in

British Library
Business & IP Center

•	
•	

•	 Free access to the extensive intellectual
•	
•	

property resources (e.g. databases of
business, company and industry information).
Physical Location for entrepreneurs to
network.
Topical sessions and Workshops with
business experts market competition.

universities, colleges or research institutions
to support their opportunity.
Wide range of free workshops.
Provides grants to eligible small businesses
(5 - 249 employees).

Clusters for the future
Knowledge Vouchers is a collaboration
between the British Library and
Knowledge Connect, both of whom
were funded by LDA, additionally
the ERDF in the case of Knowledge
Connect. They give out two types of
vouchers. The first are £3,000 minivouchers for testing concept designs,
strategic and technical development,
and market research and investigation.
The second are £10,000 maxi-vouchers
for performing R&D for new products
and services, the creation of preliminary
prototypes, plus software development,
testing and validation.

Knowledge Vouchers

£3.000
MINI
VOUCHER

•	 Testing proof of concept.
•	 Strategic or Technical
•	

Development.
Market Investigation.

£10.000
MAXI
VOUCHER

•	 R&D of new products, services and
markets.

•	 Prototyping.
•	 Software development, testing and
validation.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

19
Berlin
FUTURE ORIENTED
SECTOR CLUSTERS
Berlin
Region: Europe
Population: 4.5 m
GDP: US$ 133 billion
GDP/cap: US$ 37,935
Patents: 6,624.7
Public R&D Expenditure: 2.78%
Data: 2012

Strongest Drivers

Berlin is a city that is constantly evolving. The fast development of its urban structures, the
international mix of its population and the economical development of its cultural network
are all making Berlin an extremely attractive city for entrepreneurs to live in and to build
their ideas within.
						
The support that the government provides creates an outstanding landscape that
promotes science, education and research. Government becomes the foundation of the
innovative ecosystem of this city, and the clusters created around modern sectors drive
the increasing competitiveness of the region in the international market.
						
With a reasonably sizable and affluent population, Berlin has positioned itself as one of
the most attractive environments for entrepreneurs, with specific focus on the young
European online start-up scene.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

21
Global Innovation Index 2012

Startup Ecosystem Report 2012

Germany

Berlin

Innovation Input Subindex

23º
Institutions

26º

Human &
Research Capital

16º

Infrastructure

Market
Sophistication

Business
Sophistication

16º

24º

Trendsetter
Mindset
Support
Talent
Performance
Funding
Startup Output
Differentiation

24º

Innovation Output Subindex

7º
Knowledge &
Technology Output Creative Output

10º

12º

compared to: 141 countries

compared to: 20 cities
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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Government

lin

nb

ur

g

Ber

d is

de
an
Br
lin
er
ie
B
&D

str
en

tR

at
ion
de

pe

nd

ov
Inn

B

g
sa

ion

t

va

TS

t

en

o
Inn

g

Te

D

&
eR

int

n
atio
ov
inn
n
to

ort
pp
su

(4

ies

tor

ra
bo

tm

nv
&i

la

kom

e
isch

nL

rlin
t Be

mbH

nG
atio

ov

t Inn

old
umb

B

&D

sita

ver

Uni

hn
Tec

H

Spin

ies

tor

ra
abo

atio

ov
Inn

e
Tel

Senate of Berlin

Startup Community

D

R&

in

t
en

es

t

iva

Pr
)
12
20
il/
b

ng

ti
ies

olo

B

rlin

Be

ftu

n
ch

TS

lin

B
ur

Berlin’s ecosystem is characterized by a
strong knowledge base, but is also one
that also struggles to link with industry
and private funding.

The Senate is the heart of the engine
that decides future innovation strategies,
and one that has focused on the
development of technology parks and an
R&D landscape. It is ensuring financing
through the Investment Bank Berlin (IBB),
as well as attempting to attract foreign
investments.

er

Jo

ge
ud
ly b
ear
of y
25%
i n v e sts

Universities/ R&D

at
eg

20
10
-2
02
0

erl
in

lan
Ma

to

B
IB

In

tr

ted
ib u

ste
rP

na

te

of
B

rog
ram

Pro
fit P

stiti
on

sB

s An

Inve

Se

foc
us
on
fut
ure
inv
gro
es
wt
ts
h in
ma
du
inly
str
in
ies
SM
E’s

ture
buil
der
&a
en

nd s

a

ct a

ank

gels

ital

ines

Bus

Ventu
re Ca
p

ers Fon
d
Europe
an Fond

Incubators

Innovative & growth
oriented industry clusters

Capital

cce
leara
tor

Private Enterprises

Companies

all r
egio
n al f u

sv

Startups

The Ecosystem

l

choo

Off S

Fueled by a strong working morale and
well trained people, the community is
very active and interlinked. Nevertheless,
the Incubator and Venture Capitalist
power is concentrated in the hands of
a few, very influential people and their
organizations. This makes quick, agile
reactions possible, but in certain cases
may result in less transparency than is
desirable in their activities.

Universities/ R&D

Berlin has a unique landscape
of universities, R&D centers and
tion Centers independent research institutes that
nda
Parks & Fou
seek to co-operate with the business
Technology
sector through spin-off GmbHs and
laboratories.
ff Zone

Spin O

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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Current Situation
To Maintain

+ Favourable

To Increase Presence
Capital from International
VC or Angels

Attracting Investors
for R&D

R&D Knowledge
Diffusion & Transfer

Impact of Key Factors

Cheap & International
Human Capital

High Skilled Specialized
Human Capital

- Low

Institutional Support
for Clusters

Regional Funding

Cooperation between
Science & Private Sector
Mindset

Lack of Support for
Internationalization/
Growth of SME’s
Transparency of Regional
Decision Process

Cultural Mix & Creative
Inspiration

Changes in Urban
Structures

Startup Community
& Network

+ High

To Mitigate the Risks
To reduce the Risks
Berlin has excellent science and R&D
capabilities, based on a workforce
that is both highly qualified and 20
percent cheaper than other European
metropolitan areas.
			
There is, however, a strong private and
overall investment gap (80 percent
less private funding with respect
to Silicon Valley), making R&D and
new companies heavily reliant upon
the government for funding. The
government brings specific support
through financial regulations favoring
investors in the Sector Clusters.
			
Despite English language proficiency
among the population, the ecosystem’s
greatest barrier to competitiveness may
be that SMEs and Startups focus mainly
on local markets, and lack support for
internationalization.

- Unfavourable
Presence of Key Factors
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

24
Strengths

Weaknesses

Opportunities

Threats

Workforce

Culture

Financial Crisis

Financial Crisis

The financial crisis worked as a spark that
pushed people towards becoming less
risk averse, and reduced the cultural fear
towards failure.

The financial crisis has also led to public
budget cuts both at a national and
European level. In an ecosystem that still
relies upon the government for funding,
this has reduced available funds for
entrepreneurs and technology centers,
thus reducing incentives for foreign
companies to invest in local businesses.

Berlin is Germany’s biggest and most welltrained labor market.*		
It also has a multi-national workforce with
low labor costs.**

Funding Policy
The Government provides strong support
for all funding stages, and international
funding in key industries such as healthcare, energy, transport, Logistics, ICT and
photonics.

Smart City

Due, in part, to a well functioning and
constantly improving infrastructure, Berlin
has one of the world’s highest standard of
living levels. ***

Attractive for SMEs

Berliners are less individualist than the
general population, but they continue to
be risk averse. This means the population
is less prone to taking the necessary risks
typically involved in entrepreneurship.

Accelerators
There is not a great deal of variety nor
number of Accelerators, which skews the
power balance unnecessarily towards
existing ones. Such is the case of Rocket,
which has led to shortage of programmers.

Logistics
The government investment in
infrastructure has led to cheaper and faster
ways to import and export from Berlin.

International
Initiatives to promote cross-border
investment have arisen from both sides:
the Minister of Economics took 100
entrepreneurs to Silicon Valley in order to
seek support. In return, Bill Gates and his
peers have invested over $35million in
German start-ups through Research Gate.

City Trends
Due to the city’s growing attractiveness,
living costs such as rental fees are
booming, and at the same time available
space is being reduced, which acts both
as a detractor of potential talent and as
discouragement to entrepreneurship in the
shape of rising labor costs.

Berlin is the governmental and economic
center of Germany, as well as being
strategically centered in Europe, providing
access to both Eastern and Western
Europe.	
Ideal market size for start-ups (3.5 million)
with strong SME tradition.
*Highest researcher and academic per
capita ratio in Germany
**20 percent less than other European
metropolitan areas
***16/121 Mercer Ranking of living standard

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

25
Best Practices
Steering Committee

The Senate of Berlin & Brandenburg

Optical Technology
All Industry

&

Research entities
ICT Media &
Creative Industry

InnoBB:
Future Oriented Clusters
InnoBB is an strategy initiated by Berlin
and Brandenburg to make their region
more competitive with clusters of future
focused sectors on the international
market. Some of them belonged
already to Berlin’s specialities, e.g.
Pharmaceutical Sector, while others
like ICT, came into focus due to the
development of a start-up community in
the city. The aim is to to grow a unique
profile of future growth branches and to
bundle the knowledge of all stakeholders
in an effective and sustainable way.
Clusters allow an efficient usage
of resources, a fast evolvement of
professional networks and support
interlinked projects.

Biotechnology
Medical Technology

Transport/ Traffic
Mobility

Cross Cutting Themes: Clean Tecnologies/ Security/ Materials & Production/ Automation Engineering
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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Best Practices

r
fo

ts with third parties
projec
in
rsity
ive
Un

Subsidiary
Enterprise

Researc

h&

Gu
i da
nc

e

Humboldt
University

tion
rea
C

SpinOffs

Industry

Humboldt Innovation GmbH
The Humboldt Innovation GmbH is a
spin-off and total subsidiary enterprise
of the Humboldt University, and acts
as a comprehensive interface between
the university and industry, for example
between science and business. It
positions itself between business and
academia and performs research
projects & start- up development with
third parties. Since 2005 it has overseen
the implementation of 34 successful
spin-offs and over 500 research
projects.

Humboldt
Innvation
GmbH

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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Santiago
GLOBAL ENTREPRENEURSHIP
COMMUNITY
Santiago
Region: South America
Population: 6.6 m
GDP: US$ 101.7 billion
GDP/cap: US$ 15,208
Patents: 1106
Public R&D Expenditure: 0,4%
Data: 2012

Strongest Drivers
Santiago has developed a fast-growing innovative ecosystem within the last decade.
With a population twice the size of Silicon Valley, Santiago is considered the agricultural,
mining, financial and transportation hub of Chile.
			
Over the last five years the Chilean Government has made strong and successful efforts
to position Santiago as the upcoming Internet Technology Hub of Latin America.
			
This challenge is not insignificant, considering that Chile isn’t even yet classified as
an innovation-driven economy by the OECD. Nevertheless, the country ranks 39th in
the Global Innovation Index Report and the city of Santiago was noted as an example
of a extremely efficient start-up ecosystem among 20 similar cities by the start-up
Ecosystem Report of 2012. The city has benefited hugely from government initiatives,
such as “Start-Up Chile”, that are designed to attract and foster new start-ups.
			
In addition, innovation and applied Research & Development are key strategic elements
to aid Chile in becoming a fully developed country by 2020.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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Global Innovation Index 2012

Startup Ecosystem Report 2012

Chile

Santiago

Innovation Input Subindex

43º
Institutions

29º

Human &
Research Capital

75º

Infrastructure

Market
Sophistication

Business
Sophistication

44º

50º

Trendsetter
Mindset
Support
Talent
Performance
Funding
Startup Output
Differentiation

57º

Innovation Output Subindex

34º
Knowledge &
Technology Output Creative Output

85º

44º

compared to: 141 countries

compared to: 20 cities
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

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The Ecosystem

Public Institutions

ge

sta
th
row

tg

ov
aC

Inn

e

anc
Fin

or

UP

e

ate

De

ma

Fin

an

ce

n
R&D

Co
llab

R&D

Proj

or

at

i
tw

ork

ing

fa)

o

Finance

ects

fo
So

tr
s
en
er )
ce
nt rivate
rs ar/ C
llen
Ce & P
nte vist
ce
D
Ex
Ce o
of
R& ublic tion va M
rs
o
a
te
(P
ov Inn
en
lC
Inn entro
na
rs
(C
tio
nte
na
Ce
er
al
Int
gic
olo
hn
go)
ntia
Tec
ities de Sa
vers d
VO
Uni iversida
INNO

d

Ne

I
CH

RT
TA
S

Cr

ve

Universities/ R&D

LE

Su

pp

C
OR
(C ORF
FO
h
O
CO ilean
Re
gio
Inv N
YS Eco
n
no
FO esti IT
ga (C
mi
De N
cD
ció o
sa DE
ev
n mis
rro R
Ci ió
elo
en n
llo (Fo
pm
tífi Na
Ci nd
en
ca ci
en o
tA
y T ona
tífi de
ge
co F
ec l d
nc
no e
y)
y T om
lóg
en
ec
ica
no to
)
lóg al
ico
)

s
tor
era
cel

Ac

reig

nE

ntre

pre

pital

(108 el Net
w
3 in
vest ork
ors)
Fo

re Ca

Ang

Vent
u

Lo a

nk

Ba

neu

rs

Government

Banks

Funds: R

isk & See
d

Capital

ns

Startups

Companies

Capital

Companies

Fund

s

(Un

nters

n Ce

tio
nova

In

el
r Mod
ubatorsities)
k Inc

ive
or
Netwte-State-Un
(Priva

Public institutional support is the major
milestone of the innovative ecosystem in
Santiago.		
Public authorities are making continual
strong efforts to create a favorable
entrepreneurial environment by attracting
talent and capital from abroad, and
encouraging international companies and
institutions to locate their R&D operations
in Santiago.
Such efforts also provide strong financial
support when starting new financing
programs, as well as restructuring the
previous ones. Public institutions have
taken over the role as facilitator between
entrepreneurs and the private industry,
which are less involved in the ecosystem
in comparison to universities and
governments.

