Washington, D.C.
(Carnegie Endowment for International Peace): January 25, 2001

Can we sensibly define a stage in the innovation process beginning with invention (proof of concept for a high-tech innovation) and ending with innovation (readiness for market entry with first product)? What is known about the sources of finance for the R&D required for this transition? What is further known about the distribution of those sources according to specific stage of technology development, technology area, geographical region? How do public and private institutions and funding sources interact to support technology development in this stage? How might existing public data be interpreted to provide us with a more realistic picture of the intensity of effort over time in this stage of technology development?

Is there enough information about supply and demand for seed, angel, and bootstrap resources to justify the conclusion there exists a financial gap in the support of early-stage, technology-based innovations (that is, market failure) to match the R&D gap derived from institutional failures? (See Branscomb and Auerswald 2001.) How do firms, investors, and agencies view the problem of finding resources for the invention-to-innovation transition? What type of further research (such as data gathering and/or analysis) would help to inform this question?What is the public policy motivation for exploring these questions? In particular, to what extent are government programs like ATP—perhaps SBIR and others as well-motivated by perceptions that there exists a financial gap as described above and are consequently aimed at the stage of innovation we characterize as being between invention and innovation. What other motivations (other than government procurement) exist for federal programs that provide support to early-stage, technology-based innovation?

Lewis Branscomb, Kennedy School of Government, Harvard University
Philip Auerswald, Kennedy School of Government, Harvard University

Panel 2. TECHNOLOGY FOCUS: AMORPHOUS SILICON

We first hope that the panelists will reconstruct for us, in summary form, the history of commercial amorphous silicon (Si) devices. When and where were the key inventions made? Was there a point when proof of concept for a commercial product was in hand, but before product specs, production processes, costs and markets were defined and business revenue could be committed? Can these two points be recognized in the history or were there multiple, overlapping, premature entries to market before the technology was ready for successful commercialization? Does the history of this case match the “invention to innovation” model proposed for this project?

For which firms were amorphous Si devices a mainstream product for the business the firm considered “core” and for which were they an attractive, but off-core opportunity? How did that influence decisions and sources of funding for the R&D to exploit the opportunity?

Further questions to each panelist

• How was the early (seed) stage of the work funded in the panelists’ respective firms and elsewhere, and how were the decisions made to invest? Was funding from internal corporate resources? Venture capital? Federal grants or contracts? Potential customers or business partners?
  
• Do you know if your firm’s R&D is reflected in the National Science Foundation (NSF) industrial survey that generates the data for the biennial Science & Engineering Indicators reports, and, if so, how the research on amorphous Si work was reported (that is, as basic, applied, or development)?
  

Mark Myers, Xerox Corp. (ret.) and Wharton School (moderator)
David Carlson, Thin Film Division, BP Solarex
Nancy Bacon, Energy Conversion Devices

Panel 3. MAPPING CORPORATE INVESTMENTS

What are the best sources of data on corporate funded R&D? Can the fraction devoted to technology-based, high-tech innovations be teased out of the data? Specifically, what does the NSF industrial survey tell us about this? Even more specifically, is there anyway to distinguish corporate R&D that is invested in innovations for markets outside the corporate core business and those within it? Or is the former simply too small to measure?

Even for the corporate R&D within the core business, can the decisions on investment be matched to the model proposed in this project—that is, research to generate inventions and proof of concept for commercial applications, versus research to convert that knowledge into the information (product specs, production process, estimate costs, and initial market) required to put the product in the corporate revenue plan? Do individual firms manage innovations in such a way that they even know what the R&D gap costs are? How close does this second decision point compare to the point at which venture capitalists invest the first stage venture funding in high-tech start-ups?

Is there any way to estimate what fraction of the NSF aggregate data on industrial R&D is—first, outside core business priorities, and second, as it corresponds to funding to bridge the disjuncture between invention and innovation?

Arden Bement, Purdue University (moderator)
Bruce Griffing, Corporate Research Center, General Electric
Raman Muralidharan, Booz Allen & Hamilton
John Jankowski, National Science Foundation

Panel 4. MAPPING VENTURE CAPITAL AND ANGEL INVESTMENTS

How can we quantify the three major sources of private finance for early-stage conversion of inventions to innovations—venture capital seed investment, angel investments, bootstrap financing? Can we get any useful breakdown by technology/industry and by geographical region? Is there any way to know or estimate how much of this funding is spent on technical work, such as R&D, rather than other business costs associated with building a new enterprise? Is this money captured in the NSF survey?

How well do our working definitions of the stage in technology development from invention to innovation correspond to the definitions of stage of development of a new firm or venture (such as seed or early stage)? How are the definitions operationally different for different industries/technologies?

What is your interpretation of the significant shifts in the pattern of early-stage resources in recent years? Are such patterns likely to be cyclical or long range?

Should venture capital investments be seen as national, regional, or local in scope and coverage? In other words, is the concentration of venture capital investment in the coasts, Texas, and a few other areas a reflection of where the venture capital firms and wealthy angels are located, or is it a realistic reflection of the differences in socio-economic capital, regionally?

John Taylor, National Venture Capital Association (moderator)
E. Rogers Novak, Jr., Novak Biddle Venture Partners
Colin Blaydon, Amos Tuck School of Business Administration, Dartmouth College
Jeffrey Sohl, Whittemore School of Business, University of New Hampshire

Panel 5. REGIONAL DISTRIBUTION OF INVESTMENTS AND STATE PROGRAMS

What is the role of the states in funding early-stage, high-tech invention-to-innovation transition? How large is the total investment, and regionally, how does it compare to private and or federal investment? To what extent are these programs tied to or at least intended to leverage private or federal money?

Does achieving a more broadly distributed pattern of high-tech innovation in the U.S. depend on local and regional efforts to enhance all the elements of infrastructure (social capital) that are required for efficient innovation, and, if so, have any states demonstrated their ability to make a significant difference?

