Medical AI Startups

Introduction● Shallow introduction for entrepreneur-investor relationship in dense 'mind

map' format, mainly targeted for technical founders.

– Best to be read from a tablet (or similar device with easy zoom in/out), do not work very well for project despite the slide format.

● Note! Many of the economics papers are not very keen on nice infographics, but rather rely on regression tables.

● Touching only lightly the business model/investment deck -part at this point.

Business Models Introduction #1

http://dx.doi.org/10.1016/j.lrp.2009.07.010, Cited by 1500

http://dx.doi.org/10.1016/j.lrp.2010.02.003

http://dx.doi.org/10.1016/j.lrp.2010.02.005

Special issue on business models

We are proud to mark the 10th anniversary of the journal's 2000 re-launch with an important special issue on Business Models, which maintains its stance of seeking to be ‘in the thick of the action’. The topic of Business Models is of exceptional importance to managers, and the choice of business model is typically seen as a key component of organisational success. This special issue is designed to show the how and the why behind making the right choices. It provides robust empirical evidence, and illuminates the conceptual reasoning and academic logic behind the idea of the business model, creating legitimacy for the concept and inviting scholars to make it centre stage in future academic research.

http://dx.doi.org/10.1016/j.lrp.2010.03.002

http://dx.doi.org/10.1002/sej.1189

http://www.tandfonline.com/doi/abs/10.1080/08956308.2016.1208043

http://dx.doi.org/10.1016/j.lrp.2016.06.006

http://dx.doi.org/10.1016/j.lrp.2015.04.001

Business Models Introduction #2

Michael Skok: “Those companies getting their business model right, have literally 5-10x higher valuations, than those that don't, think about it for a second” - https://youtu.be/K0Eu6cL0BR8?t=4m20s

“Business model can be as disruptive or even more as the technology itself (take case Red Hat Linux).” https://youtu.be/K0Eu6cL0BR8?t=7m33s

“Value co-creatiion. Open up your cloud APIs, start internally within your company” (e.g. think of microservices, and Drupal ecosystem) https://youtu.be/K0Eu6cL0BR8?t=34m35s

https://medium.com/@jrodthoughts

http://www.forbes.com/sites/davechase/2016/05/18/

Business Models focus● Often technical founders focus too much on the technology, and do no achieve the

Product-market fit

– In medical startups, it is often very useful to do proper health economics calculations to see your idea to customers and investors.

● In other words, how much can your solution make the healthcare more efficient economically while improving quality of care to the patient.

– Other common problem in the long run is the reimbursement as in most countries, the patient itself does not that pay fully the healthcare that the patient receives, and the market access is complicated with varying regulations/policies in each country.

http://startupheretoronto.comwww.smi-online.co.uk

Reimbursement for life sciences startups

https://www.youtube.com/watch?v=g2euNDIocHY

https://www.youtube.com/watch?v=mFP2ioCDdjs

Founder-CEOs from leading venture-backed digital health start-ups (Kyruus, Wellframe, and PatientPing) and senior health system executives (Steward Health Care and Partners Healthcare) are coming together at the Harvard iLab to share their experiences in developing solutions to improving care and reducing costs under new value-based payment arrangements. The discussion will be interactive and action-oriented!

Participants:-Dr. Mark Girard, President, Steward Health Care Network, Steward Health Care-Dr. Tim Ferris, VP of Population Health Management, Partners Healthcare-Dr. Graham Gardner, Founder and CEO, Kyruus-Jake Sattelmair, Founder and CEO, Wellframe-Jay Desai, Founder and CEO, PatientPing

This presentation led by Jo Ellen Slurzberg (VP Global Health Policy, JR Associates) will focus on why it is important to create an implementable business strategy that highlights and incorporates obtaining reimbursement and/or defining the value proposition for a product so it can be successfully commercialized in the ever-changing healthcare environment.

Health economics

https://medtechengine.com/article/health-economics-europe-landscape/

https://medtechengine.com/article/navigating-european-health-economics-landscape/

https://medtechengine.com/resource/value-based-healthcare-europe-laying-foundation/

https://medtechengine.com/resource/value-based-assessment-new-medical-technologies/

medtechengine.com

https://medtechengine.com/article/medical-device-reimbursement-why-the-right-day-pays/

Business Models Innovations on the model

https://hbr.org/2016/10

Healx: A Case Study

Informed by our business model framework, we advised (and Cambridge Judge Business School’s business accelerator supported) the tech venture Healx, which focuses on the treatment of patients with rare diseases in the emerging field of personalized medicine. A big challenge for pharmaceutical companies in this domain is that rare-disease markets are very small, so companies usually have to charge astronomical prices. (One drug, Soliris, used in the treatment of paroxysmal nocturnal hemoglobinuria, costs about $500,000 per patient-year.)

Enter Healx, with a platform that leverages big data technology and analytics across multiple databases owned by various organizations within global life sciences and health care to efficiently match treatments to rare-disease patients. Its initial business model hit three of our six key features. First, Healx’s value proposition was about asset sharing (for example, making available clinical-trial databases that record the effectiveness of most drugs across therapeutic areas and diseases, including rare ones). Second, the business promised more personalization by revealing drugs with high potential for treating the rare diseases covered. Finally, Healx’s model would, in theory, create a collaborative ecosystem by bringing together big pharma (which has the treatment and trial data) and health care providers (which have data about effectiveness and incompatibility reactions and also personal genome descriptions).

https://healx.io/

More recently, Healx has developed a machine-learning algorithm that can use a patient’s biological information not only to match drugs to disease symptoms but also to predict exactly which drug will achieve what level of effectiveness for that particular patient. The latest version of its business model brings personalization to the maximum possible level and adds agility, because the treating clinician—armed with the biological data and the algorithm—can make better treatment decisions directly with the patient and doesn’t have to rely on fixed rules of thumb about which of the few available off-label drugs to use. In this way, Healx is able to support decentralized, real-time, accurate decision making.

This version of the Healx model has even more transformation potential—it exhibits four of the six features; it has already generated revenue from customers; and in the long term it could empower patients by giving them much more information before they consult a medical practitioner. Although it is still too early to tell whether that potential will be realized, Healx is clearly a venture to watch. It has earned a number of prizes (including the 2015 Life Science Business of the Year and the 2016 Graduate Business of the Year in the Cambridge cluster) and sizable investments from several global funds.

Business Plan Investor perspective

http://dx.doi.org/10.1177/0266242604042377, Cited by 356

Business angels give more emphasis than venture capital fund managers to the entrepreneur and ‘investor fit’ considerations. The implication for entrepreneurs is that they must customize their business plan according to whether they are seeking funding from a bank, venture capital fund or business angel.

http://dx.doi.org/10.5465/AMJ.2009.36462018, Cited by 311

he results suggest that, at the margin, investors in start-ups should place more weight on the business (“the horse”) than on the management team (“the jockey”). The results also inform theories of the firm.

http://dx.doi.org/10.1111/j.1540-6261.2008.01429.x, Cited by 195

Business Plan Entrepreneur perspective

TEAM

What are Investors looking for then? #1 -> Good Team

http://arxiv.org/abs/1608.07182

We draw on 54,943 successfully crowdfunded projects and 3,313 venture capital (VC) investments throughout the period 04/2012-06/2015 to investigate, on the aggregate level, how crowdfunding is related to a more traditional source of entrepreneurial finance, venture capital. Granger causality tests support the view that VC investments follow crowdfunding investments. Cointegration tests also suggest a long-run relationship between crowdfunding and VC investments, while impulse response functions (IRF) indicate a positive effect running from CF to VC within two to six months. Crowdfunding seems to help VC investors in assessing future trends rather than crowding them out of the market.

This paper uses a randomized field experiment to identify which start-up characteristics are most important to investors in early stage firms. The experiment randomizes investors’ information sets of fund-raising start-ups. The average investor responds strongly to information about the founding team, but not to firm traction or existing lead investors. We provide suggestive evidence that team is not merely a signal of quality, and that investing based on team information is a rational strategy. Altogether, our results indicate that information about human assets is causally important for the funding of early stage firms, and hence, for entrepreneurial success. Stanford University Graduate School of Business Research Paper No. 14-17

“In selecting investments, VCs see the management team as more important than business related characteristics such as product or technology. They also attribute more of the likelihood of ultimate investment success or failure to the team than to the business.”

Paul A. Gompers , Harvard Business School; Will Gornall , University of British Columbia (UBC) - Division of Finance; Steven N. Kaplan , University of Chicago - Booth School of Business; Ilya A. Strebulaev , Stanford

University

How Do Venture Capitalists Make Decisions?

August 1, 2016Stanford University Graduate School of Business Research Paper No. 16-33 + https://news.ycombinator.com/item?id=12289720

Kaminski et al. (2016)Kaminski et al. (2016)Kaminski et al. (2016)

What are Investors looking for then? #2 angels vs VCs

Saïd Business School WP 2015-2

Angel funding is often viewed as a stepping stone towards obtaining venture capital. An alternative perspective is that angel investors and venture capitalists are distinct investor types that rarely mix with each other. Using a unique database from British Columbia, Canada, we provide evidence that angel and venture capital funding are dynamic substitutes, not complements. This finding applies across the performance range. Using an instrumental variable approach based on tax credits, we find evidence of both company-led selection and investor-led treatment effects. The substitutes pattern is more pronounced for casual angels and angel funds than for serial angels.

http://dx.doi.org/10.1016/j.jbusvent.2015.08.003

We examine the extent to which private equity investors generate value-added benefits to venture development and investigate whether these benefits differ across angel groups and venture capitalists. This is the first study to compare the relative contributions to venture innovation and successful exits by angel groups versus venture capitalists. We do so by tracking external investments in 350 technology ventures. The results suggest that VCs and angel groups contribute equally to innovation rates, but these effects are non-additive. We also show, however, that VC-backed ventures have more impactful innovations and experience faster commercialization rates.

Note: This table reports the counterfactual analysis based on the results of the second-stage switching regression. Columns 1, 2, and 3 present the means of the actual innovation measures for VC-backed ventures, the means of the counterfactual (hypothetical) innovation measures of VC-backed ventures if they had not received VC investment and the difference between the means. Columns 4, 5, and 6 present the means of the actual innovation measures for angel-group-backed ventures, the means of the counterfactual (hypothetical) innovation measures of angel-group-backed if they had received VC investment and the difference between the means.

⁎ Significance at 10% level for t-test of mean difference. ⁎⁎ Significance at 5% level for t-test of mean difference. ⁎⁎⁎ Significance at 1% level for t-test of mean difference.

Good team Is defined how? #1No single definition and depends on who you ask from

"The founding team cannot be changed, and no one can speak to investors or customers with authority like a founder," Bernd Schoner (author of The Tech Entrepreneur’s Survival Guide), who currently is vice president of business development for ThingMagic, says a startup needs six personalities to be successful. While one person might have more than one of these traits, these six need to exist:

1. THE PRIMA DONNA GENIUS

2. THE SUPERSTAR

3. THE LEADER

4. THE INDUSTRY VETERAN

5. THE SALES ANIMAL

6. THE FINANCIAL SUIT

fastcompany.com

My view is the Platonic startup has a founding team of a developer, a designer and a distributor.

The perfect startup has all three founders: ● someone who understands how to build technologies and systems to solve problems;● someone who understands the human factors behind those problems, why they exist, what it takes to

fix them and how to shape the experience;● someone who understands how to reach, talk to and sell to the people whose problems are being

solved - and keep finding more of them

The ideal startup has two of the three founders, but all three skills are present between them.

inc.com/murray-newlands

John Sullivan, Jan 29, 2016 6:30 am ETblogs.wsj.com/experts/2016/01/29

“Contrary to popular belief, VCs aren’t always looking for the next big thing. They’re looking for the next big team.”

GEORGE DEEB, Managing Partner at Red Rocket Ventures

https://www.entrepreneur.com/article/232009

https://www.entrepreneur.com/article/241441

Choose To Work With People You Genuinely Like (And Trust)

Define Your Level Of Commitment, Then Stick To It

Put It In Writing

Don’t Sweat The Small Stuff

Know When To Walk Away

I’ve gone against my gut in the past- choosing to work with individuals due to their credentials or talent who gave me a bad vibe, and I’ve regretted it every time. It’s easier to solve disputes within leadership when you work with people you really like, because you can always fall back on that compatibility when issues arise. For this reason, I place ‘vibe’ at almost an equal footing as experience when selecting talent, and I don’t tolerate bad ‘vibes’ within my organization. When I experience them, I root them out and discuss them in an effort to fix the situation. Bad vibes can kill relationships and companies.

forbes.com/sites/autumnadeigbo/2016/09/04

Good team Is defined how? #2

http://dx.doi.orgi/10.1016/S0883-9026(02)00113-1

Adopting a prospective, qualitative approach, the basic argument of this paper is that shocks in the founding team and the position of its champion co-evolve with shocks in the development of the business.

Hence, technical business development remains a major task of the CEO. However, this means that a CEO hired from outside the research group should (a) be able to understand the technology very well and (b) have the ability to develop the business himself. Most CEOs hired from larger companies do not show these competencies. Second, the entrepreneurial team has to accept the arrival of an outside CEO. This is not to be taken for granted. In spite of the fact that they often indeed are technical wizards, researchers do not accept that an outsider becomes the chief of their company.

In the paper, we show how in practice, the champion of the venture automatically evolves into the CEO position. It would be very difficult to hire an outside CEO at the start of the venture. This would only be possible if the researchers have no interest to commercialize their own technology and explicitly choose to remain shareholders. The paper suggests that instead of hiring a CEO at the start of the company, it might be a more efficient choice to “coach” the start-up team and give the entrepreneurial team the time and freedom to learn. Doing so, the team develops itself the skills and capacities to run its operations.

Finally, the paper shows the difficulties of a large start-up team. Each entrepreneurial team member wants to solve every problem, which the company encounters. Being a shareholder and managing a company are two different things. Shareholder power and management authority should not be confused, but in fact, they often are. Entrepreneurial start-up teams that are larger than four persons might be interesting to convince an investor, but are in practice very difficult to run.

http://dx.doi.org/10.1016/j.jbusvent.2008.01.002, Cited by 179 articles

This article examines the role of entrepreneurial teams in processes of entrepreneurial discovery. It addresses two main questions. The first investigates the implications of economic theory for the possibility of team entrepreneurship. Because leading economic theories focus almost exclusively upon individual decision-makers, we propose a broader notion of entrepreneurship that includes enterprising teams as well as individuals. We define entrepreneurship as a profit-seeking problem-solving process that takes place under conditions of structural uncertainty.