Universities
The activities of Santiago’s universities
have a huge impact upon the innovation
efforts in the city. They act as a sponsor,
including both tangible and intangible
support.

Network Incubator
Model
The incubation network is well developed
and co-financed by public institutions,
universities and private investors.
This helps ensure accelerated growth
and creates a high impact upon
entrepreneurship, with an emphasis
on technological innovation and
entrepreneurial capability.

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31
Current Situation

To Maintain
To Increase Presence

+ Favourable

To Mitigate the Risk
Private Fundings: Capital
from VC or Angels

Entrepreneurial
Community

Institutional Support

Impact of Key Factors

Incubator & Accelerator
Environment

Knowledge Diffusion/
R&D Transfer/ Business
Expenditures

- Low

Physical
Infrastructure

Great Entrepreneurial
Mindset

+ High

Human Capital Education

Evaluating Tools

Attracting foreing
Investors & Entrepreneurs

Risk Aversion of Banks

- Unfavourable
Presence of Key Factors

Administrative Barriers &
Bureacracy

To Reduce the Risk
Industries and private financing
structures are less involved than
compared to the government and
universities.		
Corfo tries to fill the gaps in the
financing cycle, taking an active role by
designing and offering seed and risk
capital lines. Angel Investors tend to
support the growth stage and incomegenerating projects which are not
excessively risky, but it remains that
96 percent less funding is raised by
Santiago’s start-ups when compared to
Silicon Valley.		
There is a low level of knowledge
diffusion and R&D transfer between
companies and universities. Close to
40 percent of total R&D expenditure is
carried out by universities, and is mainly
located in Santiago: at the two largest
universities, namely the University
of Chile and the Catholic University.
Universities are just beginning to include
R&D projects from companies.	
The ecosystem is changing at an
accelerated rate and has experienced
an important growth during the last five
years, due to the strong efforts of the
authorities to attract foreign investors
and to make the ecosystem less
bureaucratic and more transparent.

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Strengths

Weaknesses

Incubation Environment

Universities Network

Private actors involvement

Regulation Cost

There is a growing business of the incubation
industry that is extremely strong in networking
and has a high impact on entrepreneurship.

Universities are starting to show interest
towards the incorporation of company
projects based in I+D results.	

On the other hand, whilst it has simple
administrative procedures, it also tends
to emphasize high value services such as
consulting, training and networking.	

The majority of Incubators are located
on university campuses in order to
gain access to university expertise and
resources.		

Additionally, there are informal meetings with
industry experts to bring on professionals in
order to mentor their clients.	

The major Incubators in Chile are either
funded to some degree by or work closely
with universities.

Lack of industry involvement in comparison
to universities and government.	
Lack of capital from Venture Capitalists
or Angels. The people investing seed
money do not typically come from the
private sphere. The Chilean Economic
Development Agency is involved
in providing most of the important
capital.	
Banks are reluctant to loan money to earlystage entrepreneurs as such investments
are considered risky.		
Entrepreneurs are used to facing a critical
phase in the development of a new
business during the initial stages.

Bankruptcy legislation (the last change in
tax policy did not include incentives for
companies that hire university R&D centers
of technological institutes).	
It can take months for entrepreneurs to
extricate themselves from a doomed
venture. By the time they do, their assets
have more than likely shriveled. In the
United States, lenders recover about 80
percent of the value of their investment
from a failed venture, compared to around
30 percent in Chile.

Linking informational role (government funding
line).

Public authorities
Public authorities design new financing
programs, restructure old ones, or act as
a facilitator between entrepreneurs and the
private industry.		
They demonstrate to other hubs and political
decision-makers that it is possible to nurture,
sustain and foster an entrepreneurial mindset in
order to become self-sufficient. Santiago needs
to build start-ups by attracting talent and capital
from abroad.		
Encourage international companies and
institutions to locate their R&D operations in
Santiago.

Knowledge Diffusion
Human capital and research:

Administrative Legitimation
There are important administrative and
bureaucracy obstacles for entrepreneurs,
especially in terms of access to banking
services.			
New companies only receive 9.4 percent
of public support programs.	
In addition the Incubator level does not
yet have a clear system for evaluating the
performance of Incubators.

•	 Fifty percent less Masters & PhD

compared with Silicon Valley.
•	 Public expenditure on education per
pupil (78th in global ranking).
•	 Teacher per pupil ratio at the secondary
level (101st global ranking).
International co-operation:

•	 The patented co-operation treaties with
•	

foreign investors are not sufficiently
developed.	
Low R&D transfer.

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Opportunities

Threats

Culture

Political

Education

The Santiago start-ups ecosystem has
the same healthy variety of start-ups that
target consumers, enterprises and SME
customers as Silicon Valley.

Economy and institutions are stable and
respectable.

Santiago entrepreneurs are less educated
than Silicon Valley entrepreneurs.

Their political iniciatives can help to kick
start a startup ecosystem (attracting talent
and capital from abroad).

Culture

Innovation
Chilean companies are highly innovative:

•	 93.5 percent firms that introduced
•	

product innovations.
94.3 percent firms planning to innovate
more in 2014.

Work
Startups in Santiago employ as many
people per stage as start-ups in Silicon
Valley.

Santiago startups are 31% more likely
to monetize directly than Silicon Valley
startups.

Social
The key challenges of Santiago start-ups
are similar to those experienced by Silicon
Valley start-ups. Both focus on customer
acquisition, building products, funding and
building successful teams.

The ecosystem generally does not have
a healthy distribution of start-ups across
the “start-ups life-cycle”, with only a small
number of late stage start-ups.
Santiago entrepreneurs are much less
likely to tackle markets in which they’ve
had previous experience.	
Political initiatives can help to kick start a
start-up ecosystem (attracting talent and
capital from abroad).
Santiago start-ups are 31 percent more
likely to monetize directly than Silicon Valley
start-ups.

Economics
Chile has plenty of infrastructures, high
industrialization and economies of scale.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

34
Best Practices
FONDEF

Ministry of
Education

CONICYT

Startup Community

FONDCYT

Chilean
Government

CORFO

Ministry of
Economy

INNOVA
Chile

Favorable environment
for entrepreneurs
US$40.000

Working Permit
Easy access to offices

Development of
innovation ecosystem

Its objectives are:
- To foster the interaction and
transfer of knowledge between
Chilean and global entrepreneurs.	
- To strengthen the brand
awareness of Chile as an innovative
ecosystem.	
- To enhance local entrepreneurship
development by retaining projects
with high growth potential.

Develops organic growth

Funding Give Away

1 Year

STARTUP
CHILE

The “Start-Up Chile” program is cited as
a key driver of Santiago’s ecosystem for
entrepreneurship and innovation.	

Supports entrepreneur initiatives
Attracts & retains talent

Innovative workspaces

Attraction of foreign Investors
Enable

Partnerships
Creation of

Innovation Hubs
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

35
Tel Aviv
HIGHLY ORGANIZED
R&D COOPERATION
Tel Aviv

Strongest Drivers

Region: Asia
Population: 414,000
GDP: US$ 132 billion
GDP/cap: US$ 37,767
Patents: 2665
Public R&D Expenditure: 4.3%

Tel Aviv is the second most populous city in Israel with a population of 414,000. It is
known for its vibrant and creative environment. Tel Aviv attracts young, well-educated
employees and successful businesses which, together with governmental initiatives,
have turned Tel Aviv into a start-up and innovation ecosystem with potential worldleading capabilities.
Tel Aviv is the city with the most start-up per capita in the world, and has the best quality
of scientific research.
In addition, Israel is the country which invests the highest percentage of their GPD into
R&D, and attracts the most venture per person in the world.

Data: 2012

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

36
Global Innovation Index 2012

Startup Ecosystem Report 2012

Israel

Tel Aviv

Innovation Input Subindex

19º
Institutions

47º

Human &
Research Capital

4º

Infrastructure

Market
Sophistication

Business
Sophistication

21º

9º

Trendsetter
Mindset
Support
Talent
Performance
Funding
Startup Output
Differentiation

19º

Innovation Output Subindex

9º
Knowledge &
Technology Output Creative Output

10º

27º

compared to: 141 countries

compared to: 20 cities
SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

37
The Ecosystem
Multin
ation
al Co
rpora
tions
Israe
l Co
mpa
nies
For
eign
Com
pan
An
ies
ge
lC
ap
Mi
ital
cro
fun
Ve
ds
ntu
re
Inc
Ca
pit
ub
al
at
Ac
or
ce
s
ler
at
or
s
(1
0)

Startup
s

(600+)

Companies

e

fic
Of

YO

ZU

of

he

t

Capital

MNC’s

nt

f

ie
Ch

ie
Sc

or

f
cy

85

&D

du

in

omm
R&D C

v
Avi
Tel

p r o j e c t s into Star tups

erci

y

rsit

ve
Uni

ot

Tu r
n

Co

lR

ia
str

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alized

t
era

op

e
DC

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ist

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Universities/ R&D

The four Key players in Tel Aviv´s ecosystem:

n
&D rk
OP Age se R wo
e
i
3)
TIM nal
rpr ram
s(
MA atio
nte n F
tor
E
ba
(N
al atio
cu
lob per
l In
G oo
ica
C
log
no
ch
s
Te
ter

MA

Government

Ram

Office of the Chief
Scientist

MNCs are important in
every ecosystem, as they
The Office of the Chief Scientist
provide not only funding, but
is the Ministry of Industry, Trade
also knowledge, R&D, and
and Labor of Israel. It created the
international recognition.
Venture Capital market through
the Yozma fund, making use of
the immigration of scientists and
engineers from the former Soviet
A fairly unique aspect
Union by creating technological
of Tel Aviv is concerned
start-ups and research. It also
with funding. The city has
created MATIMOP, which is in
investors for every step of
the way, from pre-seed, late charge of organizing international
seed and early growth. This R&D.

Investors

increases the success rate
of start-ups, as they seldom
face the issue of the lack of
funding opportunities.

Ramot at Tel Aviv
University
Ramot is the commercial arm of
the Tel Aviv University. It works
as a mediator between industry
and the university. On one hand
it helps university projects to find
industrial collaborators or for them
to create start-ups, and on the
other it informs companies about
projects currently being researched,
to encourage collaboration on
common subjects.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

38
Current Situation
To maintain

+ Favourable

To Increase Presence
Entrepreneurial
community

Governmental
support/Involvement

Impact of Key Factors

Quick Adjustment to
Change

IKnowledge diffusion
and R&D Transfer
Great Entrepreneurial
Mindset
Capital from VC and
Angels

+ High

- Low
Attracting Foreign
Investors &
Entrepreneurs

Tertiary Education Graduates

Youthful environment
Job growth through startups
Small domestic market

Political Instability

- Unfavourable
Presence of Key Factors

To Mitigate the Risk
To Reduce the Risk
The three main threats to the innovative
ecosystem of Tel Aviv are the
conservative culture hindering the quick
adjustment to new trends, reserved
management styles and political
instability.				
	
Furthermore, the constant threat of
terrorism in the city places investors ill
at ease.
				
One of the main problems the
ecosystem faces is the size of the local
market. Israel has a comparatively small
population. This leads to the migration
of many start-ups from Tel Aviv once
they are successful, in order to access
a larger market.
				
The strengths of the Tel Aviv ecosystem
are governmental support, funding and
knowledge diffusion, the latter of which
is especially extensive in Tel Aviv. This
occurs not only through MATIMOP and
Ramot, but also through the global
enterprise co-operation framework,
which is in charge of co-ordinating
research undertaken in R&D centers,
MNCs and local SMEs.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

39
Strengths
Fonds
Tel Aviv has:

•	 Bilateral-Funds with Canada,USA,

Korea and Singapore.
•	 Multilateral Funds with Europe.
•	 Venture Capitalists.
Every Stage of investment covered by:
accelerators and angel investors, Angel
capital, Micro Funds and Venture capital.

Mentoring
Incubators and Accelerators created
by the private sector, the universities,
multinational companies and the
government.
Even though most technology Incubators
are privatized, the government pays 15
percent of the required capital for a project
whilst the incubator owner pays the
remaining 85 percent.