Maryann Feldmann, Johns Hopkins University (moderator)
Marianne Clarke, State Science and Technology Institute
Robert Heard, National Association of Seed and Venture Funds

Panel 6. TECHNOLOGY FOCUS: LIFE SCIENCES

How is the search for invention-to-innovation funding influenced by the subsidy of the pre-invention research in a government-supported, not-for-profit organization (for instance, university, hospital, or government laboratory)? Do public funds, especially in biomedical fields, allow the work to go beyond proof of concept and thus become part of the picture of resources for invention-to-innovation conversion? Do the patterns of funding for biomedical innovations differ significantly from other kinds of high-tech innovations?

Christopher Coburn, Cleveland Clinic Foundation Innovations
Jeff Schloss, National Institutes of Health

Panel 7. MAPPING FEDERAL GOVERNMENT INVESTMENTS

What are the federal programs of R&D support that most nearly correspond to the invention-to-innovation transition? In each case how well do the starting and ending points correspond to our model, and how variable are they from case to case, program to program? Consider ATP, SBIR, public-private partnerships, and any others that come to mind. What can we know about the distribution by technology/industry and by geographical region of this funding?

How well do any of these programs correspond to the model proposed here?

Can these federal programs be judged the same way corporate executives or venture capitalists would judge their high-tech innovation investments? What levels of risk are acceptable in each case?

Charles Wessner, National Academy of Sciences (moderator)
Donna Fossum, RAND
Kelly Carnes, U.S. Commerce Department
Rosalie Ruegg, Advanced Technology Program (retired)
Ken Simonson, Office of Advocacy, Small Business Administration

PARTICIPANT BIOGRAPHIES

Nancy Bacon, Senior Vice President, Energy Conversion Devices, Inc.

Nancy M. Bacon is senior vice president of Energy Conversion Devices, Inc. (ECD). Her responsibilities include finance, public and private financings, development of business plans; presentations to major international corporations for the commercialization of ECD’s technologies; negotiations for establishment of joint ventures and the licensing of company technologies and the preparation/administration of government proposals/contracts.

Ms. Bacon is a member of the boards of directors of Energy Conversion Devices, Inc., United Solar Systems Corp., and Bekaert-ECD Solar Systems (ECD’s U.S. photovoltaic [solar] joint ventures with Bekaert N.V.), Sovlux, Ltd. (ECD’s solar and battery joint venture with KVANT and the Russian Ministry of Atomic Energy), Environmental and Energy Study Institute (EESI), and the Michigan Science and Mathematics Alliance (MISMA). In 1997, Ms. Bacon was recognized by Crain’s Detroit Business as one of Detroit’s most influential women. Ms. Bacon, a CPA, has a B.S. in Accounting, and prior to joining ECD was a manager with Deloitte and Touche.

Arden L. Bement, Basil S. Turner Distinguished Professor of Materials Engineering, Purdue University (now Director of the National Institute of Standards and Technology)

Arden L. Bement, Jr., was sworn in as the twelfth director of the National Institute of Standards and Technology (NIST) on December 7, 2001. Prior to his appointment as NIST director, Bement served as the David A. Ross Distinguished Professor of Nuclear Engineering and head of the School of Nuclear Engineering at Purdue University. He has held appointments at Purdue University in the schools of Nuclear Engineering, Materials Engineering, and Electrical and Computer Engineering, as well as a courtesy appointment in the Krannert School of Management. He was director of the Midwest Superconductivity Consortium and the Consortium for the Intelligent Management of the Electrical Power Grid.

Bement previously served as head of the Visiting Committee on Advanced Technology, the agency’s primary private-sector policy adviser; as head of the advisory committee for NIST’s Advanced Technology Program; and on the board of overseers for the Malcolm Baldrige National Quality Award.

Bement joined the Purdue faculty in 1992 after a 39-year career in industry, government, and academia. These positions included: vice president of technical resources and of science and technology for TRW Inc. (1980–1992); deputy under secretary of defense for research and engineering (1979–1980); director, Office of Materials Science, DARPA (1976–1979); professor of nuclear materials, MIT (1970–1976); manager, Fuels and Materials Department and the Metallurgy Research Department, Battelle Northwest Laboratories (1965–1970); and senior research associate, General Electric Co. (1954–1965).

Bement holds an engineer of metallurgy degree from the Colorado School of Mines, a master’s degree in metallurgical engineering from the University of Idaho, a doctorate degree in metallurgical engineering from the University of Michigan, and an honorary doctorate degree in engineering from Cleveland State University. He is a member of the U.S. National Academy of Engineering.

Colin C. Blaydon, William and Josephine Buchanan Professor of Management; Director, John H. Foster Center for Private Equity, Amos Tuck School of Business Administration, Dartmouth College

Colin C. Blaydon is the founding director of the John H. Foster Center for Private Equity at the Tuck School of Business, Dartmouth College. He is also the William and Josephine Buchanan Professor of Management and Dean Emeritus at the Tuck School. He served as dean of the school from 1983–90, and again in 1994–95. Professor Blaydon has also been on the faculties of both Harvard and Duke Universities and served as vice provost of Academic Policy and Planning at Duke. He received his B.E.E. from the University of Virginia, his A.M. and Ph.D. in applied mathematics from Harvard University.

In addition to his academic career, Professor Blaydon has served twice in government, in the Department of Defense and the Office of Management and Budget. In the private sector he has served as a principal and managing director of two professional consulting firms, as executive chairman of a systems integration and software firm, as a member of an international industrial investment group, and as a member of the board of a number of corporations and not-for-profit institutions. He also serves on the advisory boards of a venture capital fund and a fund of funds.

David E. Carlson, Chief Scientist and Director, Advanced Material & Device Research, BP Solar

David E. Carlson received his B.S. degree in physics from Rensselaer Polytechnic Institute in 1963 and a Ph.D. in physics from Rutgers University in 1968. After serving in the U.S. Army for two years, Dr. Carlson joined RCA Laboratories in 1970 as a member of the technical staff, where he invented the amorphous silicon solar cell in 1974. He was appointed group head, Photovoltaic Device Research, at RCA Laboratories in 1977. In 1983, he joined Solarex Corporation (merged into BP Solar in 1999) as the director of research of the Solarex Thin Film Division and became the general manager in 1987. He was promoted to vice president in 1988, and he became the chief scientist of BP Solar in 1999. Dr. Carlson received the top technical award of the American Ceramic Society (the Ross Coffin Purdy Award) in 1975 and was a co-recipient of the 1984 Morris N. Liebmann Award (IEEE). He was awarded the Walton Clark Medal by the Franklin Institute in 1986 and received the William R. Cherry Award (IEEE) in 1988. He received the Karl W. Boer Medal from the International Solar Energy Society and the University of Delaware in 1995. Dr. Carlson is a fellow of the IEEE and a member of the American Physical Society, the American Vacuum Society, the Materials Research Society, and Sigma Xi. He has published more than 120 technical papers and has been issued twenty-five U.S. patents.