The second question examines the conditions that are conducive to joint entrepreneurial action and the formation of entrepreneurial teams. We suggest that bounded structural uncertainty and perceived strong interdependence arising from common interest can jointly “prime” team entrepreneurship.

Good team Is defined how? #3: Shared experience

http://dx.doi.org/10.1016/j.jbusres.2010.11.026

This research examines the impact of previously well-known people (strong ties) as entrepreneurial team members on the human resource flexibility in entrepreneurial teams. Usually, firms founded by teams are more successful than those founded by individuals. New member addition critically impacts on the human capital and knowledge available as well as the culture and social interaction prevalent in the venture. Moreover, these factors affect the firm's performance potential.

Human resource flexibility is important in entrepreneurial ventures that need to respond to the changing challenges of growing the new business. This research investigates the impact of previously well-known people (strong ties) as entrepreneurial team members on the human resource flexibility of new ventures. Data collected from German founding entrepreneurs in technology-oriented, incubator-based firms shows that choosing a well known individual to join the entrepreneurial team increases the founder's ability to modify the team member's work role, but complicates asking the team member to leave the team if required. Hence, strong ties both increase and reduce human resource flexibility. However, the effect of strong ties on role modifiability is statistically significant only with novice entrepreneurs. These research findings counsel founders to discuss role modification and exit during partnership and entrepreneurial team membership negotiations.

http://dx.doi.org/10.1016/j.jbusvent.2011.11.001

Although new ventures are often started by founders with prior shared experience, which has been shown to benefit new venture performance, the mechanisms underlying this effect remain under-examined. Drawing insights from the team familiarity and cognition literatures, I posit that the prior shared experience effect is partially mediated by a team-level cognitive process—transactive memory system that enables founding teams to effectively and efficiently integrate their members' expertise and skills. Two team-level factors—task similarity and intra-team trust further strengthen the effects of transactive memory systems because they provide golden opportunities and strong motivation for team members to utilize their transactive memory systems.

http://dx.doi.org/10.1108/JSBED-02-2015-0027

Good team Is defined how? #4: Team Cognition

http://dx.doi.org/10.1111/ijmr.12055

Entrepreneurial team scholars highlight the importance of studying entrepreneurial team cognition in gaining a better understanding of why some entrepreneurial teams are capable of developing teamwork leading to successful entrepreneurial outcomes while others are not. However, in the absence of a clear definition of entrepreneurial team cognition, researchers continue to employ a vast diversity of potentially related concepts. To bring clarity to this fragmented area of research, the authors performed a systematic literature review of papers concerned with entrepreneurial team cognition published in the leading management and entrepreneurship journals over the past 20 years.

Recognizing this difficulty of studying entrepreneurial team cognition, we call on researchers to (a)cite and learn from each other’s work, (b) continue developing solid measurements, (c) integrate emergent states and processes in their research models,and (d) dare to be innovative in terms of data collection and interdisciplinary efforts.

http://dx.doi.org/10.1561/0300000055

Good team Is defined how? #5: Passion

http://dx.doi.org/10.1016/j.jbusvent.2011.11.003

We first establish a relationship between perceived passion and evaluations of funding potential, then use affective reactivity as a theoretical framework to explore how several individual characteristics of angel investors impact the relationship between perceived passion and evaluations of funding potential. The results indicate that the relationship is stronger for angel investors who are older, more intuitive, have a high openness personality, or those who are motivated to mentor. Surprisingly, the relationship weakens for angels who are extraverted and those who have a promotion-dominated regulatory focus.

http://dx.doi.org/10.1016/j.jbusvent.2012.03.003

Passion is at the heart of entrepreneurship (Cardon et al., 2005). Given the uncertain success of launching new products and services, and the challenges of developing new organizations with limited resources, passion can become a key driver of entrepreneurial action. More concretely, passion can “fuel motivation, enhance mental activity, and provide meaning to everyday work” (Brännback et al., 2006: 6). It can foster creativity and the recognition of new information patterns critical to the discovery and exploitation of promising opportunities (Baron, 2008 and Sundararajan and Peters, 2007). Moreover, passion has been associated with the ability of entrepreneurs to raise funds from investors (Cardon et al., 2009a, Mitteness et al., 2012 and Sudek, 2006), and to hire and motivate key employees (Cardon, 2008). Accordingly, scholars have pressed for a deeper understanding of passion as a central element of entrepreneurial efforts (Cardon et al., 2009b and Chen et al., 2009).

Our approach specifically focuses on entrepreneurs' experience of passion — as entrepreneurs ‘live’ the influence of this passion. As such, our work continues Chen et al.'s (2009) important theoretical focus on the affective aspects of passion, but focuses on how entrepreneurs report the passion they experience, not how others observe any potential displays of such passion. In addition, consistent with Cardon et al.'s (2009a)model of the nature and experience of entrepreneurial passion, we adopt the view that cognitive or behavioral manifestations are outcomes of the affective experience of passion, rather than part of the experience itself.

We show that the task-specific dimensions of EP (intense positive feelings toward the domains of inventing, founding and developing, and the centrality of these domains to entrepreneurs' self-identity) are conceptually and empirically distinct from one another, and from other emotions and cognitions known to play a role in entrepreneurship. Our theory and results indicate that proper measurement of entrepreneurial passion incorporates the interaction between entrepreneurs' feelings and identity centrality for each domain. We discuss the implications of our model, instrument and findings for future research on the affective components of innovation and entrepreneurship. We also develop specific guidelines for using our validated instrument in future research.

http://dx.doi.org/10.1016/j.hrmr.2008.04.001

http://dx.doi.org/10.1016/j.jbusvent.2004.01.002

Our results show that bricoleur-entrepreneurs are less likely to quit. Finally, entrepreneurs passionate about developing their firms are more likely to engage in bricolage.

doi:10.1016/j.jbusvent.2016.05.004

Good team Is defined how? #6: Devotion

http://venturehacks.com/articles/half-assed

In the long run, I think Paul Graham has it right in How Not to Die—you can’t half-ass a startup:

“The number one thing not to do is other things. If you find yourself saying a sentence that ends with “but we’re going to keep working on the startup,” you are in big trouble. Bob’s going to grad school, but we’re going to keep working on the startup. We’re moving back to Minnesota, but we’re going to keep working on the startup. We’re taking on some consulting projects, but we’re going to keep working on the startup. You may as well just translate these to “we’re giving up on the startup, but we’re not willing to admit that to ourselves,” because that’s what it means most of the time. A startup is so hard that working on it can’t be preceded by “but.””

In short, you want to prove whatever you need to prove as quickly as possible, so you can dive in full-time. Near as I can tell, there are plenty of startups that have started as “hobbies”, but you need to take it out of that phase as soon as you can. There is nothing that drives a team forward like the fear of public failure, debt, and starvation. Leap off the cliff and start building the airplane on the way down—you might be surprised with what you can pull off.

THE PROBLEM WITH PART-TIME AND DISTRIBUTED FOUNDERS2014/09/23 · by Victoria · in UC Berkeley.by Jens Lapinski, Director, Techstars LondonIn my experience, a superb way to set your company up for failure is to have part-time founders who live in different cities. When I see this arrangement, my appetite to invest drops to almost zero.

https://scalablestartup.berkeley.edu/2014/09/23/the-problem-with-part-time-and-distributed-founders/

However, I know of very few companies that have part-time, distributed founders. (Note the difference from team.) I know of a lot of startups that failed largely because of it. Doing a startup is hard. There is no need to make it even harder. I personally prefer full-time founders working from the same garage. It works.

Jun8 1693 days ago | parent | favorite | on: Joel Spolsky's Totally Fair Method to Divide Up Th...

"What if one of the founders doesn't work full time on the company? Then they're not a founder. In my book nobody who is not working full time counts as a founder."

Equity for part-time co-founder?

I am wondering what the equity structure should be for a part-time co-founder. I have a co-founder that is working part-time. He came up with the idea, helped build the MVP, financed about $30k to help build the product, brought in our first friends & family investor of $100k, and brought in our first client. I am curious what equity he should get such that there would be no red flags or deal breakers when going for institutional funding (ie, VCs).Furthermore, I should add, the part-time cofounder is continuously driving business development but doing so in a part-time capacity. He has no plans to transition to full-time even if we have enough capital to pay him market rate.

/start rant

THERE IS NO SUCH THING AS A PART-TIME CO-FOUNDER.

Sorry for shouting. But a co-founder is by definition someone who is fully committed to the company. So he/she cannot be part-time. If you really want to give that person a title, you may want to try the term TOURIST-co-founder or WANNABE-co-founder. Now about the equity:

If you give equity to a tourist-co-founder you will have to explain to investors why you did that, instead of talking about what really matters. And this will be quite hard (read=impossible). NEVER give any equity to tourists. They will make your startup un-fundable.

/end rant

https://www.quora.com/Equity-for-part-time-co-founder

Good team Is defined how? #7: non-technical founders

I believe there is a lack of clarity by both technical and non-technical entrepreneurs of the role of a business leader in the lean startup environment. I hope this post serves two purposes. One, as a checklist of skills non-technical entrepreneurs need to develop to become valuable startup team members and to be an attractive business partner for top-tier engineers. And, two, for Y Combinator and engineering-led startup CEO’s, I hope this can be used as a practical guide to help you evaluate a non-technical co-founder or business leader for your rapidly scaling product.

worldaccordingtocarp.wordpress.com

https://www.groovehq.com/blog/non-technical-founder

Learn to code

After the initial stages, even as a busy founder and CEO, it might still be worthwhile to learn how to code to a degree.

Being relatively proficient in the programming language that your team uses will help you:

● Add quick fixes or product adjustments yourself.

● More clearly communicate with your developers.

● Realize potential features not previously considered.

techinasia.com

So, my co-founder Jennifer and I were curious and surveyed developers on what would compel them to team up with a non-technical co-founder.

In contrast, idea validation was extremely important to potential technical co-founders. You, as a non-technical entrepreneur, are not selling a dream or the vision. You are selling traction.andrewchen.co

Guest Post: How I (finally) found a technical co-founder and got accepted to Seedcamp by Steven Renwick: From that moment on I devoted a significant portion of my time and energy to finding a technical co-founder. I found out firsthand just how difficult and demoralising it can be. Six months later, however, I have a technical co-founder, was a finalist in Techcrunch Disrupt Battlefield, and have just been accepted to Seedcamp. Here’s my experience…

seedcamp.com

Good team Is defined how? #8A: Team composition● Informational diversity of team correlates positively (Kristinsson et al. 2016) with idea generation.

The Hipster: Usually working their way into the mix as the designer or creative genius, they’ll make sure the final product is cooler than anything else out there. But, not only that, they’ll ensure the shade of blue used to accent the font really brings out the subtle homage to an artist from the ’70′s you’ve probably never heard of.

The Hacker: The one most likely to sit quietly through a board meeting until uttering the three sentences that answers the all important question of “how?” the new idea or initiative can be brought into reality. Resembling MacGyver with their ability to wield various lines of code or programing languages, you’ll get dizzy trying to keep up with their keystrokes.

The Hustler: They have the tendency to be the most misunderstood member of this trio. The Hipster is likely to accuse the Hustler of having sold out to the man because of their constant question of “It’s cool, but is it something our partners and clients want?” The Hacker is likely to do their best to avoid one on one conversations with the Hustler as a result of jock vs. geek episode back in high school.

https://www.quora.com/Startup-founders-what-do-you-think-of-MBAs

Designer Fund, a San Francisco outfit that looks to invest in seed-stage startups that feature designers on their founding teams, has raised $20 million in funding from unnamed individual investors, most of them successful designers looking to support the next generation. The four-year-old firm was founded by Enrique Allen and Ben Blumenfeld, who remain its only general partners. Previously, Allen was a designer at 500 Startups and Facebook’s fbFund; Blumenfeld was meanwhile a design lead at Facebook for more than five years.

The two met at the Stanford Persuasive Tech Lab, which studies how computer design can change human behavior. When Blumenfeld left Facebook to take a sabbatical, the two decided to form Designer Fund.

techcrunch.com/2016/05/03

hbr.org/2016/02https://news.ycombinator.com/item?id=47310

http://www.forbes.com/sites/andyellwood/2012/08/22/the-dream-team-hipster-hacker-and-hustler/

Good team Is defined how? #8b: Team composition

Good team Is defined how? #9: Team diversity

http://dx.doi.org/10.1016/j.lrp.2015.12.013

The findings confirm that founder team informational diversity is positively related to both idea generation and the implementation of ideas into new products or services.

http://dx.doi.org/10.1016/j.jbusvent.2004.07.001

With field interview data from 174 entrepreneurs representing 79 entrepreneurial teams, this study suggests that demographic diversity is not important for entrepreneurial team effectiveness, whereas the team process variables positively influence team effectiveness. The findings also suggest that the diversity in terms of gender, age and functional background does not contribute to the team-level cognitive comprehensiveness and team commitment.

Culturally-endorsed implicit Leadership Theories (CLTs) as a fresh perspective to advance comparative entrepreneurship research. We find strong and consistent effects of CLTs on individual entrepreneurship. These highlight that entrepreneurs thrive in cultures that do not merely strongly endorse desirable charismatic leaders, but are also able to tolerate at least some of the less desirable self-protective leadership behaviors. Our study refines theorizing on culture and entrepreneurship by considering both distal and proximal cultural determinants of entrepreneurship, as well as cultural values and practices. It contributes to a better understanding of the mechanisms through which cultural values influence entrepreneurship.

Notes: Statistics generated using 560,133 individual-level observations from GEM and 42 countries.a Dependent variable given as percent of the adult population; Source: GEM (42 countries, 2001–2008).b CLTs and cultural values obtained from the GLOBE study.

Philippines scoring the highest, while France scoring the lowest on Entrepreneurship

Good team Is defined how? #10a: Team Size

Team size statistics from US startups. 40% of teams had prior professional relationships and 17% family ties. – Each such relationship added a 30% likelihood of founder departure.