Weaknesses
R&D

Foreign Dependency

Culture

2240 Foreign centers in Israel.

Israel has a very small market where a
high percentage of knowledge and goods
come from the external sources, therefore
products must be of sufficient interest to
the foreign market for a start-up to become
successful.

The conservative culture and slow pace
of adaptation towards new technologies,
management processes and business
models could hinder Tel Aviv from
becoming the number one innovative
ecosystem.

Lost Potential

Similar to Silicon Valley

Many Israeli start-ups are sold to the US
market and become absorbed into global
firms, never really expanding in Israel.

The ecosystem of Tel Aviv makes direct
comparison for foreign investments and
projects to the ecosystem of Silicon Valley.

The information and communication
technology sector accounts for around 20
percent of total industrial output and only 9
percent of business sector employment.

Bilateral-Funds with Canada, USA, Korea
and Singapore.

Joint R&D with US, Latin America, Europe
and AsiaPacific.
The Global Enterprise R&D Cooperation
Framework.
Programs to encourage the Establishment
of R&D Ccenters in Israel for the
servicebenefit of international projeccts for
MNCs.
University Ramot at Tel Aviv University.

City Branding
Non-stop city (young population, attractive
businesses, nightlife, rising real-estate
demand,individualism, liberalism,
hedonism , freedom…)
Global city: Tech Mile, creation of
municipal high-tech hubs, conferences
and events.

The returns in terms of long-term job
creation and income growth have not been
maintained, despite continued investment
in high-tech industries.

Multilateral Funds with Europe. Venture
Capitalists.		
Every Stage of investment covered by:
Accelerators and Angel Investors, Angel
Capital, Micro Funds and Venture Capital.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

40
Opportunities

Threats

Economic

Social/Culture

Political

Commercial

Israel has the highest density of tech startups in the world.

Tel Aviv has the second highest output
index of start-ups with a healthy funnel of
new enterprises across the developmental
life-cycle, a highly developed funding
ecosystem, a strong entrepreneurial
culture, a vibrant support ecosystem and a
plentiful supply of talent.

Israel is very unstable country, politically
and is in constant threat of terrorism and
bombings.

Tel Aviv has a slow adoption speed
of new technologies (such as
programming languages), business
models (new types of monetization)
and management processes (data
driven decision making).

Israel is a country of immigrants. Youthful
environment.

•	

Sixty-three Israeli companies are listed
on the tech-orientated NASDAQ, which
is more than Europe, Japan, Korea, India
and China combined.
Attract foreign investment (UE, USA), and
entrepreneurs.

Political

Almost every major tech company
across the world today has some
kind of subsidiary in Israel, including
Intel, Microsoft, Google and Cisco.
Consequently, 39 percent of Israeli
high-tech employees work in the R&D
departments of multinational companies.

Tel Aviv startups are less ambitious:

•	 Israel startups are 46 percent more

•	

likely to tackle smaller markets.
The average company performance (in
growth & revenue) is lower than of other
ecosystems.
Employees are 9 percent less
committed to work full time before
product market fit.

They care more about “building a
great product” than “changing the
world”.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

41
Best Practices

YOZMA

US $100.000

Strategic
International
Partners

million funding

State

10

Drop Down Funds

1
State Run Fund

Yozma is a program designed by
the Israeli government with the aim
of creating a real market for Venture
Capital in the country. The state set up
a US$100 million fund. Together with
strategic international partners, Yozma
then set ten drop-down funds and
one state-run fund. The government
had a minority role in the funds, and
no interference rights in the investment
choices.
			
Additionally, the collaborators had the
option to buy the state’s shares within
five years for a very favorable price.
			
The funds focused on early-state hightech companies. In total, they invested in
217 projects and companies and eight
of these companies made use of the
buy-out option.

Ramot at
Tel Aviv University

217
Entrepreneurs

projects

After 5 Years

Collaborators can buy State shares

Ramot fosters, initiates, leads
and manages the transfer of new
technologies from university laboratories
to the marketplace, by performing all
the activities relating to the protection
and commercialization of inventions
and discoveries that are made by
faculty, students and other researchers.
Ramot provides a dynamic interface,
connecting industry to leading-edge
science and innovation, offering new
business opportunities within a broad
range of emerging markets.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

42
Best Practices
Technological Incubator
Program

15%

Incubator

(Grant + Workspace + Expertise)

50%

Shares for
Incubator

US $500K - US $800K

2 Years
Company

Incubation Period

Focus on: High Tech,
Biotech and Environment

Succesful
Company

The Technological Incubator Program
was an initiative by the government to
smartly use the knowledge available
through the immigration of scientists and
engineers from the former Soviet Union.
They are a private legal entity intended
to invest in high risk projects that would
normally find recruiting private investors
difficult.
			
The companies stay in the Incubator for
approximately two years, and receive
between US$ 500,000 and
US$ 800,000 depending on the project.
Eighty-five percent of this money is
given by the Israeli government and 15
percent by the Incubator itself. In return
the Incubator receives up to half of the
shares, whilst the government receives
between three and five percent in
royalties from revenue generated, until
the full grant plus interest is paid back,
but only if the company is successful.

The Global Enterprise R&D
Cooperation

85%

Government
(Grant)

3-5%

of Revenues
for the Government
until full grant +
interests is paid.

The program encourages MNCs to
conduct joint R&D Projects with Israeli
partners whilst focusing on the activity
in the national preference zones and/or
traditional industries.

SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV

43
Final thoughts
Innovative ecosystems can grow and become thriving environments by
means of many different methodologies or support measures. Factors
such as the strength of the scientific landscape, governmental strategies
and support, and the transparency of the overall access for start-ups
into the system are crucial when it comes to influencing the overall
development of an innovative ecosystem.			
Once a system is well established and secure in the entrepreneurial
setting of a region or city, it must gain autonomy. The less the government
is involved in the long term, the more sustainable an ecosystem becomes.
One of our missions at Opinno is to help governments implement worldclass innovation ecosystems in Latin America and the rest of the world, in
order to accelerate innovation cycles and to create disruptive innovations,
in addition to profitable products and services.
At Opinno we think that one of the main key factors is the implementation
of Lean methodologies within these ecosystems, which fosters the
acceptance of failure and raises the effectiveness of new businesses to
deliver products and services that solve real world problems and needs.	
	
Another key factor for us is the adoption of an Open Innovation framework
– a framework to create a high value network that establishes a natural
partnership amongst governments, organizations, entrepreneurs and other
entities, including large institutions such as MIT, Harvard, Stanford, and
where, in a transparent manner, everyone adds the right value and, at the
same time, benefits from each other.	

At Opinno we believe that any ecosystem that wants to create real longterm value in terms of innovation should:
Define its identity via a clear focus upon the development of strategic lines,
seeking the differentiation from other ecosystems (by type of innovation,
by sector ...) and keeping in mind that innovation is not just a group of
PhDs thinking together, but requires a mix of both hard and soft skills that
range from pure science to creativity at its best.	
Think on the long term with the right engagement for the plan. There is
little sustainability in short-term actions without continuity, and only a well
elaborated mid-term and long-term action plan, in conjunction with the
right engagement, will deliver the opportunity to build a fully independent
ecosystem that is not directly attached to government policies or the
general economic situation.
Accelerate the innovation and entrepreneurial process by removing
unnecessary bureaucracy, creating incentives for innovation through fiscal
tools and lightening the process of talent immigration and tax-schemes for
new companies.
Facilitate the integration of the different innovation agents in the country
(universities, MNCs, research centers, technology centers, public
administration...) through a legislation system in favor of the agents.	
Have faith in the talent and the inclusion of innovation and technological
thinking in the educational system.
ANNEXES
I. Global Innovation Index 2012
Research Indicators

INSEAD and the World Intellectual Property Organization (WIPO, a
specialized agency of the United Nations) & Knowledge Partners: AlcatelLucent, Booz & Company and the Confederation of Indian Industry &
Advisory Board of eleven experts & Statistical audit by the Joint Research
Centre of the European Commission.
Qualitative and quantitative research methods:
The 2011 edition of the EOS included 126 questions; 13,395 surveys
were retained for tabulation, completed by business executives from 142
economies between January and June 2011.
External secondary data:
Crunchbase (visualized: SeedTable; BuzzSparks; SeedTableBlog),
Angellist, Global Entrepreneurship Monitor (GEM), Numbeo - cost of living,
TechAccelerators; Seed-DB.
84 indicators included in the Global Innovation Index (GII). A total of 59
variables are hard data; 16 are composite indicators from international
agencies, distin- guished with an asterisk (*), includ- ing five indices based
on percent ranks for which an ‘r’ was added; and 6 are survey questions
from the World Economic Forum’s Executive Opinion Survey (EOS),
singled out with a dagger (†). The EOS has been conducted for over 30
years.

Global Coverage &
Broad Scope
•	 141 country/ economy profiles (App I)
•	 Performances by region and by income
•	

group
84 indicators; 62 hard data, 16 indices,
6 survey questions (App II Data Tables)

Effort to capture innovation in
emerging markets
•	 Scaling of indicators (comparability,
•	
•	

stages in development)
Knowledge diffusion/ absorption
Relative strengths/ weaknesses (cutoffs
based on percentage of countries with
scores above/ below)

Transparent Methodology
•	 Year-on-year comparability of results
•	
•	

(Annex 2)
Statistical audit (Annex 3, Confidence,
interval for rankings)
Sources and definitions (App 3) and
theoretical notes (App IV)

Framework adjusted for relevance
and timeliness
•	 35% of data from 2011, 35% from
•	
•	

2010, 21% from 2009
New data from ISO, STO, GMAT,
ZookNIC, Google
New sub-pillars: Ecological
sustaintability and Online creativity

ANNEXES

1
I. Global Innovation Index 2012
Research Indicators
Innovation Input Subindex

Institutions

Human &
Research
Capital

Innovation Output Subindex

Infrastructure

Market
Sophistication

Business
Sophistication

Knowledge &
Technology
Output

Creative Output

Political Environment:
+ Political Stability
+ Government
effectiveness
+ Press freedom

Education:
+ expenditure on
education
+ School Life
Expectancy
+ Assessment in Math
& Science

Information &
Communication
Technologies:
+ ICT access/ use
+ Govt. online service
+ Online e-participation

Credit:
+ Ease of getting credit
+ Domestic credit to
private sector

Knowledge Workers:
+ Knowledge-intensive
services employment
+ Business GERD
performance/financing
+ GMAT mean score

Knowledge Creation:
+ National office patent
applications
+ Patent-cooperation
treaty applications
+ Science/ technical
journals

Creative intangibles:
+ National office/
+ Madrid agreement
trademark registrations
+ ICT and business/
organization model
creation

Regulatory
Environment:
+ Regulatory Quality
+ Rule of Law
+ Cost of Redundancy
dismissal

Tertiary Education:
+ Tertiary Enrolment
+ Graduates in
Science
+ Engineering tertiary
inbound and outbound

General Infrastructure:
+ Electricity output/
consumption
+ Gross capital
formation
+ Trade- transport
infrastructure

Investment:
+ Ease of protecting
investors
+ Market capitalization
+ Venture capital deals
+ Total value of stocks
traded

Innovation Linkages:
+ University-Industry
research collaboration
+ State of cluster
development
+ GERD financed by
abroad
+ JVs

Knowledge Impact:
+ Growth rate of GDP
per person
+ New business
density
+ Total computer
software spending
+ ISO9001 quality cert

Creative goods &
services:
+ National feature films
produced
+ Daily newspaper
circulation
+ Creative goods/
services exports

Business Environment:
+ Ease of starting a
business
+ Paying taxes
+ Resolving insolvency

R&D:
+ No. of researchers
+ Gross expenditure
on R&D(GERD)
+ Quality of scientific
research institutions

Ecological
Sustaintability:
+ Ease of starting a
GDP per unit energy
use
+Environmental
performance
+ ISO 14001
certificates

Trade & Competition:
+ Applied tariff rate
+ Import/export of
goods and services
+ Intensity of local
competition

Knowledge absortion:
+ Royalty and licenses
fee payments
+ High-tech imports
+ Computer
communication service
imports
+ FDI inflows

Knowledge Diffusion:
+ Royalty and license
fees receipts
+ High-tech exports,
FDI outflows
+ IT services exports

Online Creativity:
+ General/countrycode top-level domains
+ Wikipedia monthly
edits
+ Youtube-videos

ANNEXES

2
I. Global Innovation Index 2012
Research Indicators
10º
5º

United States
United Kingdom

15º
17º

Germany

39º

/

Chile

Israel

compared to

141
countries

Innovation Input Sub-Index
United States
United Kingdom
Germany
Israel
Chile

Input
9º
5º
23º
19º
43º

Institutions
17º
9º
26º
47º
29º

Human Capital & Research
22º
21º
16º
4º
75º

Output
16º
5º
7º
9º
34º

Knowledge & Technology
11º
8º
10º
10º
85º

Infrastructure
1º
6º
16º
21º
44º

Market Sophistication
2º
3º
24º
9º
50º

Business Sophistication
9º
15º
24º
19º
57º

Creative Output
33º
14º
12º
27º
44º

Innovation Output Sub-Index
United States
United Kingdom
Germany
Israel
Chile

ANNEXES

3
II. Startup Ecosystem Report 2012
Research Indicators

By Startup Genome & Telefonica Digital
Qualitative and quantitative research methods:
50+ interviews and case studies with entrepreneurs, investors and policy
makers from various locations globally (structured and unstructured
interview guidelines).
A web-based survey: StartupCompass.
Using external secondary data: Crunchbase (visualized: SeedTable;
BuzzSparks; SeedTableBlog), Angellist, Global Entrepreneurship Monitor
(GEM), Numbeo - cost of living, TechAccelerators; Seed-DB.
The index is based on data from more than 50,000 startups around
the world who are using the Startup Genome’s Startup Compass, an
automated analyst in the cloud that helps businesses make better
decisions via benchmarks and actionable recommendations.
The ranking is made for 20 startup ecosystem: Silicon Valley, Tel Aviv,
Los angeles, Seattle, New York city, Boston, London, Toront, Vancouver,
Chicago, Paris, Sydney, Sao Paulo, Moscow, Belrin, Waterloo, Singapore,
Melbourne, Bangalore, Santiago.