Kelly Carnes, former Assistant Secretary of Commerce for Technology, U.S. Department of Commerce

Kelly H. Carnes, of Washington, D.C., served until January 2001 as the Deputy Assistant Secretary for Technology Policy in the Technology Administration at the Department of Commerce. In this role, she served as an advocate for American innovation and ensures that the industry’s voice is represented in the nation’s technology policy. Prior to joining the Department of Commerce, Ms. Carnes was a member of the technology and corporate practice groups of the Washington, D.C.-based law firm Shaw, Pittman, Potts, and Trowbridge. She specialized in representing technology companies in a wide variety of transactions, including joint ventures, strategic alliances, technology development and licensing arrangements, acquisitions, and venture capital transactions. During 1991 and 1992, Ms. Carnes served on the steering and international committees of the Northern Virginia Technology Council, where she helped develop programs to encourage Virginia-based technology companies to export their products and services. Ms. Carnes holds a bachelor of arts degree from the University of North Carolina at Chapel Hill and graduated magna cum laude from Georgetown University Law Center.

Marianne Clarke, Research Director, State Science & Technology Institute

Marianne Clarke serves as the research director of the State Science and Technology Institute (SSTI), a non-profit organization dedicated to enhancing initiatives that apply science and technology for economic growth, particularly at the state level. Ms. Clarke also directs the Washington office of Battelle Memorial Institute’s Technology Partnership Practice where she assists state and regional organizations in developing, implementing and evaluating technology-based economic development programs. Prior to her current positions, Ms. Clarke was the principal science and technology staff person for the National Governors’ Association (NGA).

Christopher M. Coburn, Executive Director, CCF Innovations, Cleveland Clinic Foundation

Christopher Coburn is executive director of CCF Innovations (CCFI) and chief operating officer of NovaMedics, Inc. He is a recognized authority on technology commercialization and has consulted and spoken on the subject throughout North America and in eighteen countries. He is responsible for moving the inventions of the Cleveland Clinic into the private marketplace via established companies and the creation of new ones. Mr. Coburn also serves as a member of the Foundation’s Conflict of Interest Committee.

Prior to joining the Cleveland Clinic, Mr. Coburn was vice president and general manager of the Battelle Memorial Institute, the world’s largest independent non-profit R&D organization. Mr. Coburn was a member of Battelle’s senior management team and directed one of Battelle’s primary business units. He also directed a regional technology commercialization center. He is the editor and co-author of Partnerships: A Compendium of State and Federal Cooperative Technology Programs, the first comprehensive catalogue of technology commercialization initiatives of the federal government and the states.

Mr. Coburn served as staff director of the States Task Force of the Carnegie Commission on Science, Technology and Government. He was executive director of Ohio’s Thomas Edison Program, Ohio’s first Science and Technology Advisor (1984–1991), and deputy director of the Ohio Department of Development. He founded and directed the Science and Technology Council of the States and the State Science and Technology Institute. He served as assistant director of the Ohio Washington Office and has held positions at the National Aeronautics and Space Administration and the National Institutes of Health. He also was an appropriations aide in the U.S. House of Representatives. He received his master’s degree from George Washington University, and holds a B.A. from John Carroll University.

Maryann Feldman, Research Scientist, The Jeffrey Skoll Professor of Innovation and Entrepreneurship, Rotman School of Management, University of Toronto

Maryann Feldman’s current work focuses on innovation and technological change, especially the diffusion and commercialization of university research as a source of economically valuable knowledge. Dr. Feldman holds a Ph.D. in economics and management and a n M.S. in policy analysis and management from Carnegie Mellon University. She received a B.A. in economics and geography from Ohio State University. Dr. Feldman has served as a consultant to local, state, and Federal government as well as private industry.

Donna Fossum, RAND

Donna Fossum (J.D. and Ph.D., Sociology) is a senior researcher in RAND’s Washington office. Dr. Fossum’s activities focus on the development, management, and deployment of RaDiUS, the first comprehensive database that tracks, in virtually real time and in substantive detail, the research and development activities and resources of the federal government. This work recently resulted in the report, Discovery and Innovation: Federal Research and Development in the Fifty States, District of Columbia, and Puerto Rico (RAND 2000), that for the first time describes in detail the R&D activities of the federal government by where they actually occur. Much of her time is also devoted to advising the Office of Science and Technology Policy in the Executive Office of the President on the overall structure of the federal R&D portfolio and the allocation of resources among federal R&D activities.

Prior to joining RAND, Dr. Fossum served as legal counsel and technology advisor to the Committee on Government Operations (now Government Reform and Oversight) in the U.S. House of Representatives. In that capacity, she was responsible for coordinating a wide variety of legislative and oversight activities regarding the budget, information collections and systems, technology and property management, and procurement systems of the federal government.

Bruce Griffing, Manager, Industrial Electronics, Corporate Research Center, General Electric

In 1979, Bruce Griffing joined the GE Research and Development Center in Schenectady, New York. From 1983 to 1985, Dr. Griffing served as the CRD Electronics Laboratory’s liaison fellow to Cornell University. In this capacity, he participated with Cornell faculty and students in research in the area of advanced integrated circuit technology.

In January 1988, he was named manager of the Large Area Electronic Systems Laboratory. The laboratory is now called the Industrial Electronics Laboratory. The most recent major development of the Lab is GE’s amorphous silicon x-ray imaging technology. It is being applied to mammography, chest imaging and cardiac applications.

