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Copyright: Alberto Sangiovanni
Vincentelli 2011

Alberto Sangiovanni
-
Vincentelli

The Edgar L. and Harold H.
Buttner

Chair of EECS

University of California at Berkeley

Co
-
Founder, CTA and Member of the Board

Cadence Design Systems

Comitato

Esecutivo
,
Istituto

Italiano

di
Tecnologia

Comitato

Scientifico
, CNR

Advisory Board (Walden International,
Sofinnova
,
Innogest
,
Xseed

(MDV))

Investment Committee (
Fondo

Atlante
,
Fondo

Next)


COLLABORAZIONE
, INNOVAZIONE, RICERCA E
IMPRENDITORIALITA'

Copyright: Alberto Sangiovanni
Vincentelli 2011

OUTLINE


Collaboration, Research, Innovation and Venture Capital


Technological Opportunities driven by Collaboration and Research:
The New Innovator!



Copyright: Alberto Sangiovanni
Vincentelli 2011

Collaborate to Innovate:

the Quest for the Virtual Corporation Manager


Firms will focus more sharply on what they do best, and they will enlist a
growing diversity of suppliers for the rest. Organizations will increasingly
look outside their walls not just to reduce costs but for
innovation



in
processes, product and service differentiation


to free up resources,
transform their businesses, and facilitate sustainable competitive
advantage. As supply networks become more global and complex,
winning will depend on transparency, trustworthiness, and reciprocity. In
a word:
collaboration
.
(
Alan McCormack et al. (HBS))


The ideal collaboration model is the
Virtual Corporation

where the
different firms involved in collaboration act as if they were division of the
same corporation (or even better!!).



Copyright: Alberto Sangiovanni
Vincentelli 2011

Silicon Valley: The Land of Innovation

Copyright: Alberto Sangiovanni
Vincentelli 2011

Silicon Valley: Role of Universities


Copyright: Alberto Sangiovanni
Vincentelli 2011

6

Factors in Success

Infrastructure


L
egal
and financial
services


Excellent Universities


The
simultaneous presence of large, medium and small companies


The
“network”: both inside and outside company boundaries


Copyright: Alberto Sangiovanni
Vincentelli 2011

The role of VCs in the Industrial Innovation Landscape


As a complementary lens on technological and market change


VCs see the world differently


As a window on global technology development


Technology is global and driven by local/regional needs


As a supplement to or portfolio hedge against internal R&D programs


Not even the best and biggest corporate R&D can cover all possibilities


To drive new/expanded market development or other strategic (non
-
R&D)
objectives (Intel; Microsoft)


Explicitly to develop risky new ideas that will initially flourish better outside the
corporation (Cisco)


A form of outsourcing of innovation


The best VCs adhere to "simple" fundamentals:



world
-
class leadership and team;


large, growing market;


defensible big idea;


rigorous application of best innovation practices


Copyright: Alberto Sangiovanni
Vincentelli 2011

Risk Factors in Evaluating Startup Opportunities


Execution Risk


Market Risk


Technology Risk


Variable Factors (dependent on sector or specific opportunity):


Future Financing Risk


Regulatory Risk

Copyright: Alberto Sangiovanni
Vincentelli 2011

Liquidity and Returns


Exit options


IPO vs. M&A (see chart, next slide)


Bankruptcy
vs Shut
-
down


Typical venture portfolio performance:


Historical
data:


Out
of every 10 investments


Half do not return capital


1 returns >10X


Rest return 1
-
10X


Source: M. Borrus,
Xseed


Copyright: Alberto Sangiovanni
Vincentelli 2011

U.S. Venture Capital Investment

1995

2008

28,298
29,406
26,449
22,968
22,422
19,730
21,941
40,609
105,140
54,102
21,100
14,894
8,031
11,271
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
$ Million Invested
Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; Data: Thomson
Financial

Copyright: Alberto Sangiovanni
Vincentelli 2011

91
92
93
94
95
96
97
98
99
'00
'01
'02
'03
'04
'05
'06
'07
'08
M&A
17
76
74
100
97
116
164
209
240
317
353
318
290
339
350
368
355
260
IPO
156
181
220
166
202
270
136
77
260
264
41
22
29
93
57
57
86
6
0
100
200
300
400
500
600
Number of Issues

Year

M&A
IPO
Source: NVCA, Thomson Reuters

Venture Exits

IPOs and M&A

by Year, 1991

2008

Copyright: Alberto Sangiovanni
Vincentelli 2011

2008
-
2010 Exits: Heating up Again (LinkedIn Story)

[
13

]

Portfolio Progress

18


Companies funded

1,700+

ideas/

researchers
canvassed

~950

resulting start
-
up
ideas analyzed in detail

16

Live

2

Shut Down

DigitAB

StemCor

8 companies
past seed stage

Copyright: Alberto Sangiovanni
Vincentelli 2011

What Drives Venture Returns?