ANNEXES

4
II. Startup Ecosystem Report 2012
Research Indicators

Startup Output

Funding

Performance

Talent

Represents the total activity of
entreprenership in the region,
controlling for population size and the
maturity of startups in the region.

Measures how active and how
comprehensive the risk capital is in a
startup economy.

Measures the total performance and
performance potential of startups in a
given startup ecosystem, taking into
account variables such as revenue,
job growth, and potential growth of
companies in the startup ecosystem.

Measures how talented the
founders in a given startup
ecosystem are, taking into account
age, education, startup experience,
industry domain expertise, ability
to mitigate risk and previos startup
success rate.

Support

Mindset

Trendsetter

Measures the quality of the startup
ecosystem support network,
including the prevalence of
mentorship, service providers and
types of funding sources.

Measures how well the population of
founders in a given ecosystem thinks
like a great entrepreneur, where
a great entrepreneur is visionary,
resilient, has a high appetite for risk,
a strong work ethic and an ability
to overcome the typical challenges
startups face.

Measures how quickly a startup
ecosystem adopts new technologies,
management processes, and
business models. Where startup
ecosystems that stay on the cutting
edge are expected to perform better
over time.

ANNEXES

5
II. Startup Ecosystem Report 2012
Research Indicators

Startup Output
Silicon Valley
London
Berlin
Tel Aviv
Santiago

20
14
6
19
0

Funding
20
16
10
20
0

Support
Silicon Valley
London
Berlin
Tel Aviv
Santiago

20
19
1
16
2

Performance
20
11
8
9
10

Mindset
20
18
3
13
17

Talent
20
12
8
16
0

Trendsetter
20
7
16
4
8

/

compared to

20
cities

ANNEXES

6
III. Silicon Valley Index 2012
Research Indicators

Joint Venture Silicon Valley and Silicon Valley Community Foundation –
with help from Californian departments for Education, Finance etc U.S.
Census Bureau, US patent and trade office etc.
Qualitative and quantitative research methods:
The survey elicits both a backward-looking as well as a forward-looking
indicator, thereby capturing the sentiment of the past six months’ trend
and its counterpart six months into the future. The survey is conducted
every month and over time is meant to develop an early warning system of
upswings and downswings in the Silicon Valley economy.
Using external secondary data:
US census bureau (all demographics), Population estimates 2012,
California departments for each sector, Joint Venture Silicon Valley network
data, 2010 American community survey, IPOhome.com, US Small
Business Administration.
5 indicators focusing on People, Economy, Society, Place and
Governance which are then further divided into sub-indiactors.