Bruce Griffing has published twenty-five papers and holds fourteen U.S. patents. He is a member of Sigma Xi, the American Physical Society and the Institute of Electrical and Electronics Engineers. He has served on and chaired program committees for the International Electron Devices Meeting (IEDM) and was general chairman for the 1988 IEDM. He has also organized tutorial courses in silicon processing for the IEDM. In 1982, he received an IR–100 award for his work on a water exposure system and received a Dushman award in 1985 for his work on contrast enhanced lithography. In 1995 he was awarded Purdue’s School of Science Most Distinguished Alumnus Award.

Raman Muralidharan, Vice-President, Booz Allen & Hamilton, Inc.

Raman Muralidharan is a strategist focused on technology intensive industries. He is based in the Cleveland office of Booz Allen & Hamilton, and joined the firm in 1993. Mr. Muralidharan has significant expertise in biotechnology and pharmaceutical markets, and in the automotive industry. Prior to joining the firm Mr. Muralidharan was the senior geotechnical engineer at Engineers International Inc. He received his M.B.A. degree from the University of Chicago’s Graduate School of Business, a n M.S. degree in structural engineering from the University of Minnesota, and a B.E. degree from the Delhi College of Engineering, University of Delhi.

Mark B. Myers, Xerox Corporation (retired) and Wharton School

Mark Myers recently retired as senior vice president for corporate research and technology at Xerox Corporation in Stamford, Connecticut, where he directed the company’s worldwide research, advanced technology including the corporate research centers, advanced development and development of emerging markets. He had oversight of the corporation’s corporate research centers in Palo Alto, California, Webster, New York, and in Canada and Europe and was a member of the senior management committee responsible for the general management of the company.

Myers is a member of the National Research Council’s Board on Engineering Education and the Task Force on Engineering Education in the U.S. and Japan. He serves on the board of directors of Xerox Canada, Inc., and SDL, Inc. and on university advisory boards at Cornell, Illinois, Delaware, and Stanford. He is vice-chairman of the board of trustees of Earlham College and has held visiting faculty positions at the University of Rochester and at Stanford University. He holds a bachelor’s degree from Earlham College and a doctorate from Pennsylvania State University.

E. Rogers Novak, Jr., Founding Partner, Novak Biddle Venture Partners

E. Rogers Novak, Jr. has over twenty years of experience as a venture capitalist, angel investor, and operating principal. Prior to co-founding NBVP, Roger was a private investor. In 1984, he was a co-founder and three fund general partner of Grotech Partners, where he was principally focused on information technology, with two of his investments, Verity and Secure Computing, among the top ten performing IPOs of 1995. Earlier in his career, Roger led the investment banking effort at Baker Watts & Co.

Roger currently serves on the boards of Blackboard, Inc., Engenia Software, Inc., Entevo Corporation, Para-Protect Services, Inc., and Simplexity.com, Inc. Roger was named to the State of Virginia’s Joint Commission on Technology and Science, where he will serve on an advisory committee to examine the digital divide, including telecommunications, work-force shortage,and education. He also serves on the board of MMG Ventures, an SSBIC; the Maryland Chapter of the Nature Conservancy; and the Gilman School where he is a member of the investment and education committees.

Rosalie Ruegg, NIST-Advanced Technology Program (retired)

Rosalie Ruegg, former Director of Economic Assessment Office and Chief Economist (now president and director of economic studies, TIA Consulting), directed economic evaluation activities for the Advanced Technology Program (ATP) from 1990 until her retirement in May 2000. She led the economic evaluation of ATP-funded projects and programs, advised on economic and business issues, and oversaw the economic and business peer review process performed by outside experts.

Ms. Ruegg has more than 50 publications, among them a book, Building Economics: Theory and Practice, co authored by Ruegg and Marshall (Chapman and Hall, 1990); a number of book chapters, including “Risk Assessment,” The Engineering Handbook (CRC Press 1996), and “Economic Methods,” Energy Efficiency" (CRC Press, 1997); and many papers and reports, such as The Advanced Technology Program’s Evaluation Plan and Progress (presented at the International Forum on Technology Management and published in the Proceedings); Guidelines for the Economic Evaluation of the Advanced Technology Program (NISTIR–5896); An Economic Impact Analysis of Fire-Safe Cigarettes (NBSTN 1242); and Efficient Allocation of Research Funds: Economic Evaluation Methods with Case Studies (NBSSP 558). She has also served as editor for several journals and reference works.

Ms. Ruegg received her B.A. degree in economics with honors from the University of North Carolina, where she was elected to Phi Beta Kappa; an M.A. degree in economics from the University of Maryland, where she was a Woodrow Wilson Fellow; an M.B.A. degree with a specialty in finance from the American University; and professional certification from Georgetown University in instructional techniques. She received the Department of Commerce’s Silver Medal Award, as well as numerous other performance awards; has served on national and international committees; and is a member of the federal Senior Executive Service. Speciality areas include program evaluation, including techniques of benefit-cost analysis, financial analysis, and risk assessment; strategic management and planning; business planning; and the economics of technological change.

Jeffery A. Schloss, Program Director, Technology Development Coordination, National Human Genome Research Institute

Jeffery A. Schloss is currently program director for technology development coordination at the National Human Genome Research Institute (NHGRI) where he manages a grants program in technology development for DNA sequencing and SNP scoring, and serves the NHGRI Division of Extramural Research and Office of the Director as a resource on genome technology development issues. He recently initiated a program to validate new sequencing technologies for use in high-throughput laboratories. He has also served the NHGRI as program director for large-scale genetic mapping, physical mapping, and DNA sequencing projects. Dr. Schloss represents the NIH on the NSTC’s Interagency Working Group on Nanoscience, Engineering, and Technology (IWGN), planning for the National Nanotechnology Initiative. He has worked with local high-school students with regard to DNA sequencing and the Human Genome Project. Before coming to NIH in 1992, Dr. Schloss served on the biology faculty at the University of Kentucky. He earned a B.S. degree with honors from Case Western Reserve University, the Ph.D. from Carnegie-Mellon University, and did postdoctoral training at Yale University. Dr. Schloss’s research in cell and molecular biology included the study of non-muscle cell motility and regulation of mRNA expression.

Kenneth D. Simonson, Senior Economic Advisor, Office of Advocacy, U.S. Small Business Administration

Ken Simonson has served since August 1998 as senior economic advisor in the Office of Advocacy, U.S. Small Business Administration. He works with the chief counsel for advocacy, Jere W. Glover, and his staff of attorneys, economists, regional advocates, communications people, and entrepreneur-in-residence to advocate and produce research on small business issues. In addition, the office has a key role in evaluating the impact on small business of proposed legislation and regulations.

