How we can encourage innovative growth in our region |

How we can encourage innovative growth in our region

Ky Good

A while ago I was at an Innovation and Invention seminar at UNR. While listening to a panel of local academics and business leaders expound on the need for young people to reach out to the community, a young man in the back stood up and asked the panel, “I have my degree. I have my business idea. Now what do I do?”

That direct request for help spoke volumes!

Every week we hear similar requests for help from engineers, marketers and others, who were laid off from large local companies, and students wanting to stay in northern Nevada.

It was reported in the Nov. 15 Northern Nevada Business Weekly that “Dr. Milton Glick wants to dampen any big expectations that the commercialization of research from the labs at the University of Nevada, Reno, will rescue the northern Nevada economy.”

It was also reported that at the Nugget Development Advisory Committee meeting in Carson City on Nov. 22, Rob Hooper, executive director of the Northern Nevada Development Authority, stated, “I have concerns with even the concept of an incubator, right now. That’s become a four-letter word for me. They just don’t work in my opinion.”

Have we given up on this young man? Have we ignored his plea?

The questions we must ask ourselves are simple and the answers have profound consequences. We need to ask: “What expectations should we have of local academic, government and business leaders? What type of leadership do we need to provide? Why is it that we have difficulties in creating new businesses and commercializing new technologies? Do we look at the path in front of us and see the difficulties or the opportunities?

The 2010 Better World Report: The Positive Impact of Academic Innovations on Quality of Life, (See celebrates real-world examples of entrepreneurs who have developed technologies that directly impact the health, well-being and overall quality of life of people around the world. Many opportunities have been commercialized: In Reno, a doctor creates a device to use eyetracking to help a patient communicate and with the help of an outstanding team of young minds develops a wearable device that will change the lives of anyone confined to a wheelchair. This company employed more than 12 interns, and 11 stayed on full-time after graduation. UNR professors were instrumental in the early support of this startup and helped get this company off the ground.

Is this the type of creativity and innovation we should expect from our brightest young minds? I think the answer is a loud and resounding – yes! The students in northern Nevada are incredibly bright and if we provide the leadership and give them the tools, they will far exceed our expectations.

But the “yes” comes with conditions. The conditions require a community to come together in a focused and concerted effort to lead, guide, and mentor these innovative minds while providing an environment that enables them to achieve their goals and dreams. These young professionals, who are our future, need more than just a better place to hang out. The need the tools and guidance on how to use these tools to achieve their dreams.

While some may not understand what an incubator is or see the value of an incubator, many across this nation differ and invest their time and money into this type of business development structure that has proven effective in creating jobs and turning innovations into solid businesses.

The U.S. Department of Commerce Economic Development Administration reports that, collectively, the over 1,400 business incubators create between 46.3 and 69.4 jobs per $10,000 in federal investment. Research by The Kauffman Foundation, University of Michigan, Ohio University and Southern Technology Council finds that 87 percent of startup companies, who graduate from an incubator, have a successful transition to becoming a sustainable company.

The Kauffman Foundation also reports that an analysis of 2007 Census data shows that “young firms (defined as one to five years old) account for roughly two-thirds of job creation, averaging nearly four new jobs per firm per year. Of the overall 12 million new jobs added in 2007, young firms were responsible for the creation of nearly 8 million of those jobs.”

Young companies are the engine of job creation.

Incubators support and mentor entrepreneurs and small business owners. “Incubator” is indeed a four letter word and that word is “Jobs” lots of them! “In 2005 alone, North American incubation programs assisted more than 27,000 companies that provided employment for more than 100,000 workers and generated annual revenues of $17 billion,” says researcher by Linda Knopp.

So, where does innovation generally start? Much of it starts with the help of an inspiring professor where the entrepreneur or student creates an invention or conducts a research project or engages in some other avenue that fosters their inquiring mind. For some, the next logical step is commercialization – turning innovation into reality. Let’s applaud the efforts of Economic Development Authority of Western Nevada’s “Can Do” program that focuses on the possibilities that we can achieve.

It is true that we need to be realistic, but at the same time we need to strive to excel and challenge those around us. Perhaps Dr. Glick at UNR is not aware that nearly half of the companies on the Fortune 500 were launched during a recession. And, even though it is true that about 10 percent (or a handful) of universities in the United States generate most of the licensing revenue and about 60 percent of the university tech transfer offices are losing money, this does not mean that we should focus on the challenges and ignore the opportunities. Ignoring the hundreds, if not thousands, of new technologies that have been developed by the “other 90 percent” of academic institutions is nearsighted and causing us to lose significant opportunities to create new revenue, grow academic institutions and help retain innovative individuals. Under the Bayh-Dole Act, universities have a mandate to ensure, to the extent possible, that inventions arising from federally funded research are commercialized. It is an obligation that many universities have embraced since l980, when the law was enacted. Several professors at regional academic organizations have been vocal about their efforts to license and commercialize their work and their concerns that UNR is missing tremendous opportunities. As one professor said, “Let’s look at other small states and see how they are able to successfully transfer technology.”