Market
growth not absolute size


Efficiency of capital deployment


Irrational exuberance in exit markets


A handful of big
winners

And most of all


Fundamental Innovation

The (Tech) world isn’t “flat” (next
slide). Great Universities play a role!!!





Source: M. Borrus,
Xseed


Copyright: Alberto Sangiovanni
Vincentelli 2011

The (Tech) World Isn’t
Flat:

Distribution of most referenced patents

Source: ATP and George Mason University

Oregon, Washington

(Microsoft, Intel

U. Wash, Toronto)

Silicon Valley

LA, S. Diego

(Qualcomm, Defense

UCLA, UCSD)

Texas

(Houston, TI, Freescale

U. Texas)

Michigan

(GM, Ford, Chrysler,

U. Michigan)

Illinois

(Motorola,

U. Illinois)

Boston

(Medical,
HiTech

Harvard, MIT)

Copyright: Alberto Sangiovanni
Vincentelli 2011

Consequence: VC
Investment by US Region (2008 vs. 2007)

California
(Especially Silicon Valley) Rules
!

0

3,000

6,000

9,000

12,000

15,000

California

Massachusetts

New York

Texas

Washington

Colorado

New Jersey

Pennsylvania

Minnesota

Virginia

Source: PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report; 2008

1,552

1,624

$14,264


$14,735

# of

Deeds

$ in Millions

All Results Rounded

405

446

295

199

164

175

100

97

90

92

171

159

47

57

81

94

146

172

$2,974


$3,714


$1,203

$1,130

$1,299


$1,469

$955


$1,382


$813

$610


$708

$632

$603


$819

$491

$489

$499


$557

0

5,000

10,000

15,000

20,000

30,000

Top 10 Total

2,091

3,110

$23,069


$25,595

2008

2007

Copyright: Alberto Sangiovanni
Vincentelli 2011

Human Resources in Highly Innovative Ecosystems:

Meritocracy to the Hilt!


Biggest challenge is to acquire and retain highly
-
skilled workforce


Play on compensation based on bonuses, restricted stock and options as
well as special claused for acquired talent via acquisitions such as
earnouts and no compete agreements


Hiring and compensation is mostly decided by technical leaders and
agreed upon by HR, HR guidelines may be violated if a good case is
mounted


HR mostly focussed on internal issues: administration of the process, say
on exec compensation, participate on the compensation plan set up at
the Board level

Copyright: Alberto Sangiovanni
Vincentelli 2011

18

Factors in Success 1

People and Technology
:



Scientific and Technology education


Centers of excellence in research


Talent pools (people form Universities and companies interested in high
-
risk high
-
reward activities)


Ability to attract the “best” to the region (infrastructure for families and
continuous learning) but attention to moving social and financial
costs

Copyright: Alberto Sangiovanni
Vincentelli 2011

Pasteur’s
Quadrant

NO

YES

Considerations of Use?

Quest for

Fundamental

Understanding?

NO

YES

Pure Basic

Research

(Bohr)

Pure Applied

Research

(Edison)

Use
-
Inspired

Basic Research

(Pasteur)

D. Stokes

Copyright: Alberto Sangiovanni
Vincentelli 2011

20

University
-
Industry Relationships


Professors are promoted on the basis of their contributions in all areas,
including professional activities


Reciprocal respect and attention to respective roles


Unrestricted grants: “speed not patents”


Transfer of technology through visiting professionals and summer
students


Formation of new companies
favored


Companies compete fiercely on talents out of University


Educational agenda left in the hands of University

Copyright: Alberto Sangiovanni
Vincentelli 2011

21

Factors in Success
3:

The Valley “Culture”