Ken has over twenty-five years of public policy experience, including thirteen as vice president and chief economist for the American Trucking Associations (1985–98). There he was in charge of all federal tax policy and a wide range of other economic and regulatory issues. He also worked with the President’s Commission on Industrial Competitiveness (1983–85), the U.S. Chamber of Commerce (1978–83), the Federal Home Loan Bank Board (1977–78), and an economic consulting firm (1972–77).

Ken is president of the National Economists Club and since 1982 has co-chaired the Tax Economists Forum, a professional meeting group he co-founded for leading researchers and policy makers among tax economists.

Jeffrey E. Sohl, Director, Center for Venture Research, UNH, Whittemore School of Business and Economics

Jeffrey Sohl is director of the Center for Venture Research and a professor in the Department of Decision Sciences at the Whittemore School of Business and Economics at the University of New Hampshire. He received his bachelor’s degree in electrical engineering from Villanova University and his MBA and Ph.D. in management science from the University of Maryland. Prior to joining the Whittemore School, he was a consultant to the Department of Energy in the area of public policy analysis. His current research interests are in early-stage financing for high-growth ventures. He currently serves on the New Hampshire Governor’s Advisory Committee on Capital Formation. He has presented his research in academic and practitioner forums in the United States, Europe, and Asia, and in briefings for several government agencies and scholars from the United States, Europe, Scandinavia, Australia, Asia, and Africa. He has appeared on CNBC, MSNBC, and National Public Radio, and has been quoted in Inc., Forbes, Fortune, Wired, the Wall Street Journal, Red Herring, Business Week, Worth Magazine, and the Nikkei Daily. He has written several articles which have been published in academic and business journals, including Venture Capital: An International Journal of Entrepreneurial Finance, the Social Science Journal, the Journal of Business Forecasting, Frontiers of Entrepreneurship Research, the Journal of Forecasting, Entrepreneurship and Regional Development, the Journal of Business Venturing, the Journal of Entrepreneurial Finance, Entrepreneurship 2000, and Entrepreneurship: Theory and Practice.

John S. Taylor, Vice President of Research, National Venture Capital Association

John Taylor is vice-president of research at the National Venture Capital Association (NVCA) which is based in the Washington, D.C. area. He is responsible for developing and overseeing association data and research efforts. He joined the NVCA in 1996.

Mr. Taylor was a senior consultant with Andersen Consulting in Washington, D.C., and has since held senior product manager and IT positions in both large and small organizations. He has served as a board member of both for-profit businesses and non-profit organizations.

He received an M.B.A. degree from the Amos Tuck School at Dartmouth College, and a B.S. degree in chemistry from Dickinson College.

Charles W. Wessner, Program Director, Board on Science, Technology and Economic Policy, National Research Council

Chuck Wessner is the director of the Program on Technology and Competitiveness for the National Research Council’s Board on Science, Technology, and Economic Policy. Dr. Wessner began his federal career with the U.S. Treasury, served overseas as an international civil servant with the OECD and as a senior officer with the U.S. diplomatic corps, and directed the Office of International Technology Policy in the Technology Administration of the Department of Commerce. Since joining the National Research Council, he has led several major studies working closely with the senior levels of the U.S. government, leading industrialists, and prominent academics. Recent work includes a White House-initiated study, “The Impact of Offsets on the U.S. Aerospace Industry,” and a major international study, “Competition and Cooperation in National Competition for High Technology Industry” in cooperation with the HWWA in Hamburg and the IFW in Kiel, Germany.

Currently, he is directing a portfolio of activities centered around government-industry partnerships for the development of new technologies, and initiating work on measuring and sustaining the new economy. The Partnerships program constitutes one of the first program-based efforts to assess U.S. policy on government-industry partnerships. Recent publications include Conflict and Cooperation in National Competition for High Technology Industry, Policy Issues in Aerospace Offsets, International Friction and Cooperation in High-Technology Development and Trade, Trends and Challenges in Aerospace Offsets, New Vistas in Transatlantic Science and Technology Cooperation, Industry-Laboratory Partnerships: A Review of the Sandia Science and Technology Park Initiative, The Advanced Technology Program: Challenges and Opportunities, and The Small Business Innovation Research Program: Challenges and Opportunities. Dr. Wessner holds degrees in international affairs from Lafayette College (Phi Beta Kappa) and the Fletcher School of Law and Diplomacy, where he obtained an M.A., an M.A.L.D. and a Ph.D. as a Shell Fellow.

Palo Alto, CA
(Xerox Palo Alto Research Center): February 2, 2001

Lewis Branscomb, Kennedy School of Government
Philip Auerswald, Kennedy School of Government

[Same as Washington, D.C. workshop.]

Panel 2. TECHNOLOGY CASES (I)

We first hope that the panelists will reconstruct for us, in summary form, the history of technology conception, invention, and development in a specific example of a high-tech innovation. When and where were the key inventions/ideas made? Was there a point when proof of concept for a commercial product was in hand, but before product specs, production processes, costs and markets were defined and business revenue could be committed? Can these two points be recognized in the history or were there multiple, overlapping, premature entries to market before the technology was ready for successful commercialization? Does the history of these experiences match the “invention to innovation” model proposed for this project? If not, what is a better model of the transition from “invention” to “innovation”? How was the early (seed) stage of the work funded in the panelists’ respective firms and elsewhere and how were the decisions made to invest? Was funding from internal corporate resources? Venture capital? Federal grants or contracts? Potential customers or business partners?