Why do we decry the difficulties instead of harnessing the opportunity? Many of the fastest growing and most successful companies in the United States had a common start an entrepreneur with an idea and courage to face the challenges, a few mentors to offer guidance, and an investor to provide small amounts of capital and wisdom. According to CEO Saieed Ameri, founder and chief executive of the Plug and Play Center in Cupertino, the startup home of Logitech, PayPal, Quantenna, Atoga Systems, and others:

“Since universities are a hotbed of great entrepreneurial ideas, we have established relationships with various universities throughout the country. We have reached out to the entrepreneurship societies and student run organizations and through these efforts we have been successful in funding startups from universities such as, Stanford, MIT, Cornell, and Berkeley to name a few. We are proud that these startups are housed in the Plug and Play University Pavilion.”

According to the Kauffman Foundation Nevada ranks 45th out of 50 in knowledge jobs. More importantly, we are ranked 43rd out of 50 in terms of our capacity to innovate. Some findings of the report:

* The lower-ranking states tend to rely on natural resources or on mass-production manufacturing and depend on low costs rather than innovative capacities to gain an advantage. Innovative capacity, derived through universities, R&D investments, scientists and engineers, and entrepreneurial drive, increasingly impels competitive success, the report said.

* Lower-ranking states are not without opportunities. The IT revolution makes it easier for businesses to relocate, or start up and grow in less densely populated states farther away from existing agglomerations of industry and commerce. Because metropolitan areas in many of the top states suffer from high costs and near-gridlock on their roads, locating in less-congested metros may be more attractive to entrepreneurial companies.

* “In today’s highly competitive environment, states must work together and with the federal government to overhaul their economic development policies,” said Dr. Robert D. Atkinson, president of the Information Technology and Innovation Foundation and co-author of the Index. “Too often, states still view their economic competitors as being next door. If they used incentives to expand broadband, support entrepreneurial assistance programs, or invest in research and technology transfer, they and the nation as a whole would be far more globally competitive.”

* The report recommends that, to pursue this new approach to economic development, states should establish policies that reduce within-state, zero-sum competition; implement state policies to spur “win-win” economic results; and pursue new state-federal innovation-based economic development partnerships.

So what do we do?

There are many outstanding minds in this region who can add value to this issue, but here are some actions we should consider:

1. Establish a concerted focus and integrate the strengths of service providers, investors, incubator managers, entrepreneurial groups, and economic developers under a single leadership organization. In my opinion, EDAWN is a logical choice to take this leadership role.

2. Develop and promote a message to Nevada alumni “Bring Nevadans Back to Nevada.”

3. Set a goal for 2011 to establish a venture capital fund with a seasoned fund manager to bring private money into Nevada and be available to support new ventures starting businesses in northern Nevada. From this fund, offer matching funds for Innovation and Entrepreneurship Relocation and Creation Programs.

4. Establish $500 sponsor-based scholarships for 500 students a year to stay in Nevada schools. Promote this at annual class reunions, offer at high schools, and offer at selected regional or national meetings to promote the concept of “Bringing Nevadans back to Nevada.”

5. Engage 50 business leaders in northern Nevada to collectively develop and endorse “Call to Action” Pact to promote job creation and small business development.

6. Develop a video for grassroots campaign to “Energize the spirit of the West” to create new and innovative growth in Nevada for the 21st Century!

7. Support a Regional Alliance of Western States to collaborate on regional Economic Development, Entrepreneurial, and Investor initiatives. The Rocky Mountain Venture Capital Association is ready to meet.

8. Integrate academic and business organizations to advance internships, new funding sources, and commercialization of academic-based assets. Convene a small group of individuals from UNR, TMCC, DRI, SNC, EDAWN, and local businesses to offer viable alternatives that may assist the efforts to transfer technology that comply with federal and state laws.

Although our future may be unclear and we may not have all of the answers, one thing is certain: We have a choice. We can either choose to focus on the many difficulties or resolve to make a positive impact and step forward.

Ky Good serves in management roles with five entrepreneurial startups in the technology, finance and education sectors. He is a co-founder of C4CUBE, a business incubator in downtown Reno.