“A friendship built on business can be glorious, while a business built on friendship can be murder.” [Page 104] - Noam Wasserman:The Founder’s Dilemmas

http://blog.oxygenstartups.com/startup-team-sizes/

A Co-founder team size of three is more likely to be successful, stands a higher chance of gaining investment and generally gets better exits. If one of those three is female, then you have even better chances. Once you get beyond four founders you have diminishing returns and it can even have a negative effect.

http://conference.iza.org/conference_files/EntreRes2011/tamvada_j3400.pdf

The empirical results suggest that the size of the entrepreneurial team has an inverted U shape relationship with firm performance indicating the existence of an optimal team size for entrepreneurial firms

Figure 1 presents a plot for a one year period growth rate in employment and Figure 2 presents a plot for a two year period growth rate in employment. A striking observation is that, consistent with the hypothesis 1(a), both plots show that teamsize has a non-linear inverted U shaped relationship with the growth of entrepreneurial firms. Both plots suggest that firm growth increases as entrepreneurs add team members until they form a team of three entrepreneurs.

https://www.quora.com/In-general-terms-what-is-the-ideal-size-and-make-up-of-a-team-for-a-pre-revenue-SaaS-startup

Christoph Janz: In my experience the ideal team size is three. The second best option is two, and the third best option is one, four or five. Why? To begin with, founders are incredibly productive and usually work for relatively little cash, so a 3-person founder team simply gets more done – faster and at lower costs – than a 2-person team or a single founder. This can be a huge advantage, especially for a bootstrapped startup that can't afford to hire many people.

Brian de Haaff: Much smaller than you think (and most people think they need funding for). The ideal number is TWO. This gives you the chance to have one person focused on the technology and one person focused on finding customers to give you feedback about the technology. Now, this assumes that you both are experienced and performing at a very high level.

Good team Is defined how? #10b: Team Size

The effect of entrepreneurial team size on new venture performance is r = .102, indicating a positive and significant effect. As predicted in hypothesis 3, the positive aspects of a large team may be particularly valuable for new ventures; larger entrepreneurial teams provide the new venture with more access to information during periods of new venture growth, which are associated with an increase of information processing needs (Certo et al., 2006).

The performance results of small teams can be supported by a behavioral integration perspective. Behavioral integration describes the degree to which a top management team engages in mutual and collective interaction (Hambrick 1995). A behaviorally integrated top management team synchronizes its social and task processes better, including quality of information exchange, collaborative behavior, and joint decision making (Lubatkin, Simsek, Ling, & Veiga, 2006). A smaller team size would facilitate higher levels of behavioral integration, which would in turn positively influence firm performance (Simsek et al., 2005).

Interestingly, our findings contradict a recent study that suggests an inverted U-shaped relationship between entrepreneurial team size and effort performance (Backes-Gellner, Werner, & Mohnen, 2015, see lef), indicating that more research on additional more intermediate outcomes may be necessary.

http://dx.doi.org/10.1007/s11573-014-0749-x

The key findings of our paper are helpful for understanding why start-up teams are typically neither very small nor very large and how incentive problems may drive the ‘‘optimal’’ team size of founders. Our theoretical and empirical results provide an additional explanation for which factors determine effort levels in founder teams. We show that not only does the negative effect of free-riding increase with team size, but also that the counterforce peer pressure generates a positive effect on effort in start-up teams.

Good team Is defined how? #11: Cross-culture factor

http://dx.doi.org/10.1016/j.jbusvent.2016.03.003

We argue that cross-cultural experience increases the ability to recognize entrepreneurial opportunities. This argument is supported by two complementary studies—a longitudinal quasi-experiment and a priming experiment. We find convergent evidence that cross-cultural experience increases a person's capabilities to recognize particularly profitable types of opportunities by facilitating the application of cross-cultural knowledge for the discovery of arbitrage opportunities and creative recombination.

The vast majority of the 69 countries surveyed report higher entrepreneurial activity among first-generation immigrants than among natives, especially in growth-oriented ventures. This pattern also extends to individuals who relocate temporarily. A disproportionally large number of individuals who have studied or worked abroad as students or expatriates choose an entrepreneurial career path once they return to their country of origin (McCormick and Wahba, 2001 and Saxenian, 2005). Overall, the link between international mobility and entrepreneurial behavior appears surprisingly stable and robust against contextual variations. Given the high importance of entrepreneurship as a vehicle for economic growth (Audretsch and Thurik, 2001), increasing migration figures, with currently over 230 million temporary and permanent migrants worldwide (United Nations, 2013), and a heated public debate on the economic consequences of migration, it appears essential to understand the root causes of this phenomenon.

Our core argument is that interacting with a different culture enhances the individual's knowledge base about products, services, and customer problems, which is beneficial to entrepreneurial opportunity recognition (Shane, 2000).

Jim Goetz, Sequoia Capital“Immigrants, the underdogs are the most interesting to back”

Good team Is defined how? #12: Trust and respect

https://www.youtube.com/watch?v=ReRcHdeUG9Y

In this in-depth talk, ethnographer and leadership expert Simon Sinek reveals the hidden  dynamics  that  inspire  leadership  and trust. In biological terms, leaders get the first pick of food and other spoils, but at a cost. When danger is present, the group expects the leader to mitigate all threats even at the expense of their personal well-being. Understanding this deep-seated expectation is the key difference between someone who is just an "authority" versus  a true "leader."

https://www.youtube.com/watch?v=llKvV8_T95M

In this wide-ranging talk, ethnographer and leadership expert Simon Sinek discusses the importance of trust, authenticity, and meaning. Sinek argues that as individuals and companies, everything that we say and do is a symbol of who we are. And it is only when we communicate our beliefs authentically that we can attract others to our cause, and form the bonds that will empower us to achieve truly great things.

● Trust among the team is in the end the most important thing to pay attention. People will figure out in the end if you are not authentic and if you are not willing to show example to others.

Good team Is defined how? #13: Founder dating

https://youtu.be/_WEEGCLt5LQ?t=35m30s

https://www.quora.com/How-do-I-find-a-co-founder-partner-for-my-startup-or-should-I-hire

https://startup88.com/daily-startup-tip/2015/09/19/picking-a-co-founder-is-like-marriage-without-the-sex/19494

http://www.inc.com/michael-lazerow/start-up-co-founders-marriage-without-sex.html

“Be as diligent in picking a co-founder as you are in picking a spouse. Does the other person share your values and work ethic? Can he disagree in a respectful way? Can she put up with your biggest weaknesses without trying to change who you are? If there's any doubt, walk away immediately.”

Good team Is defined how? #14: ’CULTURE’In the end, it is the team that face the customers and the investors, and they that determine your success

https://youtu.be/EMIa3XhQpnk?t=1h21m5s

Salsify: “When you think about culture, think about what you are not. If no one is willing to self-select out from your culture, you do not have a culture. The talent is not enough if there is no cultural fit.”https://youtu.be/EMIa3XhQpnk?t=1h26m07s

Doug Cole, General Partner, Flagship Ventureshttps://youtu.be/6WqK6MO6Gq8?t=21m51s

“The number one thing that we invest in is people. It is all about the people!”

Good team Is defined how? #15: NetworksGather talented advisors and resources around the core team

“Often I am convinced when entrepreneur walks in with a good board of directors and scientific advisors demonstrating their capability of collecting very talented people”

https://youtu.be/6WqK6MO6Gq8?t=1h10m18s

Terry McGuire, Co-Founder and General Partner, Polaris Venture

“The best entrepreneurs are not just the smartest, they are the cleverest, i.e. they find ways to do things that other people cannot do. Like collecting great resources around them.”

https://youtu.be/6WqK6MO6Gq8?t=1h4m19s

Good team Is defined how? #16: Creativity

https://youtu.be/7yAlJHpavUI?t=39m9s

Darren Dahl: “Watching people, watching yourself, first key to creativity. People that travel and see other cultures, are generally more creative”

2) They observe everything.3) They work the hours that work for them.4) They take time for solitude.6) They seek out new experiences.8) They people-watch.10) They view all of life as an opportunity for self-expression.14) They surround themselves with beauty.

http://www.huffingtonpost.com/2014/03/04/creativity-habits_n_4859769.html

Creativity happens best at the intersection of disciplines. Most breakthrough discoveries occur when two or more disciplines collide. Most people are afraid of collisions, but creative collisions are to be encouraged, because they allow you to view a problem from a new perspective.

http://www.businessnewsdaily.com/5813-creativity-in-entrepreneurship.html

In researching this question, I found a book by Bryan Mattimore, “Idea Stormers: How to Lead and Inspire Creative Breakthroughs,” which outlines well eight attributes of the most creative people, which seem to match the mind-sets of some of the best entrepreneurs I know. Investors look for these in the people they fund, and you should be looking for them in yourself.

The most creative entrepreneurs create more value and wealth, not only in physical products and services, but also in their intangible assets such as their brand, reputation, network and intellectual property. Of course, they are always looking to free up time and money for their next big idea. That’s really the best indication of a true entrepreneur.

http://www.businessinsider.com/8-startup-team-attributes-that-maximize-creativity-2013-11?IR=T

https://hbr.org/2009/12/the-innovators-dna

The Psychology of Entrepreneurship

http://dx.doi.org/10.1111/apps.12073

This article provides a narrative review of psychology of entrepreneurship research published in leading psychology journals, based on which we develop an organising framework for future psychological contributions to this field. Furthermore, we introduce the manuscripts collected in this special issue. Our review identified five research areas, broadly corresponding with basic psychological domains, namely personal differences; careers; health and well-being; cognition and behaviour; and leadership; as well as three cross-cutting themes: gender issues; genetic and biological foundations; and context. With the aim to stimulate integration across different approaches and disciplines, we propose a framework to understand how psychologists can offer innovative contributions to the multi-disciplinary entrepreneurship literature. This includes a focus on the entrepreneur embedded in and in interaction with his or her immediate and wider context; attention to different types of entrepreneurs; and a focus on dynamic within-person processes evolving over time.

http://dx.doi.org/10.1111/apps.12071

http://dx.doi.org/10.1111/apps.12054

http://dx.doi.org/10.1111/apps.12061

Founder control The rich vs. King tradeoff

http://dx.doi.org/10.1002/smj.2478

Does the degree to which founders keep control of their startups affectcompany value? I argue that founders face a “control dilemma” in which a startup’s resourcedependence drives a wedge between the startup’s value and the founder’s ability to retain controlof decision making. I develop hypotheses about this tradeoff and test the hypotheses on a uniquedataset of 6,130 American startups. I find that startups in which the founder is still in controlo f the board of directors and/or the CEO position are significantly less valuable than those in which the founder has given up control. On average, each additional level of founder control (i.e.,controlling the board and/or the CEO position) reduces the pre-money valuation of the startup by 17.1–22.0 percent.

startuplessonslearned.com/2012/04

Cited by 85 articles

http://dx.doi.org/10.2139/ssrn.2717124

http://dx.doi.org/10.2139/ssrn.2738835

“By implementing a Coarsened Exact Matching (CEM) algorithm, we generate causal evidence showing not only that prominent-investor participation increases the incidence of CEO replacement, but that these successor CEOs are drawn overwhelmingly from one pool: Outside candidates with previous CEO experience at other investor-backed startups. We provide additional causal evidence demonstrating that CEO replacement produces superior company performance, and that this performance effect is enhanced when the new CEO comes from outside the company, and boosted even more when the individual has prior startup CEO experience. We demonstrate that these performance-increasing effects are driven specifically by CEO replacements caused by prominent-investor participation, and that the involvement of prominent investors produces large independent performance premiums in startups.”

Entrepreneurial decision making

http://dx.doi.org/10.1016/j.jbusvent.2008.02.002

Differences between effectual and causal logics from Sarasvathy (2001).

http://dx.doi.org/10.1080/08985626.2016.1155742

http://dx.doi.org/10.1016/S0883-9026(96)00003-1, Cited by 2074 articles

http://dx.doi.org/10.1007/s11365-015-0357-4

Failures in Entrepreneurship

http://dx.doi.org/10.1016/j.jbusvent.2015.08.001 http://dx.doi.org/10.1016/j.jbusvent.2015.09.002

Fear of failure can dominate the choices of individuals. We model its role in the decision to become an entrepreneur and subsequent investments made in pursuit of success using the framework of loss aversion. We show that when an individual's threshold for success is sufficiently high, fear of failure motivates additional investment. When the threshold for success is equal to the foregone outside option, on the other hand, fear of failure is always de-motivating. Finally, regardless of the success threshold, fear of failure is negatively associated with entry into entrepreneurship. Our findings highlight the importance of the interaction between the degree of fear of failure and the aspirations of the would-be entrepreneur

Our model adds to the growing literature incorporating behavioral factors to explain entrepreneurship. The extant literature has mainly emphasized over optimism as a key selection force (Parker, 2006) though recent studies find evidence that personality traits (Frese and Gielnik, 2014) are also significant predictors of entrepreneurial entry and success . There is also increasing recognition of the importance of loss aversion in explaining choices. For instance, Langer and Waller (2003) observe that financial contracts produce differing effort incentives depending on the loss aversion of the entrepreneur entering into the contract. They derive optimal moral hazard contracts for financiers under these circumstances. Holmes et al. (2008) offer a theoretical framework for how loss averse entrepreneurs evaluate opportunities

Medical Accelerators Europe

http://bl.ocks.org/BenHeubl/raw/d781122f3c36e4fd823e/

According to Bart Collet, there's a momentum building in EU countries. And each country has different ways to support health tech entrepreneurs. Below is a list of the main health tech accelerator locations and programs (with thanks to Healthstartup.EU)

London, UK

Healthbox Europe launched in 2012 and received an overwhelming response of 200 applications from health technology start-ups.

Digital Greenwich, an accelerator program that aims at giving business support to digital SMEs who are working on innovative products, offers help to health technology companies (among other areas such as ‘digital home’).

The Young Foundation offers a four-month program with the goal of supporting start-ups in health tech and other areas like education and housing.

Wayra is an accelerator run by the telecommunication giant Telefonica, and offers funding, mentoring, office space, networking and support in business partnerships to companies such as precision medicine start-up Geneix LTD

Berlin, Germany

EyeFocus launched in Berlin last year to concentrate on the acceleration of start-ups in eye care. In a Techcrunch article, it’s claimed that this is the world’s first eye-care accelerator. It has given €20,000 Euros to start-ups and offered founders three-month office slots at the Rainmaking Loft in Berlin.