John Shoch, Alloy Ventures (moderator)
James Kaschmitter, PolyStor Corporation
Hylan B. Lyon, Marlow Industries Inc.
Richard Spitzer, Integrated Magnetoelectronics

Panel 3. MAPPING VENTURE CAPITAL AND ANGEL INVESTMENTS

How can we quantify the three major sources of private finance for early-stage conver sion of inventions to innovation-venture capital seed investment, angel investments, and bootstrap financing? Can we get any useful breakdown by technology/industry and by geographical region? Is there any way to know or estimate how much of this funding is spent on technical work, such as R&D, rather than other business costs associated with building a new enterprise? Is this money captured in the NSF survey? How well do our working definitions of the stage in technology development from invention to innovation correspond to the definitions of stage of development of a new firm or venture (i.e., seed, early stage)? How are the definitions operationally different for different industries/technologies? What is your interpretation of the significant shifts in the pattern of early-stage resources in recent years? Are such patterns likely to be cyclical or long range? Should venture capital investments be seen as national, regional, or local in scope and coverage? In other words, is the concentration of venture capital investment in the coasts, Texas, and a few other areas a reflection of where the venture capital firms and wealthy angels are located, or is it a realistic reflection of the differences in socio-economic capital, regionally?

Thomas Hellmann, Stanford University (moderator)
J.C. (Hans) Severiens, Band of Angels
Mark Horn, Silicon Valley Bank
Bob Evans, Technology Strategies Alliances

Panel 4. INSTITUTIONAL INNOVATIONS: NETWORKS AND INCUBATORS

As a broader community of would-be private-equity investors look for ways to participate in the returns generated in 1999–2000, investors look for more efficient ways of covering their due diligence, and entrepreneurs look for more effective ways to access sources of capital, what new forms of networks and other institutional arrangements are appearing? Are these new mechanisms achieving their goals? Do they provide a more effective mechanism for covering the early-stage and seed-funding needs of high-tech innovators? We learned last week that a new and substantial source of private equity is from corporate venture funds. Are these a major factor in your experience? Are they likely to grow? What more novel forms of finance are arising and what is their likely future (angel mutual funds, venture capital-bank collaborations with debt capital attached to equity investments, Internet packagers of angel deals?)?

Manju Puri, Stanford University (moderator)
Ron Conway, Angel Investors L.P.
Jim Robbins, Panasonic Ventures Fund and Panasonic Internet Incubator
Luis Villalobos, Tech Coast Angels

Panel 5. TECHNOLOGY CASES (II)

The questions here are similar to those for Panel 2 (above). But because these innovations are largely in the life/medical science area, some additional issues are of special interest:

To what extent was the early (seed) stage of the work funded by government (for instance, NIH), and if so did the terms of the support encourage or discourage the work required to make the business case for the innovation? Was the initial innovator in a not-for-profit institution when the commercial effort was launched?

Was seed funding from an established medical or drug company, and if so, did it fund the work in a non-profit organization or was the support for a new startup firm?

Lynne Zucker, UCLA (moderator)
Michael Knapp, Caliper Technologies Corporation
Christine Cordaro, CMEA Ventures
Kenneth Nussbacher, Affymetrix, Inc.
Gerald Adolph, Booz Allen & Hamilton

Panel 6. UNIVERSITY-INDUSTRY COOPERATION AND REGIONAL INNOVATION

How is the search for invention-to-innovation funding influenced by the subsidy of the pre-invention research in a government supported, not for profit organization (university, hospital, government laboratory...)?

Do public funds, especially in biomedical fields, allow the work to go beyond proof of concept and thus become part of the picture of resources for invention-to-innovation conversion? Do the patterns of funding for biomedical innovations differ significantly from other kinds of high-tech innovations?

Nathan Rosenberg, Stanford University (moderator)
Michael Wynblatt, Siemens Technology-to-Business Center
Michael Darby, UCLA

PARTICIPANT BIOGRAPHIES

Ron Conway, Founding General Partner, Angel Investors L.P.

Prior to founding Angel Investors, Ron Conway worked in business development for CBT Systems, a developer and distributor of interactive computer-based training. Mr. Conway was employed by National Semiconductor Corp., in the 1970s, and now serves on the boards and/or advisory boards of Red Herring Magazine, Gradient Technology, Blue Pumpkin Software, AtWeb (sold to Netscape), and OneMediaPlace (formerly AdAuction).

Christine Cordaro, Partner, CMEA Ventures

Christine Cordaro joined CMEA Life Sciences as a general partner with the Fund’s formation in 1998. She is also the founder and a general partner of Viridian Capital. Ms. Cordaro has over 17 years experience in the life-science industry. Prior to CMEA/Viridian, she was a director of life science investments with Technology Funding Ventures, where she focused on venture capital investments in the biopharmaceutical, medical device, diagnostic, medical equipment, and healthcare service sectors. Prior to Technology Funding, Ms. Cordaro held senior management positions in R&D, product planning, and business development. Ms. Cordaro holds a B.S. and M.S. in bacteriology from the University of Wisconsin-Madison, and an MBA from St. Mary’s College in California.

Michael R. Darby, Warren C. Cordner Professor, John E. Anderson Graduate School of Management

Michael Darby is the Warren C. Cordner Professor of Money and Financial Markets in the Anderson Graduate School of Management and in the departments of economics and policy studies at UCLA, and Director of the John M. Olin Center for Policy in the Anderson School. Concurrently he holds appointments as Chairman of The Dumbarton Group, research associate with the National Bureau of Economic Research, adjunct scholar with the American Enterprise Institute, and president of the Western Economic Association.

Darby served in several senior U.S. government positions, including assistant secretary of the Treasury for economic policy (1986–89), member of the National Commission on Superconductivity (1988–89), under secretary of Commerce for Economic Affairs (1989–92), and administrator of the Economics and Statistics Administration (1990–92).

Darby is the author of nine books and monographs and numerous other professional publications. From 1980 through 1986 he was Editor of the Journal of International Money and Finance, and he continues to serve on that Journal’s Editorial Board.

He also serves or served as a member of the editorial boards of the American Economic Review, Contemporary Economic Policy, Contemporary Policy Issues, and International Reports. Darby has received many honors, including the Alexander Hamilton Award, the Treasury’s highest honor, in 1989.

Thomas F. Hellmann, Assistant Professor of Strategic Management, Graduate School of Business, Stanford University

Thomas Hellmann is an assistant professor of strategic management at the Graduate School of Business, Stanford University, where he teaches a popular MBA elective, “Strategy in Entrepreneurial Ventures.” His research on the process of entrepreneurship and the role of venture capital has been published in top economics and finance journals. He has also collaborated with his former dissertation adviser, Joseph Stiglitz, working on issues of financial systems development. He holds a Ph.D. in Economics from Stanford University and a B.Sc. from the London School of Economics.

