When VCs say NO to your finance request

 

 

A year or so back we previewed some substantial and very useful work by Ron Peterson, CEO of Three Arrows Capital Corp., Bethesda, MD USA.

 

The report ‘Technology Transfer in the Life-Sciences’ is an extensive compilation of sites and organizations around the world where developed technologies can be accessed dramatically cheaper than taking risky corporate initiatives. And it is FREE.

Ron has another tome, ‘When Venture Capitalists Say “No” ­ Creative Financing Strategies & Resources’. We haven’t reviewed it, but it’s sure to be topical. Also now available FREE in e-book format. The book illustrates 83 separate tactics, and hundreds of examples. Either or both will be sent without charge – respond to tarrows@comcast.net.

Outcomes from Super Yacht cluster, Cairns

The Super Yacht Group – Great Barrier Reef is an industry cluster of 40 organisations working collaboratively to further develop the super yacht industry.

It is the largest representation of super yacht companies in Australia – includes ship refitters, agents, spare parts distributors, paint suppliers, shipbrokers. 

Around 35 vessels have visited Cairns over the last 18 months to undergo maintenance at the super yacht marina launched in 2003. Cairns is the largest super yacht refit operation in the South Pacific. Super yachts generate more than $30 million business annually for Cairns. It emerged from the Ecofish cluster. Until then, yacht repair barely existed in Cairns.

Specific Outcomes

§          Cairns is now the most visited port in Australia by international super yachts.
§          Brokered an agreement for the delivery of internationally-recognised training being delivered in Cairns.
§          Drove negotiations with Maritime Safety Queensland, leading to pilotage exemption for international super yachts (between 35 – 50 metres in length) visiting Cairns.
§          Assisted in negotiating new taxation arrangements for foreign flagged vessels, including super yachts.  

Future Directions 

The cluster is focused on consolidating the reputation of Cairns as the premier super yacht destination. Targets include:

§          Attract 10 refits per year, with export value of $14 million.
§          Attract 27 cruising super yachts per year. 

Related objectives include:

§          To promote and facilitate the development of a super yacht charter industry for Australia. §          To establish Cairns as a recognised hub for super yacht training – Year 1 & 2 areas of specialisation are MCA Yachtmaster Offshore, MCA Yachtmaster Ocean, Crew Pacific stewardess training.
§          To increase employment relating to super yacht export markets. By 2006, 75 jobs at Cairns Slipways, 150 jobs in the wider industry. 

Contact: tracy.scottrimington@credc.com.au 

(CAP has begun a series of information papers. The first is titled ‘Clusters in Australia – examples of outcomes’. The document provides hard evidence of investments and jobs resulting from the connectivity and collaboration made possible through cluster programs. More examples next month. The document will be available on our website shortly. Visit http://www.capinc.com.au)

gilt-edge advice (connectivity is the key)

 

THIS IS ONE OF OUR 10 MOST POPULAR ARTICLES

 

Occasionally you come across a statement that is so brilliantly true that it deserves a gilt-edged frame.

“The key to success lies in connectivity. Innovation emerges when there are interconnections and interdependencies, where we work outside the parameters of what has been done before and seek out new possibilities. We all have the ability to connect one idea with another, to find an idea in a different organisation, in a different industry or field of activity and connect it with another to solve the problem at hand. Why can’t we be like a child with a bucket of Legos constantly combining and recombining ideas, images and thoughts into different combinations? Most great ideas, I am fully convinced, rarely come fully formed in a single bolt from the blue – they are combinations of ideas. We can all regain our lost creativity.”

– Hon. S. Fowdar, Minister for Training, Skills Development, Productivity & External Communications (at the Innovation Summit, Mauritius, September 2004. More info – natpro@intnet.mu

Entreprenurship programs in regional USA

The Kauffman Foundation recently conducted a conference to examine linkages between entrepreneurship and regional economic growth.

Four awards for programs that were truly “best practice” in their specific disciplines were awarded. 
§          Idaho’s “TechConnect” program for Best Practice in educational efforts to promote entrepreneurship.
§          The Maryland Technology Enterprise Institute at the University of Maryland’s “Maryland Industrial Partnership Program” for Best Practice in technology transfer programs.
§          The Michigan Economic Development Corporation’s “SmartZone” initiative for Best Practice in regional economic incentives.
§          The Wisconsin Department of Commerce’s efforts to reduce state mall business regulatory burden for Best Practice in regulatory flexibility.  

More details at  www.sba.gov/advo  

Source: National Dialogue on Entrpreneurship

Neoclassical v. new growth theory

SGS’ latest newsletter points us to an interesting review by Professor Mike Berry (RMIT) of the determinants of regional economic success – titled ‘Innovation by Design: The Economic Drivers of Dynamic Regions.

 

His analysis of the two approaches – the neoclassical school, and the new growth theory school – is timely because they represent the basic policy camps here in Canberra. 