ANNEXES

7

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Innovative Ecosystems

  • 2. 3 3 3 3 3 7 3 3 5 8 As the world becomes increasingly inter-connected, wealth and ideas have greater opportunities to travel anywhere, and the boundaries between countries that we are accustomed to have become increasing blurred. The key players in this newlyconnected world are those who have harnessed the ability to attract talented people, who encourage them in sharing and trying new ideas, and who attract organizations with all the resources and knowledge required. This is known to work best on a regional scale, as shown by the most successful and best-known case of such a breeding ground of innovation, Silicon Valley. Only at this level is it possible to touch upon all the aspects of innovation both by contact with entire institutions and by dealing with individual people and companies, all whilst remaining relevant on a national scale. Here at Opinno we want to identify the most promising regions whilst they remain at their embryonic stages, and then become the enabler of their growth. To do this, we need not only to understand how these regions function, but also to identify the main key factors that make the main innovation ecosystem in the world work at the top innovation level. Within this context, we at Opinno decided to study a sample of the most innovative ecosystems that have arisen within varying contexts, with our objective being to draw conclusions upon their strengths, how they have come to be innovative, and the best practices they used that could be translated to other regions. For this task, we joined forces with students of ESCP Europe and IED Madrid (Instituto Europeo de Deseño). Ultimately, we are seeking to open new ground in Europe and in Hispanic countries, by becoming the “new Silicon Valley”. We aim to do this by analyzing the local context, adapting the best practices in line with the particular strengths we find, and by allying with strong, established partners, as only they have the capabilities to leverage the investment required for such an enterprise and to secure strong growth. We would like to give special thanks to all the people that helped us bring this white paper together: Anna Lobkowicz, ESCP Europe Student Kirstin Naeve, ESCP Europe Student Sarah Pedroza, ESCP Europe Student Vsevolod Batishchev, ESCP Europe Student Saumitra Das, ESCP Europe Student Mercedes Riba Michaus, IED Student We at Opinno hope that you will find this piece of work illuminating, and that you will enjoy reading it as much as we have enjoyed creating it. 3
  • 3. OPINNO Opinno is a global network of open innovation which uses lean development methodology to transform organizations through design, prototyping and the validation of new products, services and business models. Opinno was born as an answer to three quandaries affecting all organizations: the enhanced complexity that products and services require in order to become competitive; the increased influence that technological innovation has upon the market place and globalization, and the direct effect such innovation has upon ideation processes, production and the marketing of products and services. Opinno has responded to these challenges with three strategies which, when combined, make up our business model: - Open innovation as an engine of response to rapidly moving markets, enabling the transfer of knowledge, personnel and financial support among innovation ecosystem agents. - Lean development as a tool to design, implement, and to correct our ideas, giving our model a practical and tangible character. - Building a global network that brings together the best talent in the world, as well as linking major multinational companies, universities, research centres, entrepreneurs, investors and public administrations. Opinno is divided into three business lines: Think : Groups together all the business consulting activities that we offer to large organizations and governments. We work to generate and implement new management models and we serve as a technological intelligence network in order to detect possible partnerships, investment opportunities and emerging competitors. We also provide training for entrepreneurs and executives, and we both create and manage innovation centres orientated towards such fields as entrepreneurship, smart cities and different industrial sectors. Build : This unit, in collaboration with our clients and partners, is focused upon the implementation of our client’s projects. We offer a technological development laboratory (Labs), which is a tool for Venture Capital investment projects (Capital) that supports outside projects as well as our own. We also have a foundation (Opinno.org), which seeks to create social impact through our ideas, network and products. Engage: Does an important job in spreading innovation and entrepreneurship by means of our digital communication strategies, technology conferences, entrepreneur competitions and market prospecting explorations. This allows us to stay in constant contact with emerging new talent, new technologies and new business models.
  • 4. Methodology Input (Analysis) Our study started with an assessment of the subject matter, studying as widely as possible the ecosystems, the main stakeholders and their key personnel, the relationships between them, and the practices that exemplified how these systems performed. Ten ecosystems were first studied in this way, which were then ranked using both established criteria through existing indexes that measured their specific attributes, as well as our own expert’s assessment of them. Finally, through the in-depth study of specific cases, we were able to extract best practices and global conclusions that could be applied to other ecosystems in order to boost their chances of success. Output (Our point of view) Broad Overview Mapping the Ecosystem • • • • A visual description of how the main actors in the Global Innovation Index Report Government websites (Chamber of Commerce) Innovation Ecosystems Case Studies Global Competitiveness Report ecosystem interact Current Situation Analysis Criteria for Innovation/ City facts & figures A depiction of the most salient aspects that have a positive or negative impact and therefore need to be reinforced or respectively reduced • Start-­ p Ecosystem Report u • Regional Innovation Index Report • Silicon Valley Index Report SWOT Analysis Specific Best Practices A synthesis of the traditional analysis of Strengths, Weaknesses, Opportunities and Threats to the Ecosystem • Case Studies Opinno Recommends Best practices extracted from specific exemplary practices that have had a substantial long term impact on the success of the ecosystem
  • 5. 6 ecosystems London Londres Silicon Valley Strong Focus on Tertiary Education Berlin Future Oriented Sector Clusters Transparency in Venture Capitalism Tel Aviv Highly Organized R&D Cooperation Santiago de Chile Global Entrepreneurship Community Silicon Valley London Berlin Tel Aviv Santiago With extremely standardized legal documents and a large number of VC (Venture Capital) experts, Silicon Valley offers entrepreneurs a whole host of options that enables them to easily access the resources required to develop a start-up as quickly and as efficiently as possible. With 40 excellent Higher Education Institutes and with 43 percent of its population possessing a tertiary degree, London has an outstanding pool of skilled workers. Berlin serves as an exemplary role model that displays the positive impact that strategic clustering can have upon a city’s ecosystem. The city gathers together exceptional R&D centers, international human capital and sizable enterprises. It’s the city’s way of achieving excellence within their future sectors. The Government encourages highly intertwined activities and cooperation between its R&D centers, universities, MNCs and SMEs, mainly through enabling risks for VCs and organizing sizable multi and bilateral R&D research funds. Santiago is an excellent example of how the public sector can nurture, sustain and foster an entrepreneurial mindset in a short period of time, by creating a visionary type of environment for innovation.
  • 7. Silicon Valley Region: North America Population: 7.5 m GDP: US$ 535 billion (Bay Area) GDP/cap: US$ 74,815 (Bay Area) Patents: 224,505 (USA) Public R&D Expenditure: 10 % Strongest Drivers Silicon Valley is the leading technological hub in the world, and is located in San Francisco Bay, in the United States. Its beginnings can be first traced back to 1950s when Hewlett Packard’s growth in Palo Alto became the main driver of the region’s development. This community of entrepreneurs started developing solutions for large companies and corporations, who then started investing in these solutions, thus creating the perfect vehicle for encouraging the creation of new enterprises. The rest is history. Venture Capitalists began investing in entrepreneurs before the larger corporations could acquire them. Accelerator programs started supporting entrepreneurs before VCs invested in them. Angel Investors and Incubators swiftly followed. Data: 2012 SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 5
  • 8. Global Innovation Index 2012 Startup Ecosystem Report 2012 The United States Silicon Valley Innovation Input Subindex 9º Institutions 17º Human & Research Capital Infrastructure Market Sophistication Business Sophistication 1º 2º Trendsetter Mindset Support Talent Performance Funding Startup Output Differentiation 9º 22º Innovation Output Subindex 16º Knowledge & Technology Output Creative Output 11º 33º compared to: 141 countries compared to: 20 cities SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 6
  • 9. r nto Me ort pp Government ernm ent Sta Doc ndard iz u Fun ment ed Le s gal pe ding rm SB illio D IR Ho eregu n of $51 GD 0 us lat ing ion P De Po & cre lici as es Fo ing rei Pa gn yro Un Im ll T ive mi ax gr rs es ati itie on s La ws In ity tur Ma g din Fun Su ing Capital nd D R& R&D R& D rese R& re s arc k or hw ea rc hw D re sea ork Universities/ R&D Human Capital r c h wor k D R& Re so urc te h ch ar fo Re so R& u e DR so Ind D R& Re s llon e eM i eg so u Flow of L a bo r ies ompan F o r lo w revenue tech c es al R ctu elle Int t of Startups en stm Inve s rce ces our ab nL tio ova urc ark ia str u d for Inn es Universities Silicon Valley has established itself upon the multidisciplinary and cross pollination of ideas that both support failure and create serial entrepreneurs who are ready to start the next big thing. Having educational leaders around to support them and to offer the space to build this community has been crucial in supporting the ecosystem. lP rn Ca s rce & ve an St en S (N S NA m rn o rG se Re t In se Re d or es c ar A itu st ms: gramme ogra h Pr ates Pro li earc Res ford Affil Stan ital ap an C Hum Culture e t of workforc High amoun orking population) (25-44 age w Skilled workforce (38% terciary education) ) ovation pen inn urs/ o rking ho o (Long w Incubators/ Accelerators There are many Incubators/Accelerators in Silicon Valley (of which 90 percent are private) which have helped in building start-ups like Ycombinator and TechStars, as well as countless others. A) f an St Fu R VCs and Angel Investors together make up around 53 percent of all funding that’s provided to start-ups. VCs perform the multiple role of broker, management consultant and recruiter. They sometimes even act as lawyers. Companies Gov cuba (Y Com tors/ Acce le binato r/ Ang rators Busi el Pad ness ) (IT C luste Cluste r r) Venture C (53% Fun apitalism ding) Big Corporation MNC Companies Venture Capitalism ters C en &D Spinoffs s Startup The Ecosystem The number of people between the ages of 24 and 44 in Silicon Valley is around a quarter of a million, approximately 38 percent of whom possess a high level of education. It has been shown that these people are content to work longer daily hours and show more commitment to working full time than in any other start-up ecosystem. Furthermore, they continually display an entrepreneurial spirit and a drive to change the world with newer and better products. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 7
  • 10. Current Situation To Maintain + Favourable Increase Presence Venture Capitalists (high density) Impact of Key Factors Government Funding (SBIR/STTR) - Low To Reduce the Risk Spin-offs & Big MNCs R&D Incubation & accelerator environment Infrastructure Sustainability (Land and housing) To Mitigate the Risk Support from Universities People Education (38% tertiary education) + High Government Regulation Policy Debt Funding Stricter Immigration Laws/ H1B visas - Unfavourable Presence of Key Factors The main strength of Silicon Valley has been the level of autonomy allowed by the US government, and the drive shown by the private sector and entrepreneurs to continuously develop both the ecosystem and the community. The main weakness is the price of accommodation and property, as with more and more people coming to Silicon Valley housing has become very expensive (average monthly rent is now $1,750), to the point at which many businesses are relocating outside the region. The biggest threat to Silicon Valley is the US’s strict immigration policy. Fifty-two percent of start-ups are from foreign nationals. Some start-ups have decided to move to major hubs in other countries. Other entrepreneurs, true to their creative mindset, are coming up with solutions such as creating a floating city in international waters outside the bay, where entrepreneurs can commute to and from the Valley. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 8
  • 11. Strengths Weaknesses Government Support People Culture Foreign Immigration Laws Infrastructure Government is decreasing the payroll tax to support high head-count low revenue technological companies. The 25-to-44 age group is the largest in Silicon Valley. Reports show that as many as 52 percent of Silicon Valley’s start-ups were founded by foreign nationals, and that non-natives contribute almost 25 percent of WIPO PCT applications filed. One of the most expensive US cities to live in. State government continues its strong support of research universities. • The opening of Stanford Industrial • Park has been, to date, its greatest achievement. The Carnegie Mellon Innovations Laboratory – aerospace research with NASA. Funding Venture Capitalists not only provide the necessary financial resources to start-ups and spin-offs, but also they often perform the multiple role of broker, management consultant, and recruiter. Venture Capital has the highest concentration of VC to GDP ratio in the entire country. Nearly 53 percent of funding comes from VCs or Investment Angels. Funded start-ups are more likely to have a successful exit – through an IPO or by becoming absorbed into a bigger company. In recent years, the percentage of adults with Bachelor’s degrees or higher has increased significantly. Nineteen percent of the working population are more likely to motivate themselves by their vision of changing the world, rather than just the thought of building a product. An open culture where people from all walks of life and different companies sit down together to share ideas. Government and interested groups support the analysis and study for a solution that provides international entrepreneurs a way to legally work in the country, and so create jobs and wealth. • Five percent of new residential development in 2011 was classified as affordable. • Average monthly rent rose to $1,750 in Silicon Valley (Eight percent increase). Since there is only a small amount of land available, more and more companies are setting up their headquarters away from the city, thus creating transportation problems for their employees and also creating an urban sprawl which may not be sustainable within the terms of the innovative ecosystem of Silicon Valley. Overall job growth is constrained by limited housing production, as many individual jurisdictions do not view housing growth as being within their interests. Highway congestion results when jobs are scattered throughout the region, often far from comfortable transportation routes. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 9
  • 12. Opportunities Threats Development around transit areas Culture Other upcoming innovative ecosystems Focus employment growth near transits in existing down-town and employment areas to reduce commuting time and so increase productivity. Housing for general population Build sufficient housing in the right places for the growing workforce. Adjusting taxes Reduction of fiscal inequities among jurisdictions by sharing taxes among them, thus reducing the competition for commercial and industrial development and making investment decisions depend upon the broader regional economy, rather than specific local actions. Mentoring cities to develop innovative ecosystems Mentor other cities and economies to develop innovative ecosystems. Silicon Valley has given birth to more billion dollar companies than any other ecosystem, mainly due to its plentiful supply of risk-capital world-class talents, the inclusion of the headquarters of many leading public companies, its vibrant support ecosystem, and an “openminded, trust, pay it forward, change the world” attitude. Entrepreneurs are 22 percent less likely to think of building a new product as a major challenge. An entrepreneur’s ambition in Silicon Valley is more highly-motivated when compared to entrepreneur’s ambition on average across all other ecosystems. Many research papers suggest that there exists a general belief that the next Silicon Valley will shift location to somewhere else as the world becomes further interconnected. Start-up Chile Start-up Chile is already taking advantage of the main weakness of Silicon Valley the strict foreign immigration policy - and making use of it to promote its own city. Hence, entrepreneurs are starting to looking towards other cities to consider opening their businesses. New, upcoming innovative ecosystems – 44 percent believe it’s likely that the “technology innovation center of the world,” now in Silicon Valley, will shift to another country within the next four years KPMG survey of 668 technology business executives at $1 billion-plus companies in 2012. Entrepreneurs are 19 percent more likely to motivate themselves by the vision of changing the world rather than just creating a salable product. Supporting the development of new “collaborative consumption” start-ups. This can have an impact on the creation of new systems that break the status quo. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 10