Michael R. Knapp, Founder and Vice President of Science & Technology, Caliper Technologies Corp.

Prior to co-founding Caliper, Michael Knapp was president, scientific director, a director and a scientific advisory board member at Molecular Tool, Inc., a company he co-founded in 1988. Under his direction, the company developed a proprietary DNA typing system with the demonstrated capability of performing up to 2.5 million genotype determinations per year. This system is rapidly becoming a standard for parentage determination in both veterinary and human applications. Additionally, Dr. Knapp authored a proposal in 1994 that was one of only eleven nationwide to receive a $2 million technology development grant from the Department of Commerce’s Advanced Technology Program in their first Tools for DNA Diagnostics focused competition. From 1981 to 1986, he was scientific director of Genetica, S.A. in Joinville-le-Pont, France, a genetic engineering affiliate of French chemical giant Rhône Poulenc. Dr. Knapp was a senior scientist on the staff of Columbia University’s Center for Neurobiology and Behavior from 1986 to 1988, using the tools of molecular genetics to study the complex processes of learning and behavior in model biological systems. Dr. Knapp received his B.S. from Trinity College (Hartford) in biology in 1973. He received his Ph.D. in Medical Microbiology from Stanford University, specializing in recombinant DNA technology in 1981.

Hylan B. Lyon, Vice President Materials Research, Development and Production, Marlow Industries, Inc.

Hylan Lyon Jr. joined Marlow Industries Inc., in 1992 immediately after the company received the Malcolm Baldrige National Quality Award. His goal was to introduce a discovery-based material science program into a thermoelectric device company that had been growing for twenty years at a steady 15 percent rate. This last year Marlow Industries grew to six times its 1992 size with expectations of doubling its revenue in the year to come.

Dr. Lyon has thirty years of international, national, regional, and local policy, technological, and business experience. He serves as a member of the Technology Steering Group for the DOE Center of Excellence in the Synthesis and Processing of Advanced Materials, a director of the Baylor Research Institute, a past director of the International Thermoelectric Society, and a member of Institute for Defense Analysis Advisory Group on Critical Technologies. His Ph.D. from Berkeley in 1967 contained the discovery of surface recrystallization utilizing low-energy electron diffraction.

Kenneth J. Nussbacher, Executive Vice President, Affymetrix, Inc.

Kenneth Nussbacher has been executive vice president of Affymetrix since 1995, serving as chief financial officer from 1995 to 1997. Prior to joining Affymetrix, Mr. Nussbacher was executive vice president for business and legal affairs of Affymax. In his roles at Affymax and Affymetrix, Mr. Nussbacher played a central role in the development and implementation of business strategies for creating value in technology-based companies. His experience includes development, negotiation and implementation of commercial and scientific collaborations; licensing of intellectual property; and public and private financings. He holds a J.D. from Duke University and a B.S. in Physics from Cooper Union. Mr. Nussbacher is also a director of Symyx Technologies.

Manju Puri, Associate Professor of Finance, Graduate School of Business, Stanford University

Manju Puri holds a BA (Hons.), Delhi University, 1980; PGDM (MBA), Indian Institute of Management, Ahmedabad, 1982; MPhil, New York University, 1992, PhD, 1995. Fama-DFA Award for Best Paper, Journal of Financial Economics, 1999; NASDAQ Award for Best Paper (Western Finance Association), 1999; Trefftz Award for Best Paper (Western Finance Association), 1994; FMA Competitive Paper Awards for Best Paper(s) in Financial Institutions, 1994 and 1995; outstanding doctoral thesis awards: Irwin Award, 1993; NYU Salomon Center Award, 1994 and 1995; Herman Kroos Award, 1995. She has served as account manager, The Hong Kong and Shanghai Banking Corporation, 1983–89; visiting assistant professor of finance at Yale University, 1997–98; Fletcher Jones Faculty Fellow for 1999–2000, and has been at Stanford since 1995.

James Robbins, Executive Director, The Software Business Cluster

Jim Robbins has twenty years’ experience in the fields of new business formation, organizational design, technology development and management, business operations, and law. In addition to starting his own business to assist in the development of technology or focused incubators, he has worked for Digital Equipment Corporation and the U.S. Supreme Court and was a trial attorney. Jim is executive director of the San Jose Software Business Cluster, the San Jose Environmental Business Cluster, and the Panasonic Internet Incubator. He is a principal in Panasonic Ventures and vice-chair of the Pacific Incubation Network.

Nathan Rosenberg, Department of Economics, Stanford University

Nathan Rosenberg is the Fairleigh S. Dickinson, Jr., Professor of Public Policy in the Department of Economics at Stanford University. He was educated at Rutgers University, the University of Wisconsin, and Oxford University. He has taught at the University of Pennsylvania, Purdue University, Harvard University, the University of Wisconsin, The London School of Economics, and Cambridge University.

Professor Rosenberg’s primary research activities have been in the economics of technological change. His publications have addressed the determinants and the consequences of technological change. His research has examined the diversity of the forces generating technological change across industrial boundary lines, as well as the mutual influences between scientific research and technological innovation. Professor Rosenberg’s books include The American System of Manufactures, Perspectives on Technology, Inside the Black Box, Technology and the Pursuit of Economic Growth (with David Mowery), How the West Grew Rich (with L.E. Birdzell, Jr.), Exploring the Black Box, The Emergence of Economic Ideas and Paths of Innovation (with David Mowery), and most recently Schumpeter and the Endogeneity of Technology. He was awarded the Leonardo da Vinci Prize for his contributions to the history of technology.