XL Health offers help in funding, mentoring and networking. The organisation launched in 2012 and currently has a portfolio of four companies including Harimata – a mobile monitoring application – and MySugr GmbH – a suite of apps to help diabetes patients manage the condition, which both received investment in 2014.

Stockholm

Concerned with the lives of the elderly, the Modern Aging programme was a Stockholm-based initiative run by Access Health International (a non-profit think tank and advisory group). Modern Aging Seed funding included 50,000 SEK or around 5,000 Euro and produced a free book Modern Aging: A Practical Guide for Developers, Entrepreneurs, and Startups in the Silver Market.

https://www.startupbootcamp.org/accelerator/digital-health-berlin/

http://eyefocus.co/

What is OneStart?

OneStart is the world’s largest life sciences and healthcare startup accelerator program - welcoming ideas focused on the improvement of human health including; therapeutics, diagnostics, software, devices, research tools, and more.

Building team beyond founders #1

http://dx.doi.org/10.1111/jems.12176 5. Invite Them, Truly, to be Part of the Team Once you hire someone, you have a choice: You can consider him an employee, in the sense that you issue him directives, evaluate his work, and compensate him for his time. Or, you can consider him a member of the team that has chosen to dedicate his time to making your vision a reality, including learning alongside you and experiencing the ups and downs of your venture. And the latter is one of the main reasons why people join start-ups in the first place. We made it a point from day one to show Shane that he was part of our team, and that intention has already paid dividends.

6. Design an Onboarding Process While we did some things right during the hiring process, there are others we would have done differently. For example, the extent of our “official” onboarding for Shane was a two-hour conversation on his first day on the job. Other than that, we tried our best to show our culture and expectations over the course of many smaller conversations. And though the result has been fine, we’d definitely do it differently next time—we would put together a series of sessions ranging from our culture and intent to company history and strategy. At the very least, having all these things spelled out means that everyone who joins the company will have the same experience.

forbes.com/sites/dailymuse/2012/04/04

8. Consider personality Someone can look great on paper, deliver all the right answers and have the references to back them up… but if you don’t personally jive with them, think twice about hiring them. Again, while working in close quarters and under demanding circumstances, personalities and relationships are intensified.

If you don’t simply like someone during their interview, chances are you may never get along – and in an environment where you’re relying on others professionally, financially, and probably to some level emotionally, that just won’t work.

9. Take care of the business backend Organize business, financial and legal obligations right away. Once you’ve hired someone, don’t wait on getting all the necessary paperwork, like legal contracts, benefits coverage and payment information, in order. Not only is it just the right thing to do, but will protect you from potential liabilities, confusion and hassle.

https://foundersgrid.com/hiring-first-employee/

http://dx.doi.org/10.1016/j.econlet.2013.09.021

Using data from the EU-15 countries, our results show that the strictness of employment protection legislation is negatively related to both these types of decisions, and hence, to labour mobility among the smallest firms.

10 Feb 2016, http://dx.doi.org/10.1080/08276331.2015.1132514

http://dx.doi.org/10.1080/08276331.2010.10593495

Building team beyond founders #2

Boris Dinkevich: blog.itlater.comhttps://news.ycombinator.com/item?id=2949323

amirhhz 1831 days ago: <epiphany> A small non-technical founding team looking to hire the best technical person they can is effectively looking for a co-founder, not an employee. So you're right, the coder who would be willing to consider such early involvement in a project is probably fairly entrepreneurial and will lose out if he is taken on as anything other than an equal co-founder. </epiphany>

gamble 1831 days ago: I was in a similar situation to the OP about ten years ago - 21 years old, very little experience, first technical employee at a company founded by two doctors, low pay, meagre equity given my responsibilities - and honestly, in retrospect I think they should have taken on a full-fledged technical co-founder with more experience and full equity instead of me. I did pretty well on the technical side, all things considered, but I didn't have the knowledge, confidence, and authority to assert myself when the founders pushed the product in unmarketable and technically unrealistic directions. We wasted far too much time writing code that did more to resolve disputes between the founders than to address the needs of potential customers.

As a result of that experience, I'm extremely skeptical of companies with older non-technical founders that hire inexperienced programmers as their first technical employees. It usually means they just want a code monkey to implement their brilliant ideas, and don't understand the engineering and financial challenges inherent in any startup.

fatalerrorx3 1830 days ago: I do find that some of the co-founders "ideas" are technically not feasible and this is causing some distress, when trying to explain it to them how things work. Both of the 2 co-founders are mid-to-late 30s, one is a doctor and one had successfully built and sold a company (although in an entirely different industry, a consultant recruiting company actually). Both of the founders have limited technical knowledge and I don't think they understand the iterative process that programming is, they don't understand about refactoring code and rewriting/etc...and so as soon as I create a new feature, they already want to move onto creating another feature without refining what we have

wheels 1831 days ago: Another way of working things out is figuring out what the probable return on the stake being given is, e.g. something like, say:

• Employee given 1%

• Two additional funding rounds at 30% dillution each bring that to 0.49%

• In a $30 million exit the employee will get $147,000

• Probability of an exit at $30m of 10% (somewhat generous, but let's assume that the company has already raised an angel round and that's being used as a filter)

• So the adjusted value, including probability of failure, of those options is just $14,700

You can adjust the math to fit the startup at hand, but it's generally a reasonable formula for evaluating the value of options vs. salary. In general if you want to join a startup as a first employee you should either push for a larger slice, a near-industry-standard salary or do it for the experience (say, if you're interested in starting a startup of your own down the line).

amirmc 1831 days ago: Interesting that your figure seems to be similar to the number another commenter came up with (assuming this guy is as good as the founders) What do you think of his reasoning?

"What he should do if he actually wants to work on the startup: First, he needs to value his contribution to the company over the next 4 years appropriately and put a number on his "sweat equity". Let's say his market salary is $100,000 and he's being paid $50,000. Now add to his base salary: benefits (15% for health insurance, 401k matching), job-loss risk (25%, since typical severance offers are 1/4 tenure at current salary), career risk and opportunity cost (15%), and overage hours (30%, assuming a 50-55 hour work week). That's $185,000 per year. Take that, less the $50,000 he's making, and his sweat equity is $135,000 per year. Over 4 years, that's $540,000. The company's valuation is $2.5 million, "pre" to his contributions. He should be getting about 16% of the company, assuming he remains for 4 years. This number seems high, but if he's there after 4 years he will have been there almost as long as the founders, so it's about right."

Whether you are the one hiring or joining, you should understand both sides of the table

bothsidesofthetable.com, Mark Suster

stockoptioncounsel.com

03 Oct 2014 Analyzing AngelList Job Postings, Part 2: Salary and Equity Benchmarks A few weeks ago, I did a basic analysis of AngelList job postings. That analysis looked at attributes like job locations, vesting schedules, and commonly requested skills.

For employee #1:● 50th percentile salary range is $80k - $120k● Hire #1: 2% - 3% of equity

Building team beyond founders #3When company starts to grow, you most likely need to hire an external CEO

“Not possible to recruit a CEO without giving him a board seat”https://youtu.be/fb5Lm_BbR_E?t=31m23s “If you need to bring a professional outside CEO, make sure that

they share your passion!”https://youtu.be/_WEEGCLt5LQ?t=33m38s

http://reidhoffman.org/if-why-and-how-founders-should-hire-a-professional-ceo/

https://techcrunch.com/2012/11/11/signs-it-might-be-time-to-consider-hiring-a-ceo/

Team Conclusion● Important to align the interests (e.g. “agency theory” within team as well

Eisenhardt 1989) of all team members towards the same goal, whether they are employees or founders.

– Do you have an excited core team with commitment to succeed?

– Do you have 'outsiders' who want to maximize just their personal gain?

– Do you have freeriders that do not really commit enough?

● Important to have informational diversity, i.e. hacker/hipster/hustler or developer/scientist/designer, or cross-disciplinary team of three engineers with one being a medical doctor also, when being into design and the third into business development.

● Prepare for the incentive alignment issues especially with first hires as they might not be truly committed to make the business thrive just because you offer them equity options.

Investor Statistics

Entrepreneurial Finance Research Intro

http://dx.doi.org/10.2139/ssrn.2740453

Entrepreneurial finance literature is largely segmented. Different streams of the academic literature between entrepreneurship and finance have become segmented for reasons of theoretical tractability and data availability. In this paper, we discuss the origins and the effects of segmentation by source of financing, by data source, by field, and by country under investigation. We provide a number of examples, mainly from studies on Venture Capital, Initial Public Offerings, and Crowdfunding. We conclude with future research directions, with the hope to help de-segmenting research on entrepreneurial finance.

http://dx.doi.org/10.1016/S0929-1199(03)00059-2, Cited by 380 articles

Oxford Journals - Social Sciences - Review of Financial Studies -Volume 27, Issue 1 - Pp. 1-19

This article appears in :Special Issue: Entrepreneurial Finance and Innovation

http://dx.doi.org/10.1093/rfs/hht063

In conclusion, the articles collected in this special issue have considerably enhanced our understanding in two broad areas. First, they have enhanced our understanding in regard to the role of venture capitalists, angels, and other intermediaries (such as commercial banks) in financing new firms and fostering their future growth. Second, they have improved our understanding in regard to the effect of financing by various intermediaries, the ownership structure of entrepreneurial firms, and the legal environment in which these firms operate, on product market innovation by entrepreneurial firms

Crowdfunding for medical startups

dcinno.streetwise.co/2016/02/04

OurCrowd wants to change that. The Israel-based equity crowdfunding firm has already raised $220 million for 93 companies in just three years and in doing so has opened up early-stage investing for thousands of investors who might otherwise have been shut out of the club.

angelMD, a crowdfunding platform that connects physicians and leading medical startups, has stated the number of medical startups with live profiles on the site now exceeds 100. Startups listed on the site must be a medical product or product enabled service, must be a legal entity and be ready to share their story. angelMD selects investment candidates from those listed on the site seeking capital. Based in both San Francisco and Seattle, Washington, angelMD has incorporated the participation of leading physicians from all over the United States to source and evaluate opportunities.

http://www.crowdfundinsider.com/2014/03/https://www.seedrs.com/

https://experiment.com/

https://healthfundr.com/

https://www.springboardequity.com/

wired.co.uk

http://www.medstartr.com/

medtechengine.com

ICOs ”Crowdsourced Venture capital” 2.0 #1Are ICOs the new Venture Capital?By Cyril Bertrand, XAnge #VC funds - @siparex group - Proud supporter of #disruptive #entrepreneurs in #digital hightech and #impact tech! Sep 5 2017https://medium.com/xangevc/are-icos-the-new-venture-capital-8f9bcc5c3220

ICOs or Initial Coin Offerings

Clearly, ICOs may save a lot of headaches to entrepreneurs, compared to the usual VC fundraising processes:● shorter roadshows — ICOs need to be carefully prepared weeks or months in

advance, but their execution happens in a matter of hours● no board member / governance — no shareholder agreements, no board, no

SEC IPO legal documentation● no liquidation pref, no liquidity clause — none of the usual VC protections● no power law/fund size VC excuses — ICOs can be as small or as big as the

project makes it necessar

In summary, this industry is nascent, wild and technical. It shows early signals of having the potential to be big — big hopes, big risks. Should that be the case, it would enforce a new level of selection on the traditional VC funds — some will go belly up, but some will come out even stronger, with a more crispy message about the value they bring to the startups — beyond money.

http://www.wired.co.uk/article/what-is-initial-coin-offering-ico-token-sale

https://www.theguardian.com/technology/2017/jul/10/initial-coin-offerings-cryptocurrency-next-high-risk-big-money-maker

Vanderbilt University Department of Economics Working Papers 17-00008

Blockchain and the Economics of Crypto-tokens and Initial Coin Offerings

John P. Conley Vanderbilt Universityhttp://www.accessecon.com/Pubs/VUECON/VUECON-17-00008.pdf

ICOs ”Crowdsourced Venture capital” 2.0 #2ICOs or Initial Coin Offerings

https://news.bitcoin.com/ico-hype-attracts-investors-skeptics-financial-regulators/

https://www.forbes.com/sites/ktorpey/2017/08/22/founder-of-defunct-bitcoin-securities-exchange-warns-against-ethereum-ico-hype/#27bf9781453a

https://qz.com/1065607/dont-believe-the-hype-about-the-tremendous-returns-on-initial-coin-offerings/

http://www.ibtimes.co.uk/token-summit-2017-blockchain-engineers-say-avoid-ico-hype-1623398

https://techcrunch.com/2017/09/04/chinas-central-bank-has-banned-icos/

Angel investor Decision model

We test our propositions on a sample of nascent ventures seeking business angel funding in the New York metropolitan area. Our results suggest that business angels prefer investment proposals characterized by the moderate use of positive language, moderate levels of promotion of innovation, supplication and blasting of competition, and high levels of opinion conformity.

http://dx.doi.org/10.1016/j.jbusvent.2013.08.001

The rejection reasons generally refer to market and execution risk; this finding holds for every step of the process for proposals that pass the pre-screen. Angel group members focus more on market and execution risk than agency risk, similar to venture capitalists. Inexperienced entrepreneurs are rejected for market and product reasons. Decision-making by the studied angel group members differs from that generally described for independent angels.

http://dx.doi.org/10.1016/j.jbusvent.2015.04.002

We find that angels value passion in addition to tenacity, as well as both together, when evaluating entrepreneurs for investment. We also find that the entrepreneurial experience of angels positively moderates the value provided by passion and tenacity.

http://dx.doi.org/10.1016/j.jbusvent.2016.05.002

We show that contrary to the majority of past research that suggests they should, angel investors do not use a fully compensatory decision model wherein they weight and score a large number of attributes. Rather, they use a shortcut decision making heuristic known as elimination-by-aspects to reduce the available investment opportunities to a more manageable size.

http://dx.doi.org/10.1016/j.jbusvent.2009.09.002

http://dx.doi.org/10.1080/08985626.2015.1066875

There is some evidence for the use of heuristics in the decision making process, and for the critical role played by vicarious learning from the experience of others. Learning in the individual angel decision making process is a social as well as an individual phenomenon.

