Robotics: Entrepreneurial Opportunity? IEEE RoboResearch Seminar 6 Mar 2015 Paul Wetenhall Ventureprise, Inc. Catalyst for Entrepreneurial Innovation Topics Twin Pillars: Innovators & Entrepreneurs Entrepreneurial Best Practices Venture Financing including Robotics Resources Your Questions Innovate + Interact + Ignite 2 www.ventureprise.org 1
Start-up Job Creation Decline Jobs Created by Establishments less than one year old 5,000,000 4,500,000 4,000,000 3,500,000 Gap 1.5 mil jobs 3,000,000 2,500,000 2,000,000 1,500,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year Source: U.S. Bureau of Labor Statistics Innovate + Interact + Ignite 3 The Big Picture Innovation vital to our economic strength Disruptive innovation increases productivity and standard of living Startup companies disrupt creative destruction Startup companies drive U.S. job growth Innovate + Interact + Ignite 4 www.ventureprise.org 2
Economic Impact Each new high-tech job leads to five additional jobs in local services (lawyers, nurses, plumbers) Innovation sector multiplier is 3X manufacturing multiplier Source: Enrico Moretti, The New Geography of Jobs Innovation-driven Enterprises (IDE) National and global markets Innovation as core competitive advantage: tech, process, business model Initial losses followed by rapid growth or failure Often require external equity capital Innovate + Interact + Ignite 5 Innovators & Entrepreneurs Catalyst for Entrepreneurial Innovation www.ventureprise.org 3
Innovation Defined the act of introducing something new: something newly introduced The American Heritage Dictionary an innovation is a value-creation mechanism Lawrence Husick change that creates a new dimension of performance Peter Drucker Innovate + Interact + Ignite 7 Disruptive Innovation Disruptive Characteristics Cheaper Simpler Smaller More convenient Examples Cell Phone & Skype vs. Land Line Phone Netflix vs. Blockbuster Apple products generally Nucor minimill vs. US Steel Source: Clayton Christensen Innovate + Interact + Ignite 8 www.ventureprise.org 4
Opportunity Continuum Idea Invention Innovation Opportunity Technical Feasibility? Customer Acceptance?? Business Model??? Innovate + Interact + Ignite 9 Who Is The Entrepreneur? Source: Timmons and Spinelli Innovate + Interact + Ignite 10 www.ventureprise.org 5
Creative Destruction Innovate + Interact + Ignite 11 Customer Discovery Charlotte Venture Launch Innovate + Interact + Ignite 12 www.ventureprise.org 6
Lessons Business models more important than inventions Edison electric light patent rejection Edison enabled electricity to be sold like gas, a utility Connecting, not inventing Autos available two decades before Ford Model T Mass production; Ford I invented nothing new. I simply assembled into a car the discoveries of other men Innovation in action Watt s steam engine invention in 1762; but steam engines had been used in coal mines for 70+ years Impact when entrepreneurs worked with the technology Source: Andrew Hargadon, Kauffman Foundation Innovate + Interact + Ignite 13 Financing Catalyst for Entrepreneurial Innovation www.ventureprise.org 7
Equity Sources 1. Founders, Family & Friends 2. Angels 3. Venture Capitalists 4. Strategic Partners 5. Public Equity Market Don t forget SBIR, STTR, ATP, other government NC IDEA, Charlotte Venture Challenge, etc. Innovate + Interact + Ignite 15 Stages of Company Development Company Stage Concept Pre-Seed Seed Early Stage Later Stage A-Round, B-Round, C-Round Milestones Typical Pre- Money Valuations Typical Funding Amounts Idea -- -- Develop idea Develop beta Launch product Expansion into working products; trial sales to paying through $XXM prototype customers customers revenue targets < $1M $2 - $3M $3M - $10M $10 - $20M <$100K $250K - $1M $1M - $5M > $5M Founders, Friends, Grants Venture Capital & Strategic Investor Angel Capital & Quasi Public www.ventureprise.org 8
Venture Capital: Seed & Early Innovate + Interact + Ignite 17 Robotics Venture Capital $millions 2011 2012 2013 2014 Deals 14 24 19 27 Investment $ $160 $220 $250 $341 $ Per Deal $12 $9 $13 $13 First VC fund dedicated to robotics, Grishin Robotics, appeared in 2012 Medrobotics raised $113M with four annual rounds Largest 2014 deal Anki Drive at $55M ($100M+ to-date) 2014: 6 drone deals; 4 medical robot deals High valuation exits: Mako Surgical $1.6B, Kiva $775M, MakerBot $600M But, modest market caps limit sector appeal: irobot $1B Innovate + Interact + Ignite 18 www.ventureprise.org 9
Thinking of a Startup? Innovate + Interact + Ignite 19 Ventureprise Hybrid University & Charlotte Community University home and funding Community governance and engagement Serve multiple communities Academic researchers and students Innovation-driven entrepreneurs Regional innovation ecosystem PORTAL building: where student, faculty, entrepreneur, and corporate talent collaborate Charlotte Research Institute: corporate Ventureprise: entrepreneurs Innovate + Interact + Ignite 20 www.ventureprise.org 10
UNC Charlotte Commercialization Commercialization Awareness [Tech Transfer, Ventureprise] Invention Disclosure and IP Protection [Tech Transfer] Customer Discovery & Business Model [Ventureprise] Business Start-up and Growth [Ventureprise, SBTDC] Innovate + Interact + Ignite 21 Robotics: Entrepreneurial Opportunity? Investors don t usually fund research Thus Research via grants Capital efficient business models Niche focus Strategic partners What do you think? Innovate + Interact + Ignite 22 www.ventureprise.org 11
A Final Word! Make Something People Want Paul Graham Veteran entrepreneur and founder of Y Combinator Innovate + Interact + Ignite 23 Questions? Topic 49er Foundry & Charlotte Venture Challenge Ventureprise Contact Devin Collins devin.collins@uncc.edu Paul Wetenhall paul.wetenhall@ventureprise.org Ventureprise, Inc. 704 697-0900 www.ventureprise.org Innovate + Interact + Ignite 24 www.ventureprise.org 12