Hans Severiens, Coordinator, Band of Angels

Hans Severiens holds a Ph.D. in nuclear physics from Johns Hopkins University and a B.S. in physics from Harvard College. He is the coordinator of the Band of Angels, a Silicon Valley private investment group of about 120 members, which he co-founded. The Band is composed mainly of active high-technology executives who seek out investment opportunities in start-up and early-stage technology companies, present them to the Band as potential investments, and invest in them for their own accounts. Dr. Severiens has been making and managing investments in closely-held technology companies since 1980. He was a partner/officer in two venture capital funds: Bay Ventures, a seed-stage investor, and MIP Equity Fund, a later-stage investment firm funded by the Dutch government. Early in his career he was at Perkin-Elmer (assistant chief scientist), Columbia University (research professor), the Atomic Energy Commission (staff scientist), and the Niels Bohr Institute in Copenhagen (Ford Foundation post-doctoral fellow). Thereafter he moved to Wall Street where he worked in security analysis and investment banking at Morgan Stanley Dean Witter, Merrill Lynch, and Paine Webber (Mitchell Hutchins). He was voted an All Star Institutional Analyst each year from 1973 through 1976. Dr. Severiens is a member of the board of directors of several private corporations, a member of the board of advisors of The Enterprise Network in Silicon Valley, a trustee of Golden Gate University in San Francisco, and a member of the Advisory Board of Los Alamos National Laboratory for Technology Commercialization. He has presented and published numerous scientific papers and articles in addition to being a frequent guest speaker on technology and business subjects.

John F. Shoch, General Partner, Alloy Ventures

John F. Shoch, Ph.D., joined Craig Taylor as a venture capitalist in 1985. Prior to this, he was president of the Xerox Office Systems Division. John received a B.A. (1971) in Political Science and an M.S. (1977) and a Ph.D. (1979) in Computer Science, all from Stanford. He joined Xerox in 1971 and worked at its Palo Alto Research Center (PARC) where he helped develop the Ethernet, a local area network system. In 1980, he became the assistant to the CEO of Xerox. In 1982, John became president of the Office Systems Division, developing networked office systems derived from Xerox PARC research. He is a director, and founding investor, of Conductus (Chairman) and Remedy, both public companies. He is also a director of several private companies, including AllAdvantage, Boldfish, Intersurvey, Kasenna, MontaVista Software, Network Elements, PostX, UpShot, and Zing Networks.

Luis Villalobos, Tech Coast Angels

Luis Villalobos is the founder of the Tech Coast Angels, and has a proven track record of investing in and coaching early-stage companies. He was founder and CEO of two ventures that were sold to large companies. He is an early investor in thirty-six startups, including Gadzoox Networks and Digi International. He has a technology background, including twelve patents as lead inventor. Luis earned an M.B.A. from Harvard Business School and an Sc.B. in mathematics from MIT.

Michael Wynblatt, Siemens Technology to Business Center

As director of Venture Technology at Siemens Technology-to-Business Center (TTB) in Berkeley, Michael Wynblatt has responsibility for identification of nascent-stage opportunities, and for coaching innovation teams in both the earliest phases of business development and the later stages of technology R&D. His background in next-generation information systems provides a perspective from which to evaluate and position new technologies to form new ventures. Dr. Wynblatt was a member of the founding team of TTB with particular responsibility for recruiting the TTB innovation team and defining the key innovation spaces in which TTB would operate. As a member of the TTB core team, he helps to set the strategic direction for the center. Prior to joining TTB, Dr. Wynblatt was a member of the technical staff at Siemens Corporate Research in Princeton, New Jersey. He holds a Ph.D. in computer science from the State University of New York at Stony Brook, and a B.S.E. in Computer Engineering from the University of Michigan.

Lynne Zucker, Department of Sociology, UCLA

Lynne Zucker received her Ph.D. in sociology from Stanford University. Her academic interests include formal organization theory, institutional structure and process, comparative international institutions, scientific productivity, and industrial organization. She is currently the director of the Center for International Science, Technology, and Cultural Policy for the School of Public Policy and Social Research at UCLA.

Cambridge, Massachusetts
(Kennedy School of Government, Harvard University): May 1 and 2, 2001

Keynote Speaker (May 1)
Mr. Alexander V. D’Arbeloff, Massachusetts Institute of Technology

The co-investigators will discuss initial findings as reported in the two-part project working paper. Part I of the working paper will summarize behavioral and institutional issues pertinent to early-stage, technology-based innovation, with emphasis on views of practitioners articulated at workshops held earlier this year in Washington, D.C., and Palo Alto, California.

Lewis Branscomb, Kennedy School of Government, Harvard University
Philip Auerswald, Kennedy School of Government, Harvard University

Panel 2. BEHAVORIAL AND INSTITUTIONAL ISSUES

Against the background of Part I of the project working paper (summarizing practitioner views on early-stage innovation), a group of leading behavioral economists, organizational theorists, and a prominent angel investor discuss how risk, trust, objectives, information, and institutions interact to define the particular obstacles and opportunities facing technology entrepreneurs. Among the issues of interest:

How do we explain the proliferation of institutional forms supporting technology development in the space between invention and innovation? How does the presence of behavioral and institutional disjunctures complicate the task of assessing the supply and demand for early-stage funding?

How do insights from behavioral finance—for instance, loss aversion, status quo bias, “barn-door closing”⁽⁹⁶⁾ and herding—help us understand technological innovation, particularly in the context of early-stage projects? Might such insights help us understand the tendency of private-sector investments to concentrate at any point in time on a limited subset of technological sectors (such as in the three years prior to March 2000, Internet, and biotech), as well as the strong variations over time in these preferred sectors?

To what extent is the disjuncture between invention and innovation, as described by practitioners, a transient phenomenon that we expect will be eliminated by institutional adaptation, or, instead, a more fundamental phenomenon reflecting underlying discontinuities (for instance, that between the definition of scientific success and that of commercial success)?

Richard Zeckhauser, Kennedy School of Government (moderator)
Michael Horvath, Tuck School of Business, Dartmouth
Nick Demos, Booz Allen & Hamilton
Hans Severiens, Band of Angels

Panel 3. MAPPING THE FUNDING FOR EARLY-STAGE INNOVATION: THE NUMBERS AND WHAT THEY MIGHT MEAN

With the initials results from the project team (Part II of the working paper) as a point of reference, core contributors to the empirical literature on R&D and an experienced technology manager discuss strategies for arriving at a comprehensive accounting of project-level investments in early-stage technology development. Among the issues of interest:

What definition (or set of definitions) of early-stage, technology-based invention-to-innovation transition can be applied across the full range of potentially relevant institutional settings (such as universities, existing corporations, startups)?