Family office money

http://dx.doi.org/10.1038/nbt0613-473

http://dx.doi.org/10.1007/978-3-319-30424-3_7

Via the platform I head https://rockthepost.com we see angel investors, early stage VCs, family offices and other wealth management firms participating on some of the startup offerings that are hosted via the platform. https://www.quora.com/Do-family-offices-invest-in-startups

A family office is a full balance sheet holistic wealth management solution for an individual, they come in many forms and shapes and sizes but the major two types are single and multi-family offices. Single family offices serve one family or individual while multi-family office has many clients, some have up to 500 clients with $10M+ net worth each.

https://www.quora.com/What-exactly-is-a-family-office

http://www.famcap.com/articles/2016/8/17/why-startups-love-family-offices

https://www.entrepreneur.com/article/245399

Corporate / strategic funds #1

According to CB Insights, 30% of fundraising dollars in Q1 2014, was from strategic (or corporate) investors with corporate VC funds participating in 15% of all rounds. The discussion invariably comes up at Board Meetings when a fundraising process is begun. Legendary VC Ted Dintersmith of CRV once said to me, about taking capital from strategics, “Be careful. You’ll have sold your company. You just won’t know it.”https://www.cbinsights.com/blog/corporate-strategic-investors-startups/

In 2009, then VP at Peacock Equity (Disney) and current Lightbank venture partner Paul Lee, argued that there were benefits for startups taking strategic capital in terms of operating partnerships with the corporate investor, industry expertise, and access/visibility of your company at a new potential customer. Lee cited an interesting study that showed that “startups with CVC (corporate venture capital) backing obtain higher valuations at the IPO than those without.”

https://gigaom.com/2014/12/23/raising-money-venture-capital-versus-strategic-partners/

Different kinds of investors bring different kinds of value to the table. Striking the right balance between them is vital for any young business.

At JustPark, I’ve now had exposure to four different types of investor: a corporate investor, an angel investor, a venture capital firm, and currently the crowd – the thousands of people who have invested in our record-breaking equity crowdfunding campaign, now live on Crowdcube. Each type of investor can play their part – and raising money from a combination of them can be more powerful still.

cityam.com

http://theventurelab.blogspot.co.uk/2015/11/sourcing-strategic-investors-part-i.html

creator.wework.com

quora.com

http://www.hec.edu/Knowledge/Finance-Accounting/Corporate-Finance

Corporate / strategic funds #2

http://dx.doi.org/10.1111/etap.12105

http://dx.doi.org/10.1016/j.respol.2005.01.017

http://dx.doi.org/10.1287/orsc.1080.0386

http://dx.doi.org/10.1002/smj.2404

http://dx.doi.org/10.1016/j.jbvi.2016.04.002

http://dx.doi.org/10.1016/j.jbusvent.2015.04.006

http://dx.doi.org/10.1016/j.bushor.2016.01.008

Corporate venture funds are playing an increasingly important role in supporting life science commercialization.

Corporate venturing—the practice of establishing a unit of a corporation with the mandate to make strategic investments in entrepreneurial ventures—has emerged as one of the most prominent strategies for opening up innovation to external ideas and knowledge in the life sciences. Venture arms of pharmaceutical and large biotech companies leverage capital surplus generated through traditional revenue streams to create options for future product pipelines, enable access to innovative compounds and share the costs of risky early stage development with external partners. ...

Based on this study, we identify six new principles of corporate venturing that reflect past learning in this field by pharmaceutical firms and an improved understanding of biotech ventures. We also propose criteria that biotech entrepreneurs can use to judge the appropriateness of partnering with a corporate venture fund.

http://dx.doi.org/10.1038/bioe.2012.9

Government Venture Capital #1

http://dx.doi.org/10.1016/j.jcorpfin.2014.10.016

http://dx.doi.org/10.1016/j.respol.2015.02.002

VCs are perceived by governments as a key ingredient for achieving the objectives set by the Europe 2020 political agenda, especially in terms of innovation and growth. The relationship between innovations and venture capital has been the subject of an extensive literature. On one hand, the research suggests that VCs are attracted by innovative companies On the other hand, the literature shows that inventive and innovative activity is positively affected by the presence of Vcs.

Our findings indicate that governmental venture capital investors (GVCs), as stand-alone investors, have no impact on invention and innovation. However, GVCs boost the impact of independent venture capital investors (IVCs) on both invention and innovation. We conclude that GVCs are an ineffective substitute, but an effective complement, of IVCs. We also distinguish between technology-oriented GVCs (TVCs) and development-oriented GVCs (DVCs). We find that DVCs are better at increasing firm’s inventions, and that TVCs, combined with IVCs, support innovations.

The econometric results show that VC backing has a strong positive impact on new technology-based firms (NTBFs)’ participation in EU-funded R&D partnerships, but the magnitude of this effect rapidly decreases with NTBFs’ prior experience of this type of partnership. Moreover, the magnitude of the impact of VC backing considerably differs depending on the type of investor with bank and government VC exhibiting the strongest positive effects

Hazard rate of NTBFs’ participation in EU projects: effect of Independent VC (IVC) -,

bank-affiliated VC (BVC)- and governmental VC (GVC) backing.

Government Venture Capital #2

http://dx.doi.org/10.1016/j.technovation.2012.11.007

Government venture capital (GVC) funds have been a common policy initiative in European countries to overcome funding gaps in the promotion of early-stage ventures. In this work, we focus on the performance of such government funds. We compare the importance for the firm's development of post-investment, value-added activities by GVC firms and independent venture capital (IVC) firms.

We use a unique data set based on the results of a survey addressed to young high-tech VC-backed firms from seven European countries. The survey gauged the importance of the contribution by the first lead investor in a variety of activity areas, as assessed by the investee companies. Attention was paid to potential adverse effects of the post-investment engagement of investors.

Using a composite indicator of the value added, we find no statistically significant difference between the two types of investors. However, the profiles of value added differ across investor types, and, in particular, the contributions of IVC funds prove to be significantly higher than those of GVC funds in a number of areas, including the development of the business idea, professionalisation and exit orientation.

Government Venture Capital #3

To generate more interests in decision-making models aimed at assessing the commercial viability of candidate start-up businesses in a government-run venture capital, this study (1) provides a modified form of the Strategic Technology Evaluation Program (STEP) called G-STEP as a new selection criteria for a government-controlled venture capital scheme (2) adopts a comprehensive intuitionistic fuzzy TOPSIS framework with a sensitivity analysis component for the assessment of early stage but high potential tech start-up firms and (3) demonstrates its applicability with a numerical example assessing the commercial potential of start-up businesses in a Government technology venture capital program. The proposed decision-making framework could be useful in the assessment and selection problems in other government priority areas.

http://dx.doi.org/10.1007/s11187-015-9690-9

Source VICO dataset and OECD (2013)

This paper offers a formal explanation of why under some specific conditions, the best performing companies may self-select out of the VC market. We develop a two-step matching model between a VC investor and N heterogeneous entrepreneurial ventures. Our analysis shows that entrepreneurial ventures willing to be in the market for VC when such a market is thin are not necessarily the best performers but instead represent firms with high growth potential and low resources. In this context, the intermediation role of VC is better described asfrog-kissing (i.e., select the frog that can be turned into a prince) than as cherry-picking (i.e., select the prince).

Finally, our model also illustrates a mechanism through which GVC may benefit a thin VC market. Specifically, we show that a non-competitive GVC will increase the deal flow and the expected profits of IVC even if it is less effective than IVC in its treatment effect and in its ability to screen the companies based on their characteristics. This result suggests that to the extent to which it does not compete with IVC investors on the same deals, a GVC may increase the profitability of VC investments in a region, possibly attracting additional investors and triggering the virtuous cycle of VC market development.

http://dx.doi.org/10.1007/s40815-016-0141-9+ http://dx.doi.org/10.1108/MD-06-2015-0226

Academic Startups/spinoffs

http://dx.doi.org/10.1007/s10961-016-9476-5

In the entrepreneurial economy of today, it is not the multinational firms which are the predominant driver in the creation of new knowledge, but the individual entrepreneur. In this paper, we study the performance of academic spin-offs that received public funding from the German EXIST Business Start-Up Grant, a support program which aims at increasing the number of innovative start-ups from academia

Using a control group matching approach, we provide evidence that these start-ups are smaller by two full time equivalent employees, generate 1.7 times higher losses and have a nearly three times lower return on capital than science-based entrepreneurial firms with comparable characteristics in the first 5 years after foundation. We interpret these results to be primarily caused by the inferior financial contracting structure of the program compared to private venture capital funding and by the resulting adverse selection and incentive effects on the entrepreneurs. The evidence calls for rethinking public interventions in a national system of entrepreneurship.

http://dx.doi.org/10.1007/s11187-016-9756-3

While our investigation supports an emerging literature that finds academic entrepreneurs are typically limited by their own homophilous social networks, we also find that spinoff success relies upon academic and non-academic contacts who connect faculty and students to other social networks important to spinoff success. We investigate how by creating a taxonomy of social network evolution among spinoffs; the results show that the contributions of universities depend on the existence and interrelationship of loosely coordinated, heterogeneous knowledge intermediaries guided by a strong collective ethos to encourage and support academic entrepreneurship.

Biases in venture capital decision making #1

On the surface, it appears that investors have everything under control, exerting confidence in their decisions as they hit consistent home runs. But as we peel back the layers, empirical research shows extremely challenging and costly cognitive biases that must be battled to make sound decisions. Because of the pressure and uncertainties investors face in making decisions, these biases are especially important to understand, as any bias factor can be amplified and become detrimental. For entrepreneurs, on the other hand, understanding how these cognitive biases come into play may provide leverage points for bringing ideas to fruition. According to research, the following five cognitive biases can affect investor decision making.

Similarity Bias is defined as the tendency to categorize people as being similar to oneself, even when meeting them for the first time. According to one study on similarity bias, there are two distinct dimensions that affect an investor’s decision: education and work experience. Entrepreneurs will be categorized as similar if they have gone to the same school, worked at the same company or shared a parallel experience as the investor, which means they may have a leg up due to the favoritism that’s caused by the bias. People feel more comfortable when they can relate to others who share similarities. And investors are no exception. In fact, researchers have found that when investors feel similarities to the entrepreneurs and startup teams, they evaluate the potential business in a more favorable light.

Local Bias One specific type of similarity bias comes from a geographic similarity known as “local bias.” Local bias is defined as the “average geographic distance between the VCs and their investment.” Researchers have found that investors are positively biased toward ventures located near their investment firms. For example, researchers tracked U.S. venture capital investments from 1980 to 2009 and found that nearly 50 percent of investments were located within 233 miles of the Vcs. VCs who feel familiar with entrepreneurs tend to feel more comfortable, and as one particular study shows, being familiar with the entrepreneur or team can influence the investor to decide in favor of the deal.

Anchoring A similar bias, known as anchoring, is the tendency to rely too heavily on one factor or piece of information when making decisions. “Anchoring often comes disguised as hard won experience, and painful experiences tend to create strong anchors,” explains Clint Korver, founder of Ulu Ventures and partner at Crescendo Ventures. “For example, if a promising portfolio company fails because of the CEO’s technical failings, I am likely to be extra sensitive to any CEO’s technical expertise in the future, regardless of its importance for that particular venture.”

Information Overload Additionally, investors typically have to process large amounts of data, for example analyzing technologies, teams, markets, trends, business models and different types of risks. The massive amount of information provided to investors can result in information overload. Research has found that the more information a VC receives, the greater confidence investors will have in their decisions, a sentiment illustrated by Roberto Bonanzinga of Balderton Capital. “Some investors never give an answer and keep going asking for additional data points in the hope that the data will make the decision for the” Although this finding seems rather logical, the reality is that more information does not necessarily equate to better decision-making. Researchers have found that when investors receive more information, they tend to believe they will make better decisions, when, in actuality, more information simply increased confidence in the decision rather than accuracy. And, as confidence increases with more information, the accuracy of the decision actually decreases.

Gender Bias Finally, there is the proverbial gender bias that women must contend with in just about every industry. And, in particular, gender bias has been a hot topic for VCs as women claim their position in the entrepreneurial arena, proving the world wrong in their stereotypes and stigmas. Not surprisingly, more than 97 percent of all venture-funded businesses have male CEOs. The irony is that, when we look at the facts, we find the perspective of gender bias to be flat-out irrational. According to a Dow Jones study, which analyzed 15 years of venture-backed companies and how women in leadership roles affected startups, a company’s odds for success increase as the percentage of females holding executive positions increases.

Clint Korver uses a specific decision analysis to proactively reduce cognitive biases in his venture capital investment decisions. Korver states, “Failure may be the best teacher, but failure in early stage investing comes at a high cost.” Korver created a decision analysis model, which helps him “structure judgement and quantify intuition in forms that can be easily tested with logic and evidence.” This disciplined approach resulted in quicker, more accurate decisions.

https://techcrunch.com/2015/09/24/the-surprising-bias-of-venture-capital-decision-making/

Biases in venture capital decision making #2

http://dx.doi.org/10.1016/j.jbusvent.2014.12.002

Highlights

● Investors are affected by visual cues such as product images and color in business plans.

● Product images increase favorability in investment screening decisions.● Red decreases favorability in investment screening decisions.A growing number of studies complement this framework by illustrating how heuristic processing, a fast, automatic, and effortless cognitive processing, prompts people to rely on various heuristic cues or mental shortcuts such as affect, and message framing, to make decisions (Baron, 2008,Cardon et al., 2012 and Kahneman, 2003). One often overlooked category of heuristic cues are visual ones (Ambady et al., 2006 and Mehta and Zhu, 2009). These cues can affect decision makers' motivation and cognitive evaluations because they are automatically captured by human senses and their effects are robust and unlikely influenced by informational load, time pressure, or fatigue (Ambady and Gray, 2002 and Friedman and Förster, 2010).