  • 13. Best Practices MNCs Competitions Puts US $25.000 & gets 10% stake in Startup 2020 VC Puts US $25.000 & gets 5% more stake in Venture Big MNC’s (Cisco, Nokia, Siemens) Expert VC’s (2020 VC) Develop Prototype 6 months Business Problem Hackathon (4 day competition/ 12 teams selected) 6 months Ideation Phase (6 months) Incubation Period Second Phase Startup with a Big Client Funding System Taking as an example a scenario for 2020vc - large MNCs (Cisco, Intel, Nokia) will give 2020vc their business problems in the hope of a solution. Experts from 2020vc will spend four days or so screening applicants, who are typically entrepreneurs with no company of their own, and then assess them in a hackathon (competition). After that they will narrow the numbers down to a dozen or so teams for the entrepreneur-in-residence program. On average, 2020vc will first inject $25,000 in the “ideation” phase, for which it will receive a ten percent stake in the start-up, and then another $25,000 in the second phase for which the team will have to have a preliminary prototype ready. In addition 2020vc will receive an additional five percent stake in the second phase. Subsequently these teams become a start-up of their own with major MNCs as their clients. State Government • Through institutes SBIR & STTR. • 89$ million granted to small companies. Venture Capitalists • 10$ billion dollar investment (2012). • Highest density of VCs (53%). • Invest in clean technology. Education • Focus to increase the graduation rate • from the previous academic year and a decrease in the drop-out rate (38 percent graduates or above in Silicon Valley area). Develop institutes in collaboration with government as well as industry. Stanford: - Stanford Industrial Park. - The Stanford Center for Professional Development. CMU: - The Carnegie Mellon Innovations Laboratory. - CyLab Mobility Research Center. Entrepreneurs SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 11
  • 15. London Strongest Drivers Region: Europe Population: 8.3 m GPD: US$ 761 billion GDP/cap: US$ 38,514 Patents: 7,173 The UK’s capital now houses thousands of entrepreneurs and technology start-ups, standing true to London’s creative and daring history. The “Tech City” was endorsed by UK Prime Minister David Cameron in 2010, with a plan to accelerate its growth as far as the site of the 2012 Olympic village. Facing the difficulties of affordable housing and spaces, there are plenty of Incubators and Accelerators to support this growth. The collaboration of government agencies and universities plays an important role, bringing intellectual resources and grants to entrepreneurs. Public R&D Expenditure: 1.76 % Data: 2012 SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 13
  • 16. Global Innovation Index 2012 Startup Ecosystem Report 2012 The United Kingdom London Innovation Input Subindex 5º Institutions 9º Human & Research Capital Infrastructure Market Sophistication Business Sophistication 6º 3º Trendsetter Mindset Support Talent Performance Funding Startup Output Differentiation 15º 21º Innovation Output Subindex 5º Knowledge & Technology Output Creative Output 8º 14º compared to: 141 countries compared to: 20 cities SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 14
  • 17. Companies & ERDF ($45 m) National Higher Educatio n Funding Techn o ($400 logy Strateg m in in y vestm Board Gran ent) ts in ($1 m f in Lo orm of c ndon o East mpetitio Gov End) n ernm Capital vat e T De ion ran Vou sfe Ho regu us lat che r ing ion Co r) Po & llab Lib lici rar ora es y b tio Se us n w mi ine / na ss Brit rs Pr & ish on og IP Fin ra ce m an ntr s ce e & & Po inn lic ov ati ies on ivers F u nd s f o r Un itie nd s for SM E ’s with S M E’s s Co lla bo Eu sto n Sq ua re tio n Universities/ R&D Human Capital 0 t1 s n1 n llio mi o n tio es iza tax m n he ate ) ga or ut Or Sc rp abo t f co d lie en ed oun tm Re c es du n R es) nv Re ilico itut yI it S nst ( i C tion L ch s UC Te itie educa e in ers er iv ffic Un high ho e arc 40 ( lleg ese Co rial nt R tute pe Joi nsti in Im ch I ors ear bat Res Incu ion at es Fu ra Government Government ent Lon don Age ncy Deve Kn (LD lopm A) (Inn owled ent o g Funding ES F Shoreditch Silicon Roundabout (+300 startups) Startups The Ecosystem wi th Da Un iver si tie s vid Ca ro me n or llab l Co Inte BBC ams: ogr ch Pr esear R ital n Cap Huma L & UC London’s “Silicon Roundabout” has become the focal point of London’s tech-hub over the past five years, welcoming over 300 start-up companies such as Lastfm, SoundCloud, and many others. The UK government has taken a keen interest in the development of this hub and has started a Tech City investment Organization (TCIO) for its promotion and development, as well as proposing special visas for international entrepreneurs or support from the London Stock Exchange for facilitating exit strategies for start-ups. Universities Universities such as the Imperial College, the University College of London, the Macmillan Group and Central Saint Martins College of Arts and Design have relocated to areas close by. They offer a consistent source of cost-effective labor to entrepreneurs. force Skilled work education) 8% terciary (3 SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 15
  • 18. Current Situation To Maintain + Favourable To Increase Presence Silicon Roundabout Incubation & Accelerator Environment in Universities To Reduce the Risk LDA funding Impact of Key Factors To Mitigate the Risk People Education (43% tertiary education) VCs/Angels Funding from UK govt. - Low Matching Labour with Company needs Relief schemes from Govt. + High Financial & Legal Cluster in London Investments in R&D by state - Unfavourable Presence of Key Factors LDA Closed down London’s strengths commence with the initiatives in entrepreneurship that are taking place at Shoreditch-Silicon Valley. Various innovation schemes have been carried out each year, first by the London Development Agency (LDA) and now by the Greater London Authority (GLA), with a huge base of educational institutions providing support in the form of intellectual resources. The main weaknesses in London are the lack of private Incubators/ Accelerators and Venture Capitalists who are willing to invest in anything other than the financial services. The all-purpose start-up Incubators/ Accelerators which already exist are the mostly from outside the UK. The main threat to London is its focus on knowledge-intensive services (53 percent), due to the strong financial aspect and the legal clusters which leeches away the workforce from the high-tech companies, as well as the dilution of the LDA’s efficiency by its assimilation by the GLA, which has much less focus on innovation. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 16
  • 19. Strengths Weaknesses University Support Government Support Lack of Capital Low Investment in R&D Has a higher than average level of education and skills – a high proportion of London’s population possess tertiary education. Grants in the form of competitions. London has a funding gap, with 81 percent less capital raised by startups before product market fit than startups in Silicon Valley. Much of London’s R&D investments are made in higher education institutes. Is home to more than 40 higher education institutions. Intel invests in UK institutes to create a Global Center for Research in Sustainable Connected Cities. Silicon Roundabout Three years ago, this area housed only a dozen digital start-ups - now there are over 300. Last.fm is based there, as are SoundCloud and TweetDeck. Techhub – to nurture start-ups. Relief schemes for SMEs and large corporations. Tax schemes for start-ups, the London Stock Exchange’s facilitation, and the availability and encouragement of highly trained professionals from traditional sources. . People Culture They are 9% less likely to work full time. London has been slow in adopting mobile platforms. London entrepreneurs focus 81% more on consulting as a side activity than SV entrepreneurs. London’s technology adoption is slower than SV. London has the lowest level of business investment in R&D in the UK. FInancial And Legal Cluster London has a strong financial and legal cluster. London’s population is less likely to be employed in medium-high and high technology companies and more likely to be employed in knowledge-intensive services than in the rest of UK and EU27. Too much focus on knowledgeintensive services and too little emphasis on medium and hightech companies. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 17
  • 20. Opportunities Matching Business with Available Labour Under-utilization of the pool of potential workers is not just economically wasteful – it will increase London’s inequality gap yet further. UK Government Plans The UK Government is seeking to address the economic development vacuum that may be caused by the abolition of the nine English RDAs, by creating a three-year Regional Growth Fund that will invest around €0.5billion a year (around 15% of the RDA budget), through open competitions and the investment in the best local projects that cover any topic or any location. Threats Development of Shoreditch The European crisis It is the vision of UK Government to introduce the concept of Tech City – a theoretical space stretching across East London, from Old Street’s Silicon Roundabout to the Olympic Park. Even though London is currently one of the hottest start-up cities in Europe, along with Berlin and Stockholm, there is increasing start-up activity all over the globe that it has to contend with. They will provide support for the Roundabout’s existing start-ups, as well as encouraging larger technology companies to move to the well-equipped Olympic facilities, vacant after the 2012 Games. UK government may also consider tax breaks, as well as deregulation. Employees still have to pay 28 percent, which is equivalent to what the banking sector pays. This could be reduced to encourage entrepreneurship. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 18
  • 21. Best Practices LDA London Development Agency £1 million capital fund/ £5.4 ERDF million funding European Regional Development Fund £600.000 every year Knowledge Connect • Teams up businesses with experts in British Library Business & IP Center • • • Free access to the extensive intellectual • • property resources (e.g. databases of business, company and industry information). Physical Location for entrepreneurs to network. Topical sessions and Workshops with business experts market competition. universities, colleges or research institutions to support their opportunity. Wide range of free workshops. Provides grants to eligible small businesses (5 - 249 employees). Clusters for the future Knowledge Vouchers is a collaboration between the British Library and Knowledge Connect, both of whom were funded by LDA, additionally the ERDF in the case of Knowledge Connect. They give out two types of vouchers. The first are £3,000 minivouchers for testing concept designs, strategic and technical development, and market research and investigation. The second are £10,000 maxi-vouchers for performing R&D for new products and services, the creation of preliminary prototypes, plus software development, testing and validation. Knowledge Vouchers £3.000 MINI VOUCHER • Testing proof of concept. • Strategic or Technical • Development. Market Investigation. £10.000 MAXI VOUCHER • R&D of new products, services and markets. • Prototyping. • Software development, testing and validation. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 19
  • 23. Berlin Region: Europe Population: 4.5 m GDP: US$ 133 billion GDP/cap: US$ 37,935 Patents: 6,624.7 Public R&D Expenditure: 2.78% Data: 2012 Strongest Drivers Berlin is a city that is constantly evolving. The fast development of its urban structures, the international mix of its population and the economical development of its cultural network are all making Berlin an extremely attractive city for entrepreneurs to live in and to build their ideas within. The support that the government provides creates an outstanding landscape that promotes science, education and research. Government becomes the foundation of the innovative ecosystem of this city, and the clusters created around modern sectors drive the increasing competitiveness of the region in the international market. With a reasonably sizable and affluent population, Berlin has positioned itself as one of the most attractive environments for entrepreneurs, with specific focus on the young European online start-up scene. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 21
  • 24. Global Innovation Index 2012 Startup Ecosystem Report 2012 Germany Berlin Innovation Input Subindex 23º Institutions 26º Human & Research Capital 16º Infrastructure Market Sophistication Business Sophistication 16º 24º Trendsetter Mindset Support Talent Performance Funding Startup Output Differentiation 24º Innovation Output Subindex 7º Knowledge & Technology Output Creative Output 10º 12º compared to: 141 countries compared to: 20 cities SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 22
  • 25. Government lin nb ur g Ber d is de an Br lin er ie B &D str en tR at ion de pe nd ov Inn B g sa ion t va TS t en o Inn g Te D & eR int n atio ov inn n to ort pp su (4 ies tor ra bo tm nv &i la kom e isch nL rlin t Be mbH nG atio ov t Inn old umb B &D sita ver Uni hn Tec H Spin ies tor ra abo atio ov Inn e Tel Senate of Berlin Startup Community D R& in t en es t iva Pr ) 12 20 il/ b ng ti ies olo B rlin Be ftu n ch TS lin B ur Berlin’s ecosystem is characterized by a strong knowledge base, but is also one that also struggles to link with industry and private funding. The Senate is the heart of the engine that decides future innovation strategies, and one that has focused on the development of technology parks and an R&D landscape. It is ensuring financing through the Investment Bank Berlin (IBB), as well as attempting to attract foreign investments. er Jo ge ud ly b ear of y 25% i n v e sts Universities/ R&D at eg 20 10 -2 02 0 erl in lan Ma to B IB In tr ted ib u ste rP na te of B rog ram Pro fit P stiti on sB s An Inve Se foc us on fut ure inv gro es wt ts h in ma du inly str in ies SM E’s ture buil der &a en nd s a ct a ank gels ital ines Bus Ventu re Ca p ers Fon d Europe an Fond Incubators Innovative & growth oriented industry clusters Capital cce leara tor Private Enterprises Companies all r egio n al f u sv Startups The Ecosystem l choo Off S Fueled by a strong working morale and well trained people, the community is very active and interlinked. Nevertheless, the Incubator and Venture Capitalist power is concentrated in the hands of a few, very influential people and their organizations. This makes quick, agile reactions possible, but in certain cases may result in less transparency than is desirable in their activities. Universities/ R&D Berlin has a unique landscape of universities, R&D centers and tion Centers independent research institutes that nda Parks & Fou seek to co-operate with the business Technology sector through spin-off GmbHs and laboratories. ff Zone Spin O SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 23
  • 26. Current Situation To Maintain + Favourable To Increase Presence Capital from International VC or Angels Attracting Investors for R&D R&D Knowledge Diffusion & Transfer Impact of Key Factors Cheap & International Human Capital High Skilled Specialized Human Capital - Low Institutional Support for Clusters Regional Funding Cooperation between Science & Private Sector Mindset Lack of Support for Internationalization/ Growth of SME’s Transparency of Regional Decision Process Cultural Mix & Creative Inspiration Changes in Urban Structures Startup Community & Network + High To Mitigate the Risks To reduce the Risks Berlin has excellent science and R&D capabilities, based on a workforce that is both highly qualified and 20 percent cheaper than other European metropolitan areas. There is, however, a strong private and overall investment gap (80 percent less private funding with respect to Silicon Valley), making R&D and new companies heavily reliant upon the government for funding. The government brings specific support through financial regulations favoring investors in the Sector Clusters. Despite English language proficiency among the population, the ecosystem’s greatest barrier to competitiveness may be that SMEs and Startups focus mainly on local markets, and lack support for internationalization. - Unfavourable Presence of Key Factors SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 24
  • 27. Strengths Weaknesses Opportunities Threats Workforce Culture Financial Crisis Financial Crisis The financial crisis worked as a spark that pushed people towards becoming less risk averse, and reduced the cultural fear towards failure. The financial crisis has also led to public budget cuts both at a national and European level. In an ecosystem that still relies upon the government for funding, this has reduced available funds for entrepreneurs and technology centers, thus reducing incentives for foreign companies to invest in local businesses. Berlin is Germany’s biggest and most welltrained labor market.* It also has a multi-national workforce with low labor costs.** Funding Policy The Government provides strong support for all funding stages, and international funding in key industries such as healthcare, energy, transport, Logistics, ICT and photonics. Smart City Due, in part, to a well functioning and constantly improving infrastructure, Berlin has one of the world’s highest standard of living levels. *** Attractive for SMEs Berliners are less individualist than the general population, but they continue to be risk averse. This means the population is less prone to taking the necessary risks typically involved in entrepreneurship. Accelerators There is not a great deal of variety nor number of Accelerators, which skews the power balance unnecessarily towards existing ones. Such is the case of Rocket, which has led to shortage of programmers. Logistics The government investment in infrastructure has led to cheaper and faster ways to import and export from Berlin. International Initiatives to promote cross-border investment have arisen from both sides: the Minister of Economics took 100 entrepreneurs to Silicon Valley in order to seek support. In return, Bill Gates and his peers have invested over $35million in German start-ups through Research Gate. City Trends Due to the city’s growing attractiveness, living costs such as rental fees are booming, and at the same time available space is being reduced, which acts both as a detractor of potential talent and as discouragement to entrepreneurship in the shape of rising labor costs. Berlin is the governmental and economic center of Germany, as well as being strategically centered in Europe, providing access to both Eastern and Western Europe. Ideal market size for start-ups (3.5 million) with strong SME tradition. *Highest researcher and academic per capita ratio in Germany **20 percent less than other European metropolitan areas ***16/121 Mercer Ranking of living standard SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 25
