Presentation by Mike Bartlett, founder of the North Texas Angel Network and President of Vital Art and Sciences Inc.

1. Innovation
in
Small Companies
Mike Bartlett
MIT Enterprise Forum DFW

2. The Pace of Innovation is Increasing
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3. Innovation Outsourcing
“No internal R&D group can possibly
predict, evaluate or cover all possible
designs or competitive positions.”
Outsourcing Innovation: The New Engine of Growth
by James Brian Quinn, July 15, 2000
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4. Why Outsource Innovation?
• Big company overhead and inertia.
• Keeps the R&D cost off the books.
• Small companies don’t own a factory.
• Buying a company gives good press.
Innovation in most Big Companies is
just not working!
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5. Where Is the Innovation?
• 64% of net new jobs in the US over the last 15
years came from small business and a
substantial portion of those new jobs were
created by the high growth, high impact small
businesses. (Source: Brookings Institution)
• Not to be confused with the Main Street
businesses: restaurants, car repair shops, dry
cleaners, and the myriad of other small
operations who contribute little net job growth.
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6. Basic Requirements of a High
Growth Start-up Company
1. “Fire in the Belly”
2. A great idea!
3. Technical Skills in building and running a
company.
4. Funding
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7. Who Does a Start-Up?
Source: Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity.
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8. Baby Boomers
• Boomers have broader job skills
• Better access to capital – both their own
savings and through personal networks
• Also at a life stage where starting a
business is less risky and more attractive.
76M Boomers retiring could drive a new
Entrepreneurship Boom on their own!
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9. Generation Y
• Generation Y may be the most
entrepreneurial generation ever.
Percentage of
respondents 18 –
29 years of age
who wanted to:
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10. Why the US Leads?
• Culture
• Direct access to the world’s biggest
consumer market
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11. A Great Idea?
• Probably the biggest barrier to a
successful new company.
• Need “Domain Knowledge” from working
in a field for several years to identify the
needs and gaps.
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12. 2011 Angel Investments ($’s)
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Source: Angel Resource Institute – 2011 Halo Report 12

13. Entrepreneurship Training
• Can Entrepreneurship be taught?
• More than 2,000 college and universities
in the United States, about two-thirds of
the total, now offer a course in
entrepreneurship (Kauffman Foundation).
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14. Basic Requirements of a High
Growth Start-up Company
1. “Fire in the Belly”
2. A great idea!
3. Technical Skills in building and running a
company.
4. Funding
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15. Funding Sources
• Friends & Family – to validate the product
• Angels and Private Investors
• Federal Grants - SBIR
• VC’s (if you can find one)
• The best funding source – Customers!
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17. Summary
• The pace of innovation is accelerating
• Driven largely by small companies
• Boomers plus Gen Y will lead
• Primary areas: Social and Healthcare
• It will affect the future for all of us!
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18. How Are You Involved?
• Start or Join a Small Company
• Help a Start-up
– Mentoring
– Funding
• Teach Entrepreneurship
• Help improve the Innovation
climate in Texas & the US
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