We explore how two visual cues, product images and colors, influence venture investment screening decisions. Because visual images are accessible, memorable, and influential (Ambady and Gray, 2002 and Blossom and Morgan, 2006), we hypothesize that product images lead to more favorable screening decisions. We then delineate how color influences screening decisions. Different colors have strong learned associations with danger or safety in the environment and their effects on human motivation and cognitive evaluation are well documented across various tasks (Crowley, 1993, Friedman and Förster, 2010 and Mehta and Zhu, 2009). Consistent with prior color research (e.g.,Bellizzi and Hite, 1992 and Mehta and Zhu, 2009), we focus on the effect of red and blue on investment screening decisions involving business plans. Combining a field study and a series of controlled experiments, we find a robust negative effect of red on screening decisions.

A growing body of experiments across disciplines reveal substantive cognitive errors are made by decision makers when evaluating the merits of a candidate or an idea. Relying on heuristics or cognitive short cuts, decision makers reveal an array of implicit association biases. These findings suggest that decision makers in business, finance and entrepreneurship are not acting in ways that economic rationality or rational choice would suggest they should.

Financing decisions may not be based upon merit or competitiveness of the business, founder, idea or model, but rather on mental models, maps and/or cognitive associations of what constitutes a potentially successful entrepreneur and founding team.

Personal attributes such as the gender and physical attractiveness of the entrepreneur(s) influence evaluations of their competency, likeability, fit, performance expectations and desirability; financing decisions are not solely based, therefore, on the actual merits or potential of the idea, product, business model or founder

search.proquest.com

Oxford Journals / Social Sciences / Review of Financial Studies | doi: 10.1093/rfs/hhw010Cary Frydman and Colin Camerer

http://dx.doi.org/10.1073/pnas.1321202111

http://dx.doi.org/10.1016/j.jbusvent.2013.09.001

http://dx.doi.org/10.1111/jsbm.12132

Our findings suggest that visualization matters; posters that included specific visual devices garnered a higher level of interest among prospective stakeholders, including investors and collaborators.

VC Decision Analysis Model

Evaluation of Inkling’s Early-stage Risks. Evaluation of Inkling’s Crossing the Chasm Risks. Evaluation of Inkling’s Mass Market Risks.

Decision Diagram Showing Inkling’s Drivers of Risk and Value. Scenario Analysis Showing Inkling’s Risk and Return.

http://www.kauffmanfellows.org/journal_posts/applying-decision-analysis-to-venture-investing/Applying Decision Analysis to Venture Investing

Clint Korver co-founded Ulu Ventures, an early-stage IT venture firm, after 15 years as a serial entrepreneur.

Entrepreneur-investor conflict

http://dx.doi.org/10.1111/etap.12131

http://dx.doi.org/10.1111/j.1540-6520.2011.00456.x

Hypothesis 1a: Higher levels of relationship conflict between angel investors andentrepreneurs will increase entrepreneurs’ intention to exit their ventures.Hypothesis 1b: Higher levels of relationship conflict between angel investors andentrepreneurs will increase angel investors’ intention to exit their portfolio companiesHypothesis 2a: Higher levels of task conflict between angel investors and entrepre-neurs will increase entrepreneurs’ intention to exit their ventures.Hypothesis 2b: Task conflicts between angel investors and entrepreneurs will haveno effect on angel investors’ intention to exit their portfolio companies.Hypothesis 3a: Higher levels of goal conflicts between angel investors and entre-preneurs will increase entrepreneurs’ intention to exit their ventures.Hypothesis 3b: Higher levels of goal conflicts between angel investors and entre-preneurs will increase angel investors’ intention to exit their portfolio companies.

http://dx.doi.org/10.1007/s11187-011-9379-7

Based on findings from within- and cross-case analysis, we propose that perceived unethical behavior among venture partners triggers conflicts between them through increased fault attribution or blaming. Further, we propose that perceived unethical behavior affects venture partners’ choice of conflict management strategy and increases the likelihood of conflict escalation and of conflict having a negative partnership outcome such as failure or another form of involuntary exit. As such, this paper contributes to the entrepreneurship literature by addressing calls for more research on the darker sides of investor–investee relationships.

http://dx.doi.org/10.1080/13691066.2013.782625

We build on Sapienza's (1992) seminal work, who studied a predecessor of task conflict – divergence of perspective – and extend research by linking the most important conflict types to investor value in the context of young ventures. We contribute to the literature on conflict between entrepreneurs and venture capital firms (VCFs) and reveal clear patterns regarding the effects and interactions of task conflict and relationship conflict.

Board composition #1

http://earlystagetechboards.com/3-0-board-composition

http://www.techrepublic.com/article/startups-demystifying-the-board-of-directors/

venturebeat.com/2013/02/10

I had a group of ex-students out to the ranch who were puzzling over a dilemma – they’ve been working hard on their startup, were close at finding product/market fit and had been approached by Oren, a potential angel investor. Oren had been investing since he left Google four years ago and was insisting on not only a board seat, but he wanted to be chairman of the board. The team wasn’t sure what to do.

I listened for a while as they went back and forth about whether he should be chairman. Then I asked, “Why should he even be on your board at all?” I got looks of confusion and then they said, “We thought all investors get a board seat. At least that’s what Oren told us.”

Uh oh. Red flags just appeared in front of my eyes. I realized it was time for the board of directors versus advisors talk.

…

As we wrapped up, I offered that there was no “right answer” (see Brad Feld’s post) but they should think about their board strategy as a balance between the amount of control given to outsiders versus the great advice outsiders can bring. I suggested that if they could pull it off they might want to consider keeping the board to the two founders for now, surrounded by great advisors which may include their seed investors. Then when they got a Series A, they’ll probably add one or two professional VC’s on the board with one great advisor as an outside board member.

https://www.entrepreneur.com/article/230319

inc.com/young-entrepreneur-council

https://www.entrepreneur.com/article/273977

The advisory board is much easier and quicker to assemble. It does not have a legal tethering like a board of directors does, and as such it is a lower risk way to attract super qualified candidates that will help to enhance and accelerate your business.

A board of directors is composed of members that are legally bound to the business and thus they have a potential liability associated with being part of that board. Therefore it is a more serious engagement.

Board composition #2

http://dx.doi.org/10.1007/s10961-009-9115-5

http://dx.doi.org/10.1007/s10961-009-9114-6

Journal of Management November 6, 2012http://dx.doi.org/10.1177/0149206312463938

http://dx.doi.org/10.1080/19416520.2016.1120957

http://dx.doi.org/10.1007/s10551-014-2343-0

http://dx.doi.org/10.5465/amj.2013.0319http://dx.doi.org/10.1016/j.jbusres.2016.05.011

http://dx.doi.org/10.1016/j.technovation.2016.08.007

Usually startups form their first board following a round of Venture Capital (VC) investment. This is simply because forming a board and having a board seat is an industry-standard condition of investment from a VC firm. Consequently, the overwhelming majority of early boards consists of just VC partners and founders. The board, generally between 3 and 5 people, meets monthly or relatively regularly to see how business is developing, assess the progress against targets, discuss strategies for growth and look over finances and operations – the usual board business.

Better boards that I was lucky enough to observe are built strategically from the start. They bring in necessary experts when needed rather than relying on investors. It is not unusual for better boards to have new talent every one or two years replacing the ones whose expertise is no longer relevant, and they are not shy to ask VCs to give up their board seat:

1. Get board pack right. The board pack is the one thing that I have consistently seen the majority of founders get wrong. There are usually two extremes – not providing enough relevant detail or overloading with unnecessary information. Better board packs contain well-focused material that prepares directors for the meeting and its key discussions. The pack arrives reasonably in advance in a single document and not as a collection of reports and spreadsheets.

2. Flip the board meeting. Better boards ask questions and clarify points with the CEO on items such as management accounts, monthly run rate and operations, before the meeting. The meeting itself then becomes a working session where genuine dialogue takes place on forward-looking strategic issues as opposed to past performance. The agenda is reversed allowing significant time for discussion on, for example, shifting a business model, accessing new markets, hiring, firing or new funding, whereas actions on formal items, such as voting, are done very quickly. The founder-CEO, often with guidance from the Chair, experiments with the board agenda to create a meeting structure that gets the most out of the board's collective knowledge and expertise.

3. Invest in board team building. During the early stages when a startup does not have many employees apart from founders, a better board seeks to become a natural extension of the entrepreneurial team. To strengthen the foundation for growth, they invest time and effort in getting to know each other and becoming a better team. So when inevitably the board gets to deal with disagreements on strategy and even conflicts, it can do so in an open and constructive manner. Better boards also maintain focus on self-improvement as a decision-making and value-adding body and even engage in formal assessment, such as 360 degree feedback.

4. Skill up. Better boards are learning organisations, continuously transforming themselves and their actions as a result of shared learning from market feedback on their strategic decisions. Most importantly, better boards mentor, support and develop their founder-CEOs, encouraging them to skill up as startups mature into professionally run business operations.

Venture money statistics

Venture money: USA vs Europe

Latest CB Insights Venture Pulse Report, which found that US startups raised $53.9 billion (£42 billion) in the second quarter of 2016 while European startups raised just $6.3 billion (£4.9 billion) over the same time frame.

"We must recognise that European capital has not effectively kept up with European talent, and rather than wait for others to come to us, we’re taking action," Matt Wichrowski of Entrepreneur First wrote.

forbes.com

The British Private Equity and Venture Capital Association (BVCA) just published a report dispelling many of the stereotypes and myths about the performance of Europe’s VCs. The conventional wisdom has been that Europe’s risk-adverse nature and difficult IPO environment has constrained the potential and success of Europe’s venture and startup communities.

The report, originally covered in the Financial Times, is really interesting and extensive, with lots of stats for those of you who love digging into the numbers. Make sure to check it out here.

http://venturebeat.com/2016/03/13/why-europe-lags-behind-the-us-in-vc-investment/

Activity in the USA and Europe firmly dominates the venture capital (VC) industry. Where ‘the Valley’ led the way, start-up ecosystems have sprouted across the whole of Europe. Be it financial technology in London, ecommerce in Berlin or advertising technology in Paris, over the last decade Europe has grown a number of healthy start-up centers encouraging entrepreneurs to take a leap of faith in their ideas and start building a business.

But despite being equal to the US in terms of GDP and possessing a larger population, Europe sits very far behind the US in terms of venture financing.

rudebaguette.com/2013/01/23

Venture money: United Kingdom

http://dx.doi.org/10.1023/A:1008143713722, Cited by 136 articleshttp://dx.doi.org/10.1080/13691060050135091, Cited by 149

http://dx.doi.org/10.1016/S0883-9026(00)00057-4

http://dx.doi.org/10.1016/j.jbusvent.2014.07.009

http://dx.doi.org/10.1177/0263774X15625995

Venture money: United Kingdom and Brexit

BART SCHACHTER, IRON.IO SEPTEMBER 3, 2016 7:15 AM

One area of fallout I’ve been watching closely is Brexit’s impact on cloud data — and here, too, there are patches of blue sky for investors. Under data sovereignty laws, the data in EU data centers currently belongs to EU citizens. But two years from now, when Britain’s divorce from the EU likely becomes effective, UK data will need to reside in the UK, and EU data will need to be stored in the EU. In other words, get ready for some gigantic IT infrastructure plays as mountains of data get segregated — a daunting prospect for hundreds of corporate behemoths, even without the 24-month time frame.

venturebeat.com/2016/09/03

courierpaper.com

https://www.ft.com/content/e538e27a-5001-11e6-8172-e39ecd3b86fc

telegraph.co.uk/technology/2016/07/07

www.wsj.com

During a presentation at the financial technology industry's conference London Fintech Week 2016, Senator Cornelia Yzer said every time she speaks publicly about Berlin post-Brexit, a number of startup companies approach her office about moving to Berlin. “Not 10 or 20 or 30, more, over 100,” she said, according to International Business Times.

independent.co.uk

forbes.com/sites/adeoressi/2016/06/30

Similar concerns over regulatory uncertainty are hitting biotech, as after Brexit drugs would perhaps be regulated differently in the UK and in EU countries.

cbinsights.com

bloomberg.com/news/articles/2016-06-22

Venture money: Scandinavia

The Scandinavian Venture Capital Scene – league tables of most active Scandinavian VCs – part of my European VC blog series

by Andrew Romans | Jan 15, 2014, rubicon.vc

Taken as one region, the four Nordic countries of Sweden, Denmark, Norway and Finland, Scandinavia form the second largest market for venture capital in Europe. These four Nordic countries provide a market of 25m highly educated citizens who earn and spend a relatively high GDP.

telegraph.co.uk/finance

https://www.scandinavianinvestmentnetwork.com/

Scandinavia has produced some major tech successes. Sweden alone has almost as many tech startups as Silicon Valley, with its capital Stockholm emerging as a key player in the global tech hub scene – think Spotify, Minecraft and Candy Crush. And in the absence of Silicon Valley-sized VC funding rounds, the startup scenes of Norway, Finland, Denmark and Iceland have also delivered some exciting ones to watch.

Another day, another massive tech conference in Europe. This time we’re in Helsinki for the annual Slush conference, where 15,000 people wander around what appears to be a dark, laser-lit aircraft hangar full of startups stalls, while squinting at a map which has helpfully been printed in 4 Point on a black background. Aside from those quibbles, Slush is its usual mix of fantastic networking, speakers and startups, and their startup competition has produced interesting companies in the past, such as FishBrain. The winner this year is CareMonkey, which automates the collection and secure distribution of sensitive personal data for groups.https://techcrunch.com/2015/11/12/caremonkey-wins-slush-startup-competition/

slush.org

Venture Capital european GeoGraphy #1

http://dx.doi.org/10.1016/j.jcorpfin.2009.09.003Why is there such a strong market for Venture Capital (VC) and Private Equity (PE) in the United Kingdom or in the US? Conversely, why is there relatively little activity in Germany, the largest European economy, and why is activity close to zero in Greece or in some of the new European Union accession countries?

http://dx.doi.org/10.1111/jems.12170

em-lyon.com

Venture Capital european GeoGraphy #2

global.oup.com

http://dx.doi.org/10.1177/0020852314566002

http://dx.doi.org/10.1177/0010414009352645

Building on the varieties of capitalism thesis of comparative advantages in technological innovation, the authors theorize the effect of sociopolitical coordination from a dynamic perspective and then apply the dynamic theories to the political economy of employment, in comparison to the existing employment literature situated in a constant-technology context. Based on cross-sectional survey as well as pooled time-series aggregate data, the authors argue that new technologies not only increase productivity through process innovation but also generate rents through product innovation. By preventing opportunistic behavior between firms, sociopolitical coordination intensifies reciprocal sharing of innovation, which increases productivity returns but dilutes rents, leading to comparative advantage in process over product innovation. Because process innovation is labor saving but product innovation is employment friendly, interfirm coordination further leads to comparative disadvantage in job creation from innovation.