Move fast


Leverage all you can


Do not be afraid of making mistakes


Learn from your errors


If you fail, try again


Re
-
invent yourself and your company constantly


Grow
grow

grow

……

Copyright: Alberto Sangiovanni
Vincentelli 2011

22


Israele

Sistema
scolastico e
universitario di
eccellenza

Cultura
orientata
all’innovazione
e alla crescita
globale

Imprenditorialità


Più alto numero di Nobel pro capite (più
che tutta l’area euro)


4 università nelle top 100 in scienze

-
N
°

3 in pubblicazioni scientifiche pro
capite

-
N
°

1 in laureati pro capite


Più di 1.700 laureati all’anno in Life
Sciences


Più alto numero di aziende
quotate al Nasdaq dopo
USA


Più alta spesa di R&D sul
PIL


PIL 1948
-
2008: x50 (come
Cina, >Giappone, Corea)


Global view


Più start
-
ups dopo USA (più
seed investments di USA in
valore assoluto)


Quasi 100 VC, ~10 miliardi di
dollari under management


Governo imprenditore (Yozma,
incubatori, Life Science VC)

Copyright: Alberto Sangiovanni
Vincentelli 2011

90
KM:
Stesso

Range as in
Silicon
Valley

Herzliyya

Tel Aviv

Gerusalemme

Haifa

23


Copyright: Alberto Sangiovanni
Vincentelli 2011

24

Italy Innovation 40
-
60
%
below comparable nations

EU
27

European Innovation Scoreboard


0,35

0,50

0,55


Source: European Community:“European
Innovation Scoreboard 2008”

Copyright: Alberto Sangiovanni
Vincentelli 2011

25

)

R&D Gap is in the Private Sector

Fonte
: Intesa Sanpaolo, Servizio Innovazione della Divisione Corporate su dati OECD 2005
-

The Economist
-

August 2007

R&D as% of GNL


0

1

2

3

4

Italia

UK

Canada

Francia

Germania

Stati Uniti

Giappone

Svezia

Private Companies

State and P.A
.

Copyright: Alberto Sangiovanni
Vincentelli 2011

Why should we worry about High Tech?

SUNRISE INDUSTRIES?

SUNSET INDUSTRIES?

Innovation and high tech can be as high in

New economy as in old economy!

Process vs Produc!

Copyright: Alberto Sangiovanni
Vincentelli 2011

OUTLINE


Research, Innovation and Venture Capital


Technological Opportunities driven by Collaboration and Research:
The New Innovator!



Copyright: Alberto Sangiovanni
Vincentelli 2011

The Enabling Technology: The Emerging IT Scene

Infrastructural

core

Sensory
swarm

Mobile

access

Copyright: Alberto Sangiovanni
Vincentelli 2011

Predictions


5 Billion people to be connected by 2015 (Source: NSN)


Web2.0


The “always connected” community network


7 trillion wireless devices serving 7 billion people in 2017

(Source: WirelessWorldResearchForum (WWRF)


1000 wireless devices per person?

[Courtesy: Niko Kiukkonen, Nokia]

EE Times,

January 07, 2008

Copyright: Alberto Sangiovanni
Vincentelli 2011

The Birth of Societal IT Systems:


Complex collections of sensors,
controllers, compute and storage
nodes, and actuators that work
together to improve our daily lives

Copyright: Alberto Sangiovanni
Vincentelli 2011

The Cloud


A multi
-
year tectonic and disruptive shift


Proprietary Bottoms up analysis leads to $100bn opportunity


Themes driving the shift:

1.
Cloud and Mobile…made for each other

2.
Cloud interoperability

3.
Security as a Service

4.
Mega
-
bandwidth and Intelligent Networks

5.
Collaboration & Social Networking

6.
Platform as a Service

7.
Private Clouds: Old wine in new bottle

Copyright: Alberto Sangiovanni
Vincentelli 2011

The Cloud!


Going back to centralized computing from distributed computing…like utilities


Delivering personal (e.g., email, word processing, presentations) and business apps
(e.g., sales force automation, customer service, accounting) over the internet via a
subscription model.