  • 28. Best Practices Steering Committee The Senate of Berlin & Brandenburg Optical Technology All Industry & Research entities ICT Media & Creative Industry InnoBB: Future Oriented Clusters InnoBB is an strategy initiated by Berlin and Brandenburg to make their region more competitive with clusters of future focused sectors on the international market. Some of them belonged already to Berlin’s specialities, e.g. Pharmaceutical Sector, while others like ICT, came into focus due to the development of a start-up community in the city. The aim is to to grow a unique profile of future growth branches and to bundle the knowledge of all stakeholders in an effective and sustainable way. Clusters allow an efficient usage of resources, a fast evolvement of professional networks and support interlinked projects. Biotechnology Medical Technology Transport/ Traffic Mobility Cross Cutting Themes: Clean Tecnologies/ Security/ Materials & Production/ Automation Engineering SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 26
  • 29. Best Practices r fo ts with third parties projec in rsity ive Un Subsidiary Enterprise Researc h& Gu i da nc e Humboldt University tion rea C SpinOffs Industry Humboldt Innovation GmbH The Humboldt Innovation GmbH is a spin-off and total subsidiary enterprise of the Humboldt University, and acts as a comprehensive interface between the university and industry, for example between science and business. It positions itself between business and academia and performs research projects & start- up development with third parties. Since 2005 it has overseen the implementation of 34 successful spin-offs and over 500 research projects. Humboldt Innvation GmbH SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 27
  • 31. Santiago Region: South America Population: 6.6 m GDP: US$ 101.7 billion GDP/cap: US$ 15,208 Patents: 1106 Public R&D Expenditure: 0,4% Data: 2012 Strongest Drivers Santiago has developed a fast-growing innovative ecosystem within the last decade. With a population twice the size of Silicon Valley, Santiago is considered the agricultural, mining, financial and transportation hub of Chile. Over the last five years the Chilean Government has made strong and successful efforts to position Santiago as the upcoming Internet Technology Hub of Latin America. This challenge is not insignificant, considering that Chile isn’t even yet classified as an innovation-driven economy by the OECD. Nevertheless, the country ranks 39th in the Global Innovation Index Report and the city of Santiago was noted as an example of a extremely efficient start-up ecosystem among 20 similar cities by the start-up Ecosystem Report of 2012. The city has benefited hugely from government initiatives, such as “Start-Up Chile”, that are designed to attract and foster new start-ups. In addition, innovation and applied Research & Development are key strategic elements to aid Chile in becoming a fully developed country by 2020. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 29
  • 32. Global Innovation Index 2012 Startup Ecosystem Report 2012 Chile Santiago Innovation Input Subindex 43º Institutions 29º Human & Research Capital 75º Infrastructure Market Sophistication Business Sophistication 44º 50º Trendsetter Mindset Support Talent Performance Funding Startup Output Differentiation 57º Innovation Output Subindex 34º Knowledge & Technology Output Creative Output 85º 44º compared to: 141 countries compared to: 20 cities SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 30
  • 33. The Ecosystem Public Institutions ge sta th row tg ov aC Inn e anc Fin or UP e ate De ma Fin an ce n R&D Co llab R&D Proj or at i tw ork ing fa) o Finance ects fo So tr s en er ) ce nt rivate rs ar/ C llen Ce & P nte vist ce D Ex Ce o of R& ublic tion va M rs o a te (P ov Inn en lC Inn entro na rs (C tio nte na Ce er al Int gic olo hn go) ntia Tec ities de Sa vers d VO Uni iversida INNO d Ne I CH RT TA S Cr ve Universities/ R&D LE Su pp C OR (C ORF FO h O CO ilean Re gio Inv N YS Eco n no FO esti IT ga (C mi De N cD ció o sa DE ev n mis rro R Ci ió elo en n llo (Fo pm tífi Na Ci nd en ca ci en o tA y T ona tífi de ge co F ec l d nc no e y) y T om lóg en ec ica no to ) lóg al ico ) s tor era cel Ac reig nE ntre pre pital (108 el Net w 3 in vest ork ors) Fo re Ca Ang Vent u Lo a nk Ba neu rs Government Banks Funds: R isk & See d Capital ns Startups Companies Capital Companies Fund s (Un nters n Ce tio nova In el r Mod ubatorsities) k Inc ive or Netwte-State-Un (Priva Public institutional support is the major milestone of the innovative ecosystem in Santiago. Public authorities are making continual strong efforts to create a favorable entrepreneurial environment by attracting talent and capital from abroad, and encouraging international companies and institutions to locate their R&D operations in Santiago. Such efforts also provide strong financial support when starting new financing programs, as well as restructuring the previous ones. Public institutions have taken over the role as facilitator between entrepreneurs and the private industry, which are less involved in the ecosystem in comparison to universities and governments. Universities The activities of Santiago’s universities have a huge impact upon the innovation efforts in the city. They act as a sponsor, including both tangible and intangible support. Network Incubator Model The incubation network is well developed and co-financed by public institutions, universities and private investors. This helps ensure accelerated growth and creates a high impact upon entrepreneurship, with an emphasis on technological innovation and entrepreneurial capability. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 31
  • 34. Current Situation To Maintain To Increase Presence + Favourable To Mitigate the Risk Private Fundings: Capital from VC or Angels Entrepreneurial Community Institutional Support Impact of Key Factors Incubator & Accelerator Environment Knowledge Diffusion/ R&D Transfer/ Business Expenditures - Low Physical Infrastructure Great Entrepreneurial Mindset + High Human Capital Education Evaluating Tools Attracting foreing Investors & Entrepreneurs Risk Aversion of Banks - Unfavourable Presence of Key Factors Administrative Barriers & Bureacracy To Reduce the Risk Industries and private financing structures are less involved than compared to the government and universities. Corfo tries to fill the gaps in the financing cycle, taking an active role by designing and offering seed and risk capital lines. Angel Investors tend to support the growth stage and incomegenerating projects which are not excessively risky, but it remains that 96 percent less funding is raised by Santiago’s start-ups when compared to Silicon Valley. There is a low level of knowledge diffusion and R&D transfer between companies and universities. Close to 40 percent of total R&D expenditure is carried out by universities, and is mainly located in Santiago: at the two largest universities, namely the University of Chile and the Catholic University. Universities are just beginning to include R&D projects from companies. The ecosystem is changing at an accelerated rate and has experienced an important growth during the last five years, due to the strong efforts of the authorities to attract foreign investors and to make the ecosystem less bureaucratic and more transparent. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 32
  • 35. Strengths Weaknesses Incubation Environment Universities Network Private actors involvement Regulation Cost There is a growing business of the incubation industry that is extremely strong in networking and has a high impact on entrepreneurship. Universities are starting to show interest towards the incorporation of company projects based in I+D results. On the other hand, whilst it has simple administrative procedures, it also tends to emphasize high value services such as consulting, training and networking. The majority of Incubators are located on university campuses in order to gain access to university expertise and resources. Additionally, there are informal meetings with industry experts to bring on professionals in order to mentor their clients. The major Incubators in Chile are either funded to some degree by or work closely with universities. Lack of industry involvement in comparison to universities and government. Lack of capital from Venture Capitalists or Angels. The people investing seed money do not typically come from the private sphere. The Chilean Economic Development Agency is involved in providing most of the important capital. Banks are reluctant to loan money to earlystage entrepreneurs as such investments are considered risky. Entrepreneurs are used to facing a critical phase in the development of a new business during the initial stages. Bankruptcy legislation (the last change in tax policy did not include incentives for companies that hire university R&D centers of technological institutes). It can take months for entrepreneurs to extricate themselves from a doomed venture. By the time they do, their assets have more than likely shriveled. In the United States, lenders recover about 80 percent of the value of their investment from a failed venture, compared to around 30 percent in Chile. Linking informational role (government funding line). Public authorities Public authorities design new financing programs, restructure old ones, or act as a facilitator between entrepreneurs and the private industry. They demonstrate to other hubs and political decision-makers that it is possible to nurture, sustain and foster an entrepreneurial mindset in order to become self-sufficient. Santiago needs to build start-ups by attracting talent and capital from abroad. Encourage international companies and institutions to locate their R&D operations in Santiago. Knowledge Diffusion Human capital and research: Administrative Legitimation There are important administrative and bureaucracy obstacles for entrepreneurs, especially in terms of access to banking services. New companies only receive 9.4 percent of public support programs. In addition the Incubator level does not yet have a clear system for evaluating the performance of Incubators. • Fifty percent less Masters & PhD compared with Silicon Valley. • Public expenditure on education per pupil (78th in global ranking). • Teacher per pupil ratio at the secondary level (101st global ranking). International co-operation: • The patented co-operation treaties with • foreign investors are not sufficiently developed. Low R&D transfer. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 33
  • 36. Opportunities Threats Culture Political Education The Santiago start-ups ecosystem has the same healthy variety of start-ups that target consumers, enterprises and SME customers as Silicon Valley. Economy and institutions are stable and respectable. Santiago entrepreneurs are less educated than Silicon Valley entrepreneurs. Their political iniciatives can help to kick start a startup ecosystem (attracting talent and capital from abroad). Culture Innovation Chilean companies are highly innovative: • 93.5 percent firms that introduced • product innovations. 94.3 percent firms planning to innovate more in 2014. Work Startups in Santiago employ as many people per stage as start-ups in Silicon Valley. Santiago startups are 31% more likely to monetize directly than Silicon Valley startups. Social The key challenges of Santiago start-ups are similar to those experienced by Silicon Valley start-ups. Both focus on customer acquisition, building products, funding and building successful teams. The ecosystem generally does not have a healthy distribution of start-ups across the “start-ups life-cycle”, with only a small number of late stage start-ups. Santiago entrepreneurs are much less likely to tackle markets in which they’ve had previous experience. Political initiatives can help to kick start a start-up ecosystem (attracting talent and capital from abroad). Santiago start-ups are 31 percent more likely to monetize directly than Silicon Valley start-ups. Economics Chile has plenty of infrastructures, high industrialization and economies of scale. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 34
  • 37. Best Practices FONDEF Ministry of Education CONICYT Startup Community FONDCYT Chilean Government CORFO Ministry of Economy INNOVA Chile Favorable environment for entrepreneurs US$40.000 Working Permit Easy access to offices Development of innovation ecosystem Its objectives are: - To foster the interaction and transfer of knowledge between Chilean and global entrepreneurs. - To strengthen the brand awareness of Chile as an innovative ecosystem. - To enhance local entrepreneurship development by retaining projects with high growth potential. Develops organic growth Funding Give Away 1 Year STARTUP CHILE The “Start-Up Chile” program is cited as a key driver of Santiago’s ecosystem for entrepreneurship and innovation. Supports entrepreneur initiatives Attracts & retains talent Innovative workspaces Attraction of foreign Investors Enable Partnerships Creation of Innovation Hubs SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 35
  • 39. Tel Aviv Strongest Drivers Region: Asia Population: 414,000 GDP: US$ 132 billion GDP/cap: US$ 37,767 Patents: 2665 Public R&D Expenditure: 4.3% Tel Aviv is the second most populous city in Israel with a population of 414,000. It is known for its vibrant and creative environment. Tel Aviv attracts young, well-educated employees and successful businesses which, together with governmental initiatives, have turned Tel Aviv into a start-up and innovation ecosystem with potential worldleading capabilities. Tel Aviv is the city with the most start-up per capita in the world, and has the best quality of scientific research. In addition, Israel is the country which invests the highest percentage of their GPD into R&D, and attracts the most venture per person in the world. Data: 2012 SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 36
  • 40. Global Innovation Index 2012 Startup Ecosystem Report 2012 Israel Tel Aviv Innovation Input Subindex 19º Institutions 47º Human & Research Capital 4º Infrastructure Market Sophistication Business Sophistication 21º 9º Trendsetter Mindset Support Talent Performance Funding Startup Output Differentiation 19º Innovation Output Subindex 9º Knowledge & Technology Output Creative Output 10º 27º compared to: 141 countries compared to: 20 cities SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 37
  • 41. The Ecosystem Multin ation al Co rpora tions Israe l Co mpa nies For eign Com pan An ies ge lC ap Mi ital cro fun Ve ds ntu re Inc Ca pit ub al at Ac or ce s ler at or s (1 0) Startup s (600+) Companies e fic Of YO ZU of he t Capital MNC’s nt f ie Ch ie Sc or f cy 85 &D du in omm R&D C v Avi Tel p r o j e c t s into Star tups erci y rsit ve Uni ot Tu r n Co lR ia str R& alized t era op e DC ital ) ion ist n p f Ca %o Universities/ R&D The four Key players in Tel Aviv´s ecosystem: n &D rk OP Age se R wo e i 3) TIM nal rpr ram s( MA atio nte n F tor E ba (N al atio cu lob per l In G oo ica C log no ch s Te ter MA Government Ram Office of the Chief Scientist MNCs are important in every ecosystem, as they The Office of the Chief Scientist provide not only funding, but is the Ministry of Industry, Trade also knowledge, R&D, and and Labor of Israel. It created the international recognition. Venture Capital market through the Yozma fund, making use of the immigration of scientists and engineers from the former Soviet A fairly unique aspect Union by creating technological of Tel Aviv is concerned start-ups and research. It also with funding. The city has created MATIMOP, which is in investors for every step of the way, from pre-seed, late charge of organizing international seed and early growth. This R&D. Investors increases the success rate of start-ups, as they seldom face the issue of the lack of funding opportunities. Ramot at Tel Aviv University Ramot is the commercial arm of the Tel Aviv University. It works as a mediator between industry and the university. On one hand it helps university projects to find industrial collaborators or for them to create start-ups, and on the other it informs companies about projects currently being researched, to encourage collaboration on common subjects. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 38
  • 42. Current Situation To maintain + Favourable To Increase Presence Entrepreneurial community Governmental support/Involvement Impact of Key Factors Quick Adjustment to Change IKnowledge diffusion and R&D Transfer Great Entrepreneurial Mindset Capital from VC and Angels + High - Low Attracting Foreign Investors & Entrepreneurs Tertiary Education Graduates Youthful environment Job growth through startups Small domestic market Political Instability - Unfavourable Presence of Key Factors To Mitigate the Risk To Reduce the Risk The three main threats to the innovative ecosystem of Tel Aviv are the conservative culture hindering the quick adjustment to new trends, reserved management styles and political instability. Furthermore, the constant threat of terrorism in the city places investors ill at ease. One of the main problems the ecosystem faces is the size of the local market. Israel has a comparatively small population. This leads to the migration of many start-ups from Tel Aviv once they are successful, in order to access a larger market. The strengths of the Tel Aviv ecosystem are governmental support, funding and knowledge diffusion, the latter of which is especially extensive in Tel Aviv. This occurs not only through MATIMOP and Ramot, but also through the global enterprise co-operation framework, which is in charge of co-ordinating research undertaken in R&D centers, MNCs and local SMEs. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 39