 

Berry says the neo-classicists see innovation as an exogenous (given) factor – material welfare is achieved through the promotion of perfect competition, with firms responding to prices. Competition is driven by the law of diminishing returns to scale. Policy prescriptions in this view of the world tend to be preoccupied with micro-economic reform – including removing barriers to entry, improving consumer knowledge, eschewing proactive industry policy, confining government interventions to the correction of price signals for externalities e.g. public research.

By contrast, new growth theory (NGT) says innovation is an endogenous factor, with firms forging a continuing market advantage by being the first to create a compelling new product. This school of economists argues that direct policies are needed to help firms innovate and exploit the opportunities created by imperfect knowledge on both the demand and supply side of the market. These policies focus on skills development, promotion of sectors, competencies or industry clusters where there is a reasonable prospect of increasing returns to scale for the region or nation.

 So what, you say? Well, it amazing that the neo-classicists still hold sway here. They are invariably the bureaucrats and advisers who lack real world experience. If they had, they would understand how NGT must be the basis for lifting our trade performance in high value manufactures. FTAs with the USA and China are very risky without a strong industry policy aimed at building strategic industry competencies and global supply chains. 

India – industry policy using clusters

Finance Minister for the State of Karnataka, Mr. Siddaramaiah, plans to set up a Karnataka State Industrial Development Council (KSIDC) to accelerate industrial growth.

 

In his budget proposals for March 2006, he announced:

§          Funding of 143 crore ($US32.9 million) for facilitating investments in the industry and mining sector, as against 105 crore ($US24.2 million) for the current fiscal year.

§          Establishment of Special Economic Zones (SEZ) for textiles in Hassan and Mysore, and for IT in Mangalore.

§          Science and Technology Entrepreneurs Parks (STEPs) for 11 districts.

§          Establishment of clusters – industrial valves in Hubli-Dharwad, coir in Channapatna and Hassan, food processing in Mangalore, auto components in Shimoga. Total investment of 40 crore ($US9.2 million).

§          Establishment of state-of-the art laboratories to aid mineral investigations.

 Trivia – in researching this article we learned a new word, ‘crore’ – a Hindi unit = 10 million rupees = roughly $US230,000.

Netherlands Food Valley

Henri Janssens (Netherlands) has thoughtfully forwarded us a 4 page article on the Food Valley cluster. Please contact us for the full article. Extract follows.

Most people in the worldwide food industry instantly recognise the Netherlands as an epicentre for pioneering food technology.

Equally important is The Netherlands’ contribution to European biotechnology and agrifood. But this Valley is an intense concentration of research centres, food manufacturers, start-ups, pilot plants and academic institutions.

This combination of commercial and academic establishments has fostered an area dedicated to development.  At the centre is Wageningen University and Research Centre (70km south-east of Amsterdam), one of the leading agrifood research centres in Europe.

Other public research organisations include the Meat & Fish Innovation Centre; NIZO Food Research Ede; TNO Quality of Life; Netherlands Food Safety Authority; the Innovation Cluster for Nutrigenomics. There are 10,000 scientists and experts employed in Food Valley. 

At the core of the Food Valley strategy is a series of public-private sector partnerships, hosted by the umbrella organisation, Wageningen Centre for Food Sciences (WCFS). This is a large alliance of big names such as Unilever, AVEBE, Friesland Dairy & Drinks and DSM Nutrition. Partnerships between these companies and public food research laboratories have created a culture of innovation.

Consequently Food Valley has become the location of choice for a variety of ‘innovation companies’ and biotech startups. An example is Campina Innovation, opened in 2003. This R&D centre develops innovative consumer milk products that meet up-to-the-minute market demands – dairy drinks, yogurts and desserts. It houses a state-of-the-art pilot plant and comprehensive sensory analysis facilities. More than 30 researchers from 8 countries work on the same site. These researchers are involved in a collaborative project with NIZO food research and other companies, examining novel heating technologies. 

Dr Peter C. Sijmons, CEO, CatchMabs BV says “Food Valley as a concept is very important for us. It provides a food innovation profile for this agro food cluster in the region which we regard as strategic. Food Valley has the critical mass to be a respected centre of innovation. We meet new partners easier and more quickly for research and funding. We have also experienced benefits from unexpected visits. The proximity of food companies and research organisations is in this respect is most helpful.”  

Lifeline for regional universities?

Australia’s chief scientist, Robin Batterham, wants universities’ efforts to establish links with local businesses recognised and rewarded with funding.

It is part of an overhaul of how the federal government distributes its research funds. He says there is an important role for regional universities in particular, to reach out to their local business communities. He added that such ‘third arm activities’ – such as helping companies with their commercialisation strategies, hosting summer schools and placing students with companies – need to be legitimised. 

Dr. Batterham is well-known for his support of clustering and the pursuit of stronger research-industry links. His ideas are expected to be included in a discussion paper for release in a matter of days.  

The significance of his ‘third arm’ idea, which is well-understood in the UK and USA, is that it could provide a very important lifeline for a number of regional universities, and indeed for regions where micro businesses are the norm.

Numerous reports have recently noted the decline of regional universities due in part to a funding regime that places emphasis on top-end research and teaching, which has tilted the funding to the major city-based universities.    

Watch this space.