STRATEGIC ENTREPRENEURSHIP a.a. 2013/2014

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Prof.ssa Silvia Vicentini

Mail to: silvia.vicentini@amadioartiaco.it

LESSON 1

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The 2013 Koski Survey

Startup Outlook 2013 is Silicon Valley Bank’s fourth annual survey of executives at start-up companies across USA. It is based

on a third party market research firm “Koski Research”.

We have defined “startups” as high-growth technology and healthcare companies with less than $100 million in revenues

and fewer than 500 employees. “Koski Research” received responses from 758 executives of U.S. based, high growth

technology and healthcare startups.

The responses by sector were as follows:

Software: 433 responses (57%);

Healthcare: 220 responses (29%);

Hardware: 50 responses (6%);

Cleantech: 63 responses (8%).

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Startups Outlook- Overview

Innovation is at the top of corporate America’s agenda, as evidenced by the broad, deep array of

“traditional” corporations that have established venture investing arms or innovation centers.

Nine in 10 startups plan to hire new employees, but an equal number say it is challenging to find

workers with the skills they need.

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USA

Entrepreneurs are remarkably versatile and solutions-oriented. But they do need a few things

from government — like an education system that teaches students about science, technology,

engineering and maths (the so-called “STEM” skills); an immigration system that welcomes

people who bring talent and energy to their economy; an intellectual property system that

rewards invention, not litigation; and a tax system that provides certainty, predictability, and an

incentive to invest in real companies, doing real things.

Diversity: driver to success

22% percent of startups have one or more women on their founding team. 64%

percent of startups have one or more foreign born persons on their founding

team.

Intellectual Property Protection

About half of the surveyed executives see IP as a “key strategic asset,” but litigation is a real

issue for startups. Nearly one in four respondents faces lawsuits.

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Most startups don’t earn a profit

Most startups don’t earn a profit. That’s true even when they earn significant

topline revenues, and even in capital-efficient sectors (like software) where the

cost to start a company have declined meaningfully in recent years.

Tech Economy Continues to Perform as the Economy Stabilizes (1/2)

Startups have performed well in 2012 with 58 % of executives saying that they either

meet or exceeded revenue targets.

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Tech Economy Continues to Perform as the Economy Stabilizes (2/2)

This is not dampening business people enthusiasm. Executives are as likely as in previous years

to say that current business conditions compared to last year are “better” and that conditions

in the coming year will continue to improve.

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Startups Remain a Job-Creation Engine … But Can They Find the People They Need?

Respondents are even more likely than in past years to say they’re hiring with nearly nine in 10

executives saying they will employ new employees in 2013.

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Startups Remain a Job-Creation Engine … But Can They Find the People They Need?

Most executives are looking for workers with STEM (Science, Technology, Engineering, and

Math) skills. Hardware executives are the most focused on workers with STEM skills.

But finding the right workers will be a real challenge.

Nine in 10 executives say it is hard to find workers with the qualifications needed to grow their

businesses. Software and hardware executives face the greatest challenges.

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US Manufacturing firms

Just over one in three startups (35%) either currently manufacture or plan to start

manufacturing in the next 18 months. And a great deal of this activity will occur in the

United States. Eighty percent of respondents say they will do at least some

manufacturing in the U.S.

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US Manufacturing and workers’ skills

When deciding where to locate manufacturing facilities, the number one factor for startups

is the availability of workers with the necessary skills.

Manufacturing has the potential to create middle class jobs. Approximately two in three of

these jobs require some combination of high school education, experience, and training,

but not a college diploma.

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The Impact of Public Policies on Startups

In this year’s survey, they dig deeper into a handful of issues that are front and

center on the policy landscape: intellectual property protection, federal tax and fiscal

policies and the new 2,3% exercise tax on medical device companies’ topline

revenues.

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The UK start-up situation

Two-thirds of U.K. startups reported revenues in 2012 – roughly the same as in the U.S. with

64% of revenue-generating startups. However, U.K. revenue generating startups were much

more likely to be profitable in 2012 — 46% compared to 27% of U.S. startups.

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U.S. Versus U.K. Startups: Similarities and Differences

Like their U.S. counterparts, nine in 10 U.K. startups are hiring and are primarily looking for

workers with STEM (Science, Technology, Engineering, and Math) skills. As in the United

States, finding the right workers can be difficult.

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U.S. Versus U.K. Start-ups: Similarities and Differences

Nine in 10 (90 %) of entrepreneurs in this study say the U.K. fundraising environment is

challenging.

26% of startups in the U.K. survey have women on founding team, similar to the 22% for startups

in the U.S. survey.

37% of startups in the U.K. survey have foreign born members on founding team, compared to

46% for startups in the U.S. survey.

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Understanding Startups

High-growth startups have an outsized long-term impact on the U.S. economy, generating revenues

equal to an estimated 21% of U.S. GDP and creating roughly 11% of all U.S. private sector jobs.