Cloud computing has been made possible by the shift to Internet built on Web
-
based
standards and improvements in hard drives, processors, and Internet speed


Transfer of capital, implementation and maintenance risk


Copyright: Alberto Sangiovanni
Vincentelli 2011

33


Massive Resources are
Virtualized

Copyright: Alberto Sangiovanni
Vincentelli 2011

Challenge of Integrating Intermittent Sources

34

Sun and wind

aren’t where

the people



and the

current grid



are located!

www.technologyreview.com

T. Boone Pickens Wind Farm

Copyright: Alberto Sangiovanni
Vincentelli 2011

The Big Switch:

Clouds + Smart Grids

Computing
as
a Utility

Computing
in
the Utility

Large
-
scale industrialization

of computing

Energy

Efficient

Computing

Embedded

Intelligence in

Civilian

Infrastructures

Copyright: Alberto Sangiovanni
Vincentelli 2011

Energy + Information =

Third Industrial Revolution


“The coming together of
distributed
communication technologies and
distributed renewable energies via an
open access, intelligent power grid
,
represents “power to the people”. For a
younger generation that’s growing up in a less
hierarchical and more networked world, the
ability to produce and share their own energy,
like they produce and share their own
information, in an open access intergrid, will
seem both natural and commonplace.”

Jeremy Rifkin

Copyright: Alberto Sangiovanni
Vincentelli 2011

Towards
Integrated Wireless Implanted Interfaces

[Illustration art:
Subbu

Venkatraman
]

Power budget:
m
Ws

to 1
mW

Moving the state
-
of
-
the
-
art

in wireless sensing

ADC

LNA

electrodes

DSP

memory

Tx

regulator

clock

Copyright: Alberto Sangiovanni
Vincentelli 2011

Engineering Tomorrow’s Designs

Synthetic Biology

The creation of novel biological functions and tools by modifying

or integrating well
-
characterized biological components into

higher
-
order systems using mathematical modeling to direct

the construction towards the desired end product.

“Building life from the ground up” (Jay Keasling, UCB)

Keynote presentation, World Congress on Industrial Biotechnology and Bioprocessing,

March 2007.


Development of foundational technologies:

Tools for hiding information and managing complexity

Core components that can be used in combination reliably

38

Copyright: Alberto Sangiovanni
Vincentelli 2011

idi

Microbial Synthesis of
Artemisinin

AcCoA

AcAcCoA

HMG
-
CoA

Mev
-
P

Mev
-
PP

IPP

PMK

MPD

MK

isp
A

HMGS

atoB

tHMGR

DMAPP

Mev

FPP

AMO

ADS

CPR

Artemisinin

Off
-
the
-
shelf
parts?

BioShack

39

Copyright: Alberto Sangiovanni
Vincentelli 2011

A Roadmap for Synthetic Biology


An educational program (Berkeley (lead), Harvard, MIT and Stanford)


To train the next generation of bioengineers


A research program


To determine how to set standards


To learn how to develop standard components


A
BioFAB


To construct biological components and offer them open source


Applications

40

Copyright: Alberto Sangiovanni
Vincentelli 2011

Applications of Synthetic Biology

Energy Crop


Water saving


No fertilizer


Doubled photosynthetic efficiency

Biodiesel
and
biojet

fuel


No compromise


Fully compatible with existing
infrastructure

Natural product drugs


Capture all of the chemistry in nature


Construct a microbe that
can

produce
any natural product

41

Copyright: Alberto Sangiovanni
Vincentelli 2011

Amyris


Amyris

had its technological foundation
in 2001
in the
Keasling

lab at Berkeley, when
Jay
Keasling

and his team of post
-
docs pioneered a methodology to produce
isopentenyl

pyrophosphate, at rates with commercial potential, from yeast
-
fermented
sugars.


Keasling’s

magic bug, genetically enhanced from a soup of DNA obtained from bacteria
and the plant world, is a five
-
carbon base chemical and a high
-
value target in the world
of what is now known as the field of renewable chemicals


its a path to
isoprenoids
,
which are themselves a family of some 50,000 molecules that have applications or
pathways for pharmaceuticals, fragrances, cosmetics and fuels.


Keasling

filed the patent in 2001, and
Amyris

itself was eventually formed and funded by
2006 with $14.1 million in Series A investments from
Kleiner

Perkins and
Khosla

Ventures among other early backers.


Copyright: Alberto Sangiovanni
Vincentelli 2011


IPO in 4
°

Quarter 2010


From 680Mil cap to 1.265Bil today

Copyright: Alberto Sangiovanni
Vincentelli 2011

The SCIENCE
-
Application Dilemma

Raffaello Sanzio, The Athens School

Copyright: Alberto Sangiovanni
Vincentelli 2011

Teamwork!!!

Copyright: Alberto Sangiovanni
Vincentelli 2011

Educational Challenge

46