  • 43. Strengths Fonds Tel Aviv has: • Bilateral-Funds with Canada,USA, Korea and Singapore. • Multilateral Funds with Europe. • Venture Capitalists. Every Stage of investment covered by: accelerators and angel investors, Angel capital, Micro Funds and Venture capital. Mentoring Incubators and Accelerators created by the private sector, the universities, multinational companies and the government. Even though most technology Incubators are privatized, the government pays 15 percent of the required capital for a project whilst the incubator owner pays the remaining 85 percent. Weaknesses R&D Foreign Dependency Culture 2240 Foreign centers in Israel. Israel has a very small market where a high percentage of knowledge and goods come from the external sources, therefore products must be of sufficient interest to the foreign market for a start-up to become successful. The conservative culture and slow pace of adaptation towards new technologies, management processes and business models could hinder Tel Aviv from becoming the number one innovative ecosystem. Lost Potential Similar to Silicon Valley Many Israeli start-ups are sold to the US market and become absorbed into global firms, never really expanding in Israel. The ecosystem of Tel Aviv makes direct comparison for foreign investments and projects to the ecosystem of Silicon Valley. The information and communication technology sector accounts for around 20 percent of total industrial output and only 9 percent of business sector employment. Bilateral-Funds with Canada, USA, Korea and Singapore. Joint R&D with US, Latin America, Europe and AsiaPacific. The Global Enterprise R&D Cooperation Framework. Programs to encourage the Establishment of R&D Ccenters in Israel for the servicebenefit of international projeccts for MNCs. University Ramot at Tel Aviv University. City Branding Non-stop city (young population, attractive businesses, nightlife, rising real-estate demand,individualism, liberalism, hedonism , freedom…) Global city: Tech Mile, creation of municipal high-tech hubs, conferences and events. The returns in terms of long-term job creation and income growth have not been maintained, despite continued investment in high-tech industries. Multilateral Funds with Europe. Venture Capitalists. Every Stage of investment covered by: Accelerators and Angel Investors, Angel Capital, Micro Funds and Venture Capital. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 40
  • 44. Opportunities Threats Economic Social/Culture Political Commercial Israel has the highest density of tech startups in the world. Tel Aviv has the second highest output index of start-ups with a healthy funnel of new enterprises across the developmental life-cycle, a highly developed funding ecosystem, a strong entrepreneurial culture, a vibrant support ecosystem and a plentiful supply of talent. Israel is very unstable country, politically and is in constant threat of terrorism and bombings. Tel Aviv has a slow adoption speed of new technologies (such as programming languages), business models (new types of monetization) and management processes (data driven decision making). Israel is a country of immigrants. Youthful environment. • Sixty-three Israeli companies are listed on the tech-orientated NASDAQ, which is more than Europe, Japan, Korea, India and China combined. Attract foreign investment (UE, USA), and entrepreneurs. Political Almost every major tech company across the world today has some kind of subsidiary in Israel, including Intel, Microsoft, Google and Cisco. Consequently, 39 percent of Israeli high-tech employees work in the R&D departments of multinational companies. Tel Aviv startups are less ambitious: • Israel startups are 46 percent more • likely to tackle smaller markets. The average company performance (in growth & revenue) is lower than of other ecosystems. Employees are 9 percent less committed to work full time before product market fit. They care more about “building a great product” than “changing the world”. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 41
  • 45. Best Practices YOZMA US $100.000 Strategic International Partners million funding State 10 Drop Down Funds 1 State Run Fund Yozma is a program designed by the Israeli government with the aim of creating a real market for Venture Capital in the country. The state set up a US$100 million fund. Together with strategic international partners, Yozma then set ten drop-down funds and one state-run fund. The government had a minority role in the funds, and no interference rights in the investment choices. Additionally, the collaborators had the option to buy the state’s shares within five years for a very favorable price. The funds focused on early-state hightech companies. In total, they invested in 217 projects and companies and eight of these companies made use of the buy-out option. Ramot at Tel Aviv University 217 Entrepreneurs projects After 5 Years Collaborators can buy State shares Ramot fosters, initiates, leads and manages the transfer of new technologies from university laboratories to the marketplace, by performing all the activities relating to the protection and commercialization of inventions and discoveries that are made by faculty, students and other researchers. Ramot provides a dynamic interface, connecting industry to leading-edge science and innovation, offering new business opportunities within a broad range of emerging markets. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 42
  • 46. Best Practices Technological Incubator Program 15% Incubator (Grant + Workspace + Expertise) 50% Shares for Incubator US $500K - US $800K 2 Years Company Incubation Period Focus on: High Tech, Biotech and Environment Succesful Company The Technological Incubator Program was an initiative by the government to smartly use the knowledge available through the immigration of scientists and engineers from the former Soviet Union. They are a private legal entity intended to invest in high risk projects that would normally find recruiting private investors difficult. The companies stay in the Incubator for approximately two years, and receive between US$ 500,000 and US$ 800,000 depending on the project. Eighty-five percent of this money is given by the Israeli government and 15 percent by the Incubator itself. In return the Incubator receives up to half of the shares, whilst the government receives between three and five percent in royalties from revenue generated, until the full grant plus interest is paid back, but only if the company is successful. The Global Enterprise R&D Cooperation 85% Government (Grant) 3-5% of Revenues for the Government until full grant + interests is paid. The program encourages MNCs to conduct joint R&D Projects with Israeli partners whilst focusing on the activity in the national preference zones and/or traditional industries. SILICON VALLEY LONDON BERLIN SANTIAGO TEL AVIV 43
  • 47. Final thoughts Innovative ecosystems can grow and become thriving environments by means of many different methodologies or support measures. Factors such as the strength of the scientific landscape, governmental strategies and support, and the transparency of the overall access for start-ups into the system are crucial when it comes to influencing the overall development of an innovative ecosystem. Once a system is well established and secure in the entrepreneurial setting of a region or city, it must gain autonomy. The less the government is involved in the long term, the more sustainable an ecosystem becomes. One of our missions at Opinno is to help governments implement worldclass innovation ecosystems in Latin America and the rest of the world, in order to accelerate innovation cycles and to create disruptive innovations, in addition to profitable products and services. At Opinno we think that one of the main key factors is the implementation of Lean methodologies within these ecosystems, which fosters the acceptance of failure and raises the effectiveness of new businesses to deliver products and services that solve real world problems and needs. Another key factor for us is the adoption of an Open Innovation framework – a framework to create a high value network that establishes a natural partnership amongst governments, organizations, entrepreneurs and other entities, including large institutions such as MIT, Harvard, Stanford, and where, in a transparent manner, everyone adds the right value and, at the same time, benefits from each other. At Opinno we believe that any ecosystem that wants to create real longterm value in terms of innovation should: Define its identity via a clear focus upon the development of strategic lines, seeking the differentiation from other ecosystems (by type of innovation, by sector ...) and keeping in mind that innovation is not just a group of PhDs thinking together, but requires a mix of both hard and soft skills that range from pure science to creativity at its best. Think on the long term with the right engagement for the plan. There is little sustainability in short-term actions without continuity, and only a well elaborated mid-term and long-term action plan, in conjunction with the right engagement, will deliver the opportunity to build a fully independent ecosystem that is not directly attached to government policies or the general economic situation. Accelerate the innovation and entrepreneurial process by removing unnecessary bureaucracy, creating incentives for innovation through fiscal tools and lightening the process of talent immigration and tax-schemes for new companies. Facilitate the integration of the different innovation agents in the country (universities, MNCs, research centers, technology centers, public administration...) through a legislation system in favor of the agents. Have faith in the talent and the inclusion of innovation and technological thinking in the educational system.
  • 49. I. Global Innovation Index 2012 Research Indicators INSEAD and the World Intellectual Property Organization (WIPO, a specialized agency of the United Nations) & Knowledge Partners: AlcatelLucent, Booz & Company and the Confederation of Indian Industry & Advisory Board of eleven experts & Statistical audit by the Joint Research Centre of the European Commission. Qualitative and quantitative research methods: The 2011 edition of the EOS included 126 questions; 13,395 surveys were retained for tabulation, completed by business executives from 142 economies between January and June 2011. External secondary data: Crunchbase (visualized: SeedTable; BuzzSparks; SeedTableBlog), Angellist, Global Entrepreneurship Monitor (GEM), Numbeo - cost of living, TechAccelerators; Seed-DB. 84 indicators included in the Global Innovation Index (GII). A total of 59 variables are hard data; 16 are composite indicators from international agencies, distin- guished with an asterisk (*), includ- ing five indices based on percent ranks for which an ‘r’ was added; and 6 are survey questions from the World Economic Forum’s Executive Opinion Survey (EOS), singled out with a dagger (†). The EOS has been conducted for over 30 years. Global Coverage & Broad Scope • 141 country/ economy profiles (App I) • Performances by region and by income • group 84 indicators; 62 hard data, 16 indices, 6 survey questions (App II Data Tables) Effort to capture innovation in emerging markets • Scaling of indicators (comparability, • • stages in development) Knowledge diffusion/ absorption Relative strengths/ weaknesses (cutoffs based on percentage of countries with scores above/ below) Transparent Methodology • Year-on-year comparability of results • • (Annex 2) Statistical audit (Annex 3, Confidence, interval for rankings) Sources and definitions (App 3) and theoretical notes (App IV) Framework adjusted for relevance and timeliness • 35% of data from 2011, 35% from • • 2010, 21% from 2009 New data from ISO, STO, GMAT, ZookNIC, Google New sub-pillars: Ecological sustaintability and Online creativity ANNEXES 1
  • 50. I. Global Innovation Index 2012 Research Indicators Innovation Input Subindex Institutions Human & Research Capital Innovation Output Subindex Infrastructure Market Sophistication Business Sophistication Knowledge & Technology Output Creative Output Political Environment: + Political Stability + Government effectiveness + Press freedom Education: + expenditure on education + School Life Expectancy + Assessment in Math & Science Information & Communication Technologies: + ICT access/ use + Govt. online service + Online e-participation Credit: + Ease of getting credit + Domestic credit to private sector Knowledge Workers: + Knowledge-intensive services employment + Business GERD performance/financing + GMAT mean score Knowledge Creation: + National office patent applications + Patent-cooperation treaty applications + Science/ technical journals Creative intangibles: + National office/ + Madrid agreement trademark registrations + ICT and business/ organization model creation Regulatory Environment: + Regulatory Quality + Rule of Law + Cost of Redundancy dismissal Tertiary Education: + Tertiary Enrolment + Graduates in Science + Engineering tertiary inbound and outbound General Infrastructure: + Electricity output/ consumption + Gross capital formation + Trade- transport infrastructure Investment: + Ease of protecting investors + Market capitalization + Venture capital deals + Total value of stocks traded Innovation Linkages: + University-Industry research collaboration + State of cluster development + GERD financed by abroad + JVs Knowledge Impact: + Growth rate of GDP per person + New business density + Total computer software spending + ISO9001 quality cert Creative goods & services: + National feature films produced + Daily newspaper circulation + Creative goods/ services exports Business Environment: + Ease of starting a business + Paying taxes + Resolving insolvency R&D: + No. of researchers + Gross expenditure on R&D(GERD) + Quality of scientific research institutions Ecological Sustaintability: + Ease of starting a GDP per unit energy use +Environmental performance + ISO 14001 certificates Trade & Competition: + Applied tariff rate + Import/export of goods and services + Intensity of local competition Knowledge absortion: + Royalty and licenses fee payments + High-tech imports + Computer communication service imports + FDI inflows Knowledge Diffusion: + Royalty and license fees receipts + High-tech exports, FDI outflows + IT services exports Online Creativity: + General/countrycode top-level domains + Wikipedia monthly edits + Youtube-videos ANNEXES 2
  • 51. I. Global Innovation Index 2012 Research Indicators 10º 5º United States United Kingdom 15º 17º Germany 39º / Chile Israel compared to 141 countries Innovation Input Sub-Index United States United Kingdom Germany Israel Chile Input 9º 5º 23º 19º 43º Institutions 17º 9º 26º 47º 29º Human Capital & Research 22º 21º 16º 4º 75º Output 16º 5º 7º 9º 34º Knowledge & Technology 11º 8º 10º 10º 85º Infrastructure 1º 6º 16º 21º 44º Market Sophistication 2º 3º 24º 9º 50º Business Sophistication 9º 15º 24º 19º 57º Creative Output 33º 14º 12º 27º 44º Innovation Output Sub-Index United States United Kingdom Germany Israel Chile ANNEXES 3
  • 52. II. Startup Ecosystem Report 2012 Research Indicators By Startup Genome & Telefonica Digital Qualitative and quantitative research methods: 50+ interviews and case studies with entrepreneurs, investors and policy makers from various locations globally (structured and unstructured interview guidelines). A web-based survey: StartupCompass. Using external secondary data: Crunchbase (visualized: SeedTable; BuzzSparks; SeedTableBlog), Angellist, Global Entrepreneurship Monitor (GEM), Numbeo - cost of living, TechAccelerators; Seed-DB. The index is based on data from more than 50,000 startups around the world who are using the Startup Genome’s Startup Compass, an automated analyst in the cloud that helps businesses make better decisions via benchmarks and actionable recommendations. The ranking is made for 20 startup ecosystem: Silicon Valley, Tel Aviv, Los angeles, Seattle, New York city, Boston, London, Toront, Vancouver, Chicago, Paris, Sydney, Sao Paulo, Moscow, Belrin, Waterloo, Singapore, Melbourne, Bangalore, Santiago. ANNEXES 4
  • 53. II. Startup Ecosystem Report 2012 Research Indicators Startup Output Funding Performance Talent Represents the total activity of entreprenership in the region, controlling for population size and the maturity of startups in the region. Measures how active and how comprehensive the risk capital is in a startup economy. Measures the total performance and performance potential of startups in a given startup ecosystem, taking into account variables such as revenue, job growth, and potential growth of companies in the startup ecosystem. Measures how talented the founders in a given startup ecosystem are, taking into account age, education, startup experience, industry domain expertise, ability to mitigate risk and previos startup success rate. Support Mindset Trendsetter Measures the quality of the startup ecosystem support network, including the prevalence of mentorship, service providers and types of funding sources. Measures how well the population of founders in a given ecosystem thinks like a great entrepreneur, where a great entrepreneur is visionary, resilient, has a high appetite for risk, a strong work ethic and an ability to overcome the typical challenges startups face. Measures how quickly a startup ecosystem adopts new technologies, management processes, and business models. Where startup ecosystems that stay on the cutting edge are expected to perform better over time. ANNEXES 5
  • 54. II. Startup Ecosystem Report 2012 Research Indicators Startup Output Silicon Valley London Berlin Tel Aviv Santiago 20 14 6 19 0 Funding 20 16 10 20 0 Support Silicon Valley London Berlin Tel Aviv Santiago 20 19 1 16 2 Performance 20 11 8 9 10 Mindset 20 18 3 13 17 Talent 20 12 8 16 0 Trendsetter 20 7 16 4 8 / compared to 20 cities ANNEXES 6
  • 55. III. Silicon Valley Index 2012 Research Indicators Joint Venture Silicon Valley and Silicon Valley Community Foundation – with help from Californian departments for Education, Finance etc U.S. Census Bureau, US patent and trade office etc. Qualitative and quantitative research methods: The survey elicits both a backward-looking as well as a forward-looking indicator, thereby capturing the sentiment of the past six months’ trend and its counterpart six months into the future. The survey is conducted every month and over time is meant to develop an early warning system of upswings and downswings in the Silicon Valley economy. Using external secondary data: US census bureau (all demographics), Population estimates 2012, California departments for each sector, Joint Venture Silicon Valley network data, 2010 American community survey, IPOhome.com, US Small Business Administration. 5 indicators focusing on People, Economy, Society, Place and Governance which are then further divided into sub-indiactors. ANNEXES 7