(source -Venture Impact: The Economic Importance of Venture Capital-Backed Companies to the U.S.

Economy, 6th Ed.(2011)).

Most startups don’t earn a profit —even when they earn significant to topline revenues, and even in

capital-efficient sectors (like software) where the cost to start a company has declined meaningfully

in recent years.

Annual Trailing Revenues

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The 2013 Koski survey

758 Executives of US high-growth technology amd health care start-ups

Software: 57%;

Healthcare 29%;

Hardware: 6%;

Cleantech: 8%.

The are a number of companies that are not yet earning revenues — from 29% in 2012 to 36% in 2013. The year over year

increase in number of pre-revenues companies was driven by software companies (from 16% in 2012 to 28 % in 2013).

By sector, we saw the largest number of pre-revenue companies in the healthcare and cleantech sectors (55% and 42%,

respectively).

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A successfull Italian Start up model

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A successfull italian Start up model (1/2)

The company’s name is Eos (Ethical Oncology Science).It was founded in 2006 by Silvano Spinelli and

other two Italians. Who is Spinelli?

He is a researcher and a pharmaceutical entrepreneur and he is the CEO of EOS.

The founders put the first money (250.000 $)but very soon the French company Sovimova and the

Dutch company Aescap invested also and in the 2009 arrived further 3 Milion $ from the Italian

fund Principia.

Eos with the French and Dutch money bought a biotech product from an American company in

Silicon Valley.

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Then EOS relied on Italian laboratories to develop a drug against the cancer, being able to count on

the Italian investors.

In 2012 EOS succeeded in reaching an agreement with Clovis for the spreading worldwide of the

drug with the exception of China.

At the end of November 2013 Clovis bought EOS for 450 MIO $for overall value over 20 times the

initial investment.

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A succesfull italian Start up model (2/2)

Understanding Startups

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Startups Remain a Job-Creation Engine … But Can They Find the People They Need?

Nearly nine in 10 startups (87%) plan to hire new employees in 2013, up from 83 % in last year’s

survey. Software, hardware, and cleantech executives are most likely to hire.

Eighty-two percent of executives we surveyed are looking for workers with STEM (Science,

Technology, Engineering, and Maths) skills.

Four in 10 executives (40 %) say it is the most critical job skill. Only one in five (17%) say

management, marketing, and other non-STEM skills are most critical.

Hiring Companies most critical skills

Hiring Companies most critical skills

The New Ranking Of Top Countries In Reading, Science, And Math (PISA 2013)

• The OECD is out with new global rankings of how students in various countries do in reading, science, and math. Results of the full survey can be found and delved into here.

• You can see below how Asian countries are obliterating everyone else in these categories.

• The United States, meanwhile, ranks below the OECD average in every category.

• The results from the 2012 Program for International Student Assessment (PISA), which are being released on Tuesday, show that teenagers in the U.S. slipped from 25th to 31st in math since 2009; from 20th to 24th in science; and from 11th to 21st in reading.

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Start up : all the figures of the ecosystem (1/2)

“Italia start up” and “Osservatori-Polimi” , present us the “Who’s Who” among the most innovative

1227 new start up companies.

They also present 113 financed hi tech start up , 97 incubators and accelerators , 32 institutional

investor, 40 scientific and technological parks , 65 co-working areas, 33 start-up competitions.

In 2012, Italian innovative start-ups went over 1200. Last year 112 mio/euro were invested in hi-tech

start-ups. 2013 figures reflect a constant trend.

The technical responsible at the Ministry for economical development , has commented as follow: at

the present in Italy it’s easier to create a start-up, thanks to the legislative decree “crescita bis”,

making good use of European funds.

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The Italian Start-up Ecosystem: numbers

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Start up : all the figures of the ecosystem (2/2)

Total Innovative start-ups (n. 1227)

Geographical distribution:

• 50% Northern Italy

• 36 % Central Italy

• 14% Southern Italy

Financed Start-ups (n. 113)

• 46% Northern Italy

• 26 % Central Italy

• 28% Southern Italy38

Of which:

• 232 Lombardia• 135 Emilia Romagna• 120 Lazio• 113 Veneto• 111 Piemonte• 92 Toscana

Of which:

• 39 Lombardia• 17 Veneto• 11 Campania• 10 Lazio• 7 Toscana• 6 Sardegna

Investors & Industries

Investors distribution:

• 70% Institutional Investors

• 30 % Business Angels, Family Offices, Incubator/Accelerators

Start-up Industry:

• 73% ITC

• 17 % Power and Green Energy

• 10% Health Care

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Venture Capital: Italia dietro Spagna e Ungheria

TAG: Venture Capital, EVCA, Rude Baguette

• Italy only 14th, 1,7% of 3,5 billion Euro invested funds in Europe

• United Kingdom is first in start-up investments with 721 milionEuro (20,3% on total intotal investment in Europe)

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