Our paper adds to a remarkably limited field of research on the effect of venture capital on aggregate economic growth rather than on firm-level performance. … We find that the rate of new business creation increases in countries and industries with sizeable venture capital investment.

Using a comprehensive database of firms from 21 European countries over the period 1998–2008, we find that venture capital investment has a positive effect on the rate of new business creation. This is especially true in countries with higher entry costs, higher protection of intellectual property rights, and lower taxes on capital gains. Our results suggest that, controlling for country and industry characteristics, venture capital is beneficial to bringing new ideas to the marketplace in the shape of new companies.

http://dx.doi.org/10.1016/j.jbankfin.2013.08.010

Startup Acquisition statistics

http://dx.doi.org/10.1111/1467-8551.12174

This paper examines the relationship between the firm’s direct ties, its inter-firm network prominence and its likelihood of being acquired. The authors argue that firm’s direct ties and prominence enhance the firm’s visibility and signal its quality – and thus foster the firm’s likelihood of being acquired. However, higher levels of direct ties and prominence, by providing access to resources and the firm’s status, respectively, increase the firm’s ability to remain independent and thus reduce its likelihood of being acquired. Thus, the authors posit the overall relation as an inverted U-shaped. Furthermore, they show that, for firms that undergo an initial public offering, the aforementioned relation becomes much weaker. The hypotheses are empirically tested in the biopharmaceutical industry and important theoretical and managerial implications are discussed.

http://dx.doi.org/10.1504/IJTM.2010.035858

http://dx.doi.org/10.1016/j.jengtecman.2011.06.005

http://dx.doi.org/10.1007/978-3-319-19593-3_20

http://dx.doi.org/10.1080/10438599.2012.703487

Intellectual property

Legal documents for startupsDianna Labrien, September 6, 2016tech.co

IP Assignment Agreement

Your IP assignment agreement is likely to be the first document that potential investors want to see. This is especially true if you are a technical startup. In many cases, your IP portfolio is more �heavily when it comes to evaluating your value than your inventory or future orders. The reason that this is so important to investors is that documented IP ownership can serve as a barrier to entry for anyone wanting to copy your business model. It also stops rogue team members from absconding with intellectual property.

Founder’s Agreement

This is an agreement that is written up and signed by all founding members of a startup. This defines each person’s roles, methods for solving conflicts, and the relationships and hierarchy of the founders. It should also contain language contributions by the founders are the property of the startup, or of any entity that should take ownership of the startup in the future.

Employment Contracts and OffersIt’s a bad idea to bring on new employees without having clear contracts and offers of employment. These should outline all terms of the offer and employment. This includes:● Length of employment● Initial rate of pay● Benefits● All duties to be performed● Percentage of travel time● Company policies● Retirement and vesting information● Who owns the work they produce

including anything that could be subject to a patent or copyright

Articles of Incorporation

Don’t put off incorporating your startup. Failure to do so can result in tax penalties and personal liabilities for yourself and your co-founders. Graeme Donnelly, CEO of Rapid Formations, the company formation agents, mentions the following: “The effects of not properly incorporating can be devastating. People have lost their homes, reputations, and livelihoods because of this. What a shame when incorporating can be so easy.”

Bylaws

Bylaws are essentially the internal rules of the company. They help determine how disputes are settled. They also set the rights and responsibilities of shareholders. A good bylaws document will even outline how leadership is elected, and which actions can be performed by people at each leadership tier with or without approval. For example, one bylaw might outline the amount of money that a team or department leader can spend during a quarter before they must get approval from the board of directors.

Non-Disclosure Agreements

There are times when it is necessary to disclose sensitive information to outside parties. This might include customer data, company secrets, future plans, and financial information. Vendors, contractors, consultants, external auditors, even lawyers may require access to this information to do their jobs. This is acceptable, but a non-disclosure agreement is an absolute must have in any of these situations. This agreement defines confidential information, outlines the proper ways to handle that information, clearly states that the startup is the owner of that information, and determines and relevant time periods.

Shareholder Agreements

If you have reached the point where you are getting funding from private investors, it is time to have your attorneys draw up shareholder agreements. These documents outline the shareholders’ rights and the means by which they can exercise these rights. This includes how shares may be sold or transferred, what happens when a shareholder dies, right of first refusal, and more. Because there are regulatory requirements related to the sale and exchange of shares, these agreements are absolutely crucial.

Intellectual property overview for startups #1Home - Starting a Small Business -Protect Your Genius: 5 Intellectual Property Mistakes That Can Doom Your Startup

Mistake 1: Underestimating The Importance Of Intellectual Property

If you are like most entrepreneurs, you don’t spend much time focusing on your company’s IP. Instead, you spend your day working on creating (or perfecting) your product and executing your business and marketing plans.

You probably have some sense that your business has intangible assets and that those assets have value, but you think of intellectual property as a legal issue that can be dealt with by the lawyers.

This common approach is a fundamental mistake. The most successful businesses understand that intellectual property is an important business tool.

In fact, valuation experts estimate that intellectual property represents the largest asset class held by American companies (representing 40 percent of the value of all assets).

Intellectual property assets represent a significantly larger percentage of the value of the most successful companies – those in the S&P 500.

By some estimates, IP represents up to 90 percent of the value of these companies. Considering that intellectual property assets represent such a large asset class, you need to stop thinking about intellectual property as a legal matter and instead understand that your business can create value by making intellectual property part of your business plan.

Mistake 2: Failing To Take The Time To Create An IP Plan

Most startup founders create all sorts of plans: business plans, product development plans, marketing plans, and so on. In fact, business people seem to be planners by nature.

Unfortunately, all too often, entrepreneurs don’t take the time to create a plan to harness their intangible assets or to ensure that they are not infringing the rights owned by third parties. This is a critical mistake that can doom your startup.

An IP plan serve as a roadmap for your business to use to harvest the most value from the innovations you are creating. The plan will help you prioritize tasks and ensure that you are not missing opportunities to build value.

Just as important, the plan will map out how to minimize your risk of being sued by others. The last thing any startup needs is to face a costly IP lawsuit that will force it to spend precious time and money. This as an investment that will compound over time.

Mistake 4: Failing To Run A Trademark Search

Mistake 5: Not Setting Up Confidentiality Protections

The fifth mistake that startups often make is failing to put in place adequate confidentiality protections. Trade secret law allows companies to protect confidential business information that has business value.

Trade secret protection has been used to protect some of the most valuable business secrets in the world, including the recipes for Coca-Cola and Kentucky Fried Chicken. The key to obtaining and preserving the protection is that the company must take reasonable steps to ensure the confidentiality of the information.

Mistake 3: Not Setting Up Communications

Once your company has grown past a handful of employees, you will certainly get to the point where the people creating intangible assets are not the ones making decisions about protecting those assets.

In the haze of growth, many companies miss this shif and don’t set up systems to ensure that the creators and deciders are communicating on a regular basis. Communication between creators and deciders is important for a couple of reasons. First, decision makers can’t protect assets they don’t know about.

Thus, without communications, you won’t be able to harness the value from the innovations you are creating. Second, the deciders can’t make sure that your company is taking prudent steps to minimize the risks it faces if they don’t know about new initiatives. Keeping these deciders informed will allow them to protect you from a costly lawsuit.

While most confidential information does not require high level protection, too few startups establish systems and procedures to maintain the confidentiality of their sensitive business information.

A company should have:● Written agreements with employees that require them to

maintain business confidences.● Policies that put limits on the extent to which employees may

transfer sensitive material to personal devices (e.g., rules against sending material to a personal email address).

● Written agreements with outside contractors that require them to maintain business confidences.

● Policies that limit who may access the information.● Reasonable security protocols (e.g., password-protected

computer access) to limit access to the information.

Intellectual property overview for startups #2

http://www.ipwatchdog.com/2011/05/21/the-top-5-ip-mistakes-tech-startups-make/id=17068/

Mistake #1: Not protecting commercially valuable innovations with patents

Mistake #2: Spending too much money on patent filings.

Mistake #3: Failing to include protective IP provisions in agreements with employees, contractors, suppliers and other parties.

Mistake #4: Infringing someone else’s trademark rights.

Mistake #5: Losing the ‘secret’ in ‘trade secret’: loose lips sink ships.

It helps to work with a lawyer who wants you to succeed and looks out for your interests. Whenever hiring a law firm, be sure to confirm which attorney(s) will be doing your work. The ones doing the pitch are not always the ones that will be helping you.

Finally, in the end, if it sounds too good to be true, it likely is. Advertisements for inexpensive patents are often referring to design patents, which are different from (and usually a lot simpler than) utility patents. Moreover, patent application quality is important since the principal reason to spend the resources to prepare, file, and prosecute is to secure an enforceable patent.

There are many great patent attorneys and patent agents to work with. Be sure to find the right fit for your company.

What entrepreneurs often don’t realize, though, is that in the midst of brutal competition, the path to scale and success is often lined with unexpected co-travelers and events. There are plenty of misfortunes that can befall startups: 29 percent run out of cash, 23 percent don’t have the right team on board and 8 percent are beleaguered by legal challenges. Though it’s impossible to plan for everything, there are definite safety belts you can put in place, especially from a legal standpoint.

Most founders I meet aren’t focused initially on intellectual property (IP) defense. They are, as they should be, thinking about how to build the best product that they’re able, and how to get the most customers to use it. What they often don’t see coming is that their success can sometimes make them a target for frivolous litigation.

Patent trolls are another threat. More than 50 percent of businesses that are targeted by trolls make less than $10 million in revenue, and more than 80 percent of patent troll lawsuits have been multi-defendant suits using weak patents brought against companies with less than $100 million in revenue.

If you’ve got intellectual property that’s meaningful, by all means, protect it. Filing a patent allows you to stake a claim to that IP, monetize it through licensing and collaborate with others while protecting what’s yours. Indeed, 18.9 percent of venture-funded companies filed for a patent before they received funding; 33 percent of funded companies file for a patent at some point in their life cycles.

For those companies that find themselves under attack by frivolous litigation, an unfortunate but necessary path for defense may be to actually acquire patents from trolls. By taking patents away from trolls, and using them for defensive purposes only, you are actually disabling it as a weapon in the overall troll arsenal. It’s not the source of the patent that matters, but instead, how you use it

Patents How much of use in startups? #1

techcrunch.com/2012/06/21Leonid Kravets is a patent attorney specializing in developing IP strategy for young technology companies. He blogs on the topic at startupsip.com

Just how much attention are start-ups paying to patents? Rather than speculate, we decided to go straight to the data. We pulled information from CrunchBase and the USPTO to build a patent activity database of over 12,000 funded technology companies. Then we plugged it into RJMetrics, a tool that makes data more understandable and actionable for online businesses. Here’s what we found:

● One third of all funded companies have filed a patent application.

● 19% of all funded companies filed at least one patent application prior to receiving any funding.

● Since 2005, the average start-up has become less likely to apply for patents than companies founded in the previous year.

● Companies in the semiconductor industry are most likely to apply for patents (65.2%) and companies in ecommerce are the least likely (10.5%).

● Among firms that have invested in at least 100 companies, those with the most patent pursuers in their portfolios are DAG Ventures (59%), Menlo Ventures (57%), and Kleiner Perkins (56%).

● Outspoken anti-sofware-patent investors Brad Feld (Foundry Group, 26.2%) and Fred Wilson (Union Square Ventures, 18%) practice what they preach — they have fewer than average patent pursuers in their portfolios.

The differing patent philosophies of top investors are illuminated by our findings. First, it is worth noting that 18.9% of all funded companies filed patent applications prior to even receiving their first funding round. This compares to 33% of all funded companies having filed patent applications at any point during their existence.

Healthcare investors appear to place a strong emphasis on patents, with the highest patent application rates belonging to De Novo Ventures (96%) and Delphi Ventures (91%). Seed-stage investors have the fewest patent applicants in their portfolios, with 500 Startups (6.5%), SV Angel (17.7%), and German VC High-Tech Gruenderfonds (15.7%) rounding out the bottom of the list.

Some investors are outspoken against sofware patents. For example, Fred Wilson of Union Square Ventures and Brad Feld of the Foundry Group believe software patents should be abolished. Indeed, the investment philosophies of both funds appear to reflect these views. Union Square Ventures (18%) and Foundry Group (26.2%) both have patent application rates that are well below the average of 43%.

Conclusion

Over the past several years, the average popularity of patents has steadily declined among funded technology startups. The reasons an individual company may choose to apply for patents can be complex, but key characteristics can have a major influence. A company’s industry and investors, for example, appear to be meaningful indicators of their likelihood to apply for patents.

Despite the overall decline in application activity, those companies that have chosen to pursue patents have done so more aggressively than ever. This is indicative of the increasing dichotomy in the marketplace, in which some thought leaders are actively speaking out against certain types of patents while patent portfolios are being bought and sold for lucrative amounts.

Patents How much of use in startups? #2

For startups short on cash, there are alternative, cost-effective routes that can provide relatively robust protection. Confidentiality  agreements and trade  secret  protection can potentially work just as well as costly patent registration. All employees, board members and advisors should be required to sign agreements obligating them to assign all business-related IP to the startup. You will also want to extend IP protection through agreements with non-employees, including vendors. outsourced designers, consultants, engineers, and even customers.https://www.quora.com/How-do-tech-startups-file-patents

While many inventors are no doubt aware of “provisionals,” in my experience there is a significant misunderstanding. First, there is no such thing as a provisional patent, period. What you are doing is filing a provisional patent application. There is nothing wrong with using a provisional patent application, but critics are absolutely correct to point out that the vast majority of provisional applications are worthless. To be at all useful the provisional patent application absolutely MUST completely describe invention and all of its various aspects.

If you fear being specific don’t seek a patent I can’t tell you how many times I’ve heard inventors tell me that they do not want their patent applications to be “too specific.” It seems these inventors have decided that what they need is a patent that is extremely broad and they don’t want a bunch of details getting in the way of narrowing their rights. If you are afraid to be specific in a patent application then you really shouldn’t be seeking a patent in the first place, and instead should be keeping what you have invented to yourself as a trade secret to the greatest extent possible (if possible).

www.ipwatchdog.com/2016/07/09

According to a 2008 Berkeley Patent Survey, patents play a significant role in securing funding for technology startups. The survey found that venture-backed startups had a median of 6 patents or applications, while startups without venture capital tended to hold no patents or applications. Venture capitalists clearly prefer to invest in tech startups with patent-pending technology, and they’re not alone. Angel investors, banks, and friends and family also consider patents an important part of their funding decisions. circleup.com

America Invents Act (AIA) geeks might also point out that you can simply disclose your invention publicly before someone else files a patent application in order to defeat their application. This approach is both impractical and inferior because:

1) the burden would fall on you to prove that you publicly disclosed the invention claimed in a third party application (i.e., this may cost you more money than if you had just patented your concept), and

2) if someone were inclined to steal your concept, they could modify the patent application so as to claim a slight variation of your original concept.

indiegogo.com/blog/2015/04

Timing strategies for your patent An invention cannot be patented if it has already been publicly disclosed. There is a one-year grace period in Canada and the United States, but not in Europe. Public disclosure can include:● Publication● Seminar presentations● Poster presentations● Abstract submissions for conferences

Therefore, take care not to wait until after public disclosure, as the invention will then be non-patentable. Another timing strategy is to delay public disclosure until there is sufficient information and finances to file a patent.https://www.marsdd.com/mars-library/patent-strategy/

Patents How much of use in startups? #3

Robert Plotkin, Patent attorney specializing in patent protection for computer technology. Written May 15, 2011. I would divide this into two questions:

(1) Is patent protection appropriate for your startup company?

(2) If the answer to question (1) is "yes," then when should you file your patent applications?

The answer to (1) depends on a combination of your technology and business model. Although I can't provide an exhaustive list here, the answers to the following questions will influence whether patent protection is appropriate for you:

● Was your technology difficult, time-consuming, and/or expensive to develop but easy for others to copy once they see it? If so, then patent protection may be appropriate for you.

● Do you have large competitors who have the resources to knock off your products/services quickly and outcompete you? If so, then patent protection may be appropriate for you?

● Will first-mover advantage be sufficient to give you a significant advantage over your competitors? If so, then patent protection may not be appropriate or particularly valuable for you.

I disagree with the common assertion that startup companies should not seek patent protection because startups do not have the resources to engage in patent litigation. Most patent owners -- small and large -- do not benefit from their patents by suing infringers. Patent litigation is very rare, although you might not know this from reading the news headlines. Instead, patent owners use patents in other ways, such as to:

● deter others from infringing in the first place;

● raise money;

● strike licensing deals;

● deter others from suing them for patent infringement; and

● get acquired.

Mark Cummins, Co-founder Plink (now Google Goggles), Written Dec 7, 2010Very late, possibly never.

Unless you are involved in a medical/biotech/cleantech start-up, it is unlikely that a patent will provide much genuine value to your business. It is expensive, time consuming, and distracts you from making your core product. If you are not venture funded, I would rule it out completely.

I can think of very few sofware-based businesses that are meaningfully based on a patent-monopoly. Patents are useful to large companies as a tool for counter-suing in disputes with other large companies. Start-ups do no have the finances to engage in patent litigation to enforce claims, nor do they have enough cash to be a target for claims from other companies. So for the most part, ignore patents.

Our startup (Plink) made stuff that many people would consider high-end magic. We had plenty of patentable material, but we didn't file a single patent.

Dan Ballard, Patent and intellectual property attorney, Written May 16, 2011 The question “When should I seek patent protection?” reflects a much too limiting mindset for a technology-centric company.

First, the question assumes that the technology, in fact, belongs to the company. Much technology is not patentable [and therefore not capable of being owned] because it, or something obviously similar, has already been publicly disclosed. The cliché “my best ideas were stolen by the ancients” is a lesson that must be learned over and over again. While there’s no duty for a patent applicant to search for any relevant “prior art” it’s often worthwhile to do some searching to determine if the technology is already out there—perhaps not embodied in a patent or patent application but in a academic or industry-specific journal or darn near anywhere. If it is, then seeking patent protection for “your” technology is a waste of time and money.

Second, if we assume that the technology has not already been publicly disclosed and does not infringe one or more already-existing patents, then the right question is not “When to patent” but rather “How can I protect the competitive advantage that I’ve gained by developing my technology and will gain by commercially exploiting it?”

https://www.quora.com/At-what-point-in-a-startups-evolution-should-you-file-for-patents

Patents How much of use in startups? #4

We filed for a provisional patent a year ago, and the year is just about up, so we need to decide whether to go for the full patent. Our lawyer is saying $5k for an opinion of counsel and then up to $10k more for the full patent. This is basically all of our remaining capital and then some.

The patent, if we get it (82% were rejected last year), would theoretically protect us from competition if we could afford to litigate. More likely it would serve as a reason for us to get bought. If we don't go for the patent we won't have protection (not that it would come in for 3+ yrs or whatever), but we could still try and rule the market we are in. A patent might also help us get funding, if we try and seek it (more funding, right now we've got friends and family money). Needless to say, spending the rest of our money would put us in a tight spot. Just wondering what HN's denizens thought of our situation or patents in general. thx.

mixmax 2795 days ago [-]

I've started two companies that took out patents, and thus have seen this up close. My experience is:

● The market doesn't care about patents. Whether your product is good or bad a patent makes absolutely no difference to a customer.

● Competitors care very little about patents. They know the cost of patent litigation, and that you probably can't afford it. Even if you could they would probably be able to strike a deal.

● Investors, on the other hand, do care about patents. The thinking seems to go along the lones of I have no idea which company to invest in, but the ones that have a patent must be the smart ones. So those are the ones I'll invest in. This is from Denmark, and may be different depending on your meatspace coordinates.

● Patents take time and focus. Patenting takes the focus off your product and selling it, and patents don't get you customers.

I would say that if you're gunning for investors get a patent, if you're not don't.

https://news.ycombinator.com/item?id=436053

https://www.quora.com/Should-I-bother-getting-a-patent-for-my-startup-idea

http://dx.doi.org/10.2139/ssrn.1429049, Cited by 362

Vic Lin, Patent attorney | streamliningIP.com founder. Updated Jun 29, 2015

Instead of making anecdotal observations, let me suggest a data-driven study - High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey- which showed that startups who filed patent applications were more likely to receive VC funding than those who didn't. The issue for a startup is not whether you'll have the time and money to enforce patents because you most likely won't. It's about raising capital.

quora.com

Patents Definition of prior art

Unfortunately there is no easy answer to the question of prior art, particularly for those who are new to the patent field.

The trouble with explaining what prior art is stems from the fact that everyone already thinks they know what it is. Conceptually we do not want to issue patents for inventions that are not considered new, which seems fair enough. The trouble is defining what is “new.”

See There is No Prior Art for My Invention. The reality is that there is always prior art for an invention, the questions are just how close is it to what you want to protect and what are the reasonable expectations for obtaining a patent? That is why inventors should always do their own patent search to start, but should also eventually hire a patent attorney to engage in a thorough patent search and patentability assessment.

ipwatchdog.com/2010/10/02

http://tntech.libguides.com/patent

Section 2: NoveltySections (2.01 - 2.41)

www.gov.uk

On March 16, 2016, it will have been three years since the definition of prior art changed under the America Invents Act (AIA). Under the AIA, every application filed on or after March 16, 2013 is examined under a new standard for anticipation, unless the application has an effective filing date before this date. In essence, the passage of the AIA converted US patent law from a ‘first-to-invent’ to a ‘first-to-file’ system, thereby harmonising the US patent system with the rest of the world.

www.worldipreview.com

http://dx.doi.org/10.1002/smj.2279

http://dx.doi.org/10.1007/s11192-016-1858-9

Patents non-prophetic vs prophetic

By Russ Krajec, April 26, 2016, www.ipwatchdog.com

A startup’s patent portfolio can be thought of in two distinct patent types: prophetic patents and non-prophetic. Non-prophetic patents can also be thought of as “data-driven” patents. Prophetic patents are a necessary evil, but they can be very damaging to a startup when used badly.

Prophetic patents are those that are almost purely forward-looking. These patents are filed prior to raising funds or at least before going to market. They are prophetic in the sense that there are guesses about how the technology will work and how the market will adopt the technology.

The first patent is typically filed prior to entering the market. This prophetic patent might have several different ways a product may be designed and capture a couple different ways the product may go to market.

The first patent will NOT be the most important patent in the portfolio, so do not treat it like it is. Conceptually, the first patent might be merely a placeholder or framework into which other patents will follow. Practically, this patent application must capture the one or two points of novelty that differentiate the product – and nothing more.

Do NOT put too much information in the first patent. Far too many inventors and entrepreneurs file gigantic, self-written prophetic provisional applications. These are a very bad practice. “Kitchen sink” patents – where everything is thrown in – can cause endless problems down the road. These patent applications are brain dumps of as much information as possible.

Disclosing too much information prevents getting a patent on the actual invention when the research is actually invested to figure out how to do it. Everything in a patent application is prior art which will be used against the company down the road. This includes provisional applications, which are publicaly available once their non-provisional cousins become public. When a provisional application states that something is possible but does not explain how to do it, an examiner can still cite it as prior art.

Non-prophetic or “data-driven” patents cover things for which data exists. The data may be performance-related test data, or market-related data that comes from customer behavior. The patents that come from market-related data tend to be some of the most valuable patents in a portfolio. The idea of “data-driven” patents is that there is substantive data that supports the business proposition of the patent. The substantive data can be test results, but the most important data are market results. When the patent captures a deep market insight, such as a customer pain point, that patent has strong commercial value.

In general, data-driven patents will have much more value than prophetic patents for two reasons:

● There is less guesswork about the technology, which means the claims will be more meaningful.

● The decision to protect something has real business value, meaning the money is well spent.

The data-driven patents can also be thought of as risk-reduced patents. The risk of a patent is the technology risk and the market risk. When data exists on either the technology or market risk, the overall risk of a patent goes down.

NON-PROPHETIC PATENTS PROPHETIC PATENTS

This is an excerpt from “Investing In Patents” by Russ Krajec, CEO of BlueIron IP, a patent investment company that finances patents for startup companies. “Investing In Patents” is available on Amazon in paperback and Kindle.

Patents Provisional patent

By Gene Quinn, October 19, 2013, www.ipwatchdog.com

In almost all circumstances, an entrepreneur or startup company should NOT get a provisional patent application. The main purpose of the provisional application is to *delay* the patent process. A delay is very useful for circumstances, such as pharmaceuticals, where most of the value of the patent is at the end of the patent term. This is not the case for almost all startup companies.

First, having a patent application quickly will add value to the company. It makes business sense to get patents as fast as possible, since the company’s valuation will go up if you are raising money, and it gives the startup company at least some protection in the marketplace. I suggest using the Patent Prosecution Highway or Track One to expedite the patent to try to get a patent within 1-2 years, not the sometimes 5-7 years without expediting.

Second, a “thin” provisional application does far more damage than it helps. Many people file a 1-2 page provisional application, then think they will come back a year later and pay an attorney to write a “full” patent application. Entrepreneurs ofen think that they are “protected”, so they go out and freely discuss their inventions with customers, investors, and the general public during the one-year period.

This creates a situation where you have two filing dates: a first one for the provisional and a second filing date with the rest of the material. The “full” patent application probably has much more material that is needed to support the claims in the patent. This creates a weird problem: the provisional application is “prior art” against you on later patent applications, but it is not enough to support the claims. The damaging prior art will hurt all of your future patent applications.

All European and other international patent rights are lost through this process. The European Patent Office requires full support for claims in the specification. Since you didn’t have this support in the provisional, then you talked about the invention publically before filing the non-provisional, your international rights are lost.

If the invention is truly valuable, it makes much more sense to pay for a competent attorney/agent to draf a full, complete patent application covering every variation you can imagine for your invention. File this application as soon as possible, and grow your business accordingly. There is nothing more depressing than to tell an entrepreneur that much of their patent rights were lost because they tried to save a couple dollars by filing a provisional.

A common question I receive from inventors and decision makers at Start-ups is whether they should file a provisional patent application or a non-provisional patent application for their new invention. There are benefits and detriments to both ways of beginning the patent process for an invention, which in some industries may be more important. Below are some factors that you may consider. As a patent attorney, for most small start-ups dealing with software and mobile applications I recommend filing provisional applications for many of their inventions.

piersonpatentlaw.com, Gene Pierson

Finally, it is also critical to understand that a provisional patent application does not protect your invention from copying by others. Remember, there is no such thing as a provisional patent. You will not obtain exclusive rights until a patent issues, which won’t possibly happen until after you file a non-provisional patent application that has been reviewed and allowed by a patent examiner. Thus, it is incorrect to think of a provisional patent application as creating some type of exclusive right. There is no such thing as a provisional patent, period. You can file a provisional patent application as a low cost first step toward achieving a patent, but the Patent Office will never issue a provisional patent.

ipwatchdog.com/2016/03/05

http://krajec.com/provisional-patent-applications-are-wrong-for-your-business/

Patents Going International

JEFFREY SHIEH

readwrite.com/2012/08/22

www.epo.org

Home > Legal issues & red tape > Intellectual property law

In UK, startups.co.uk

https://startupxplore.com/en/blog/startup-patents-in-europe/

techcrunch.com/2012/08/17

The innovative start-up looking to protect its market and increase its value will often file for patent protection. But when making the decision to seek patent protection, it will quickly face a second question: Should the start-up file for international patent protection?

There is no such thing as an international patent but there is such a thing as an international patent application. (But see #4 below regarding the European Unitary Patent.) 148 countries, including all the countries where a start-up might want to file a patent application except Taiwan, are signatories to the Patent Cooperation Treaty (PCT), which accepts PCT patent applications. A PCT application in most ways is the same as a US application, and within 30 months of its filing, an applicant can transition the PCT application into individual countries, including the US.

http://www.schottpc.com/start-ups-primer-on-interna.html

By Gene QuinnNovember 3, 2011

The Patent Cooperation Treaty, or the PCT as it is typically referred to, came into existence in 1970, and has been subsequently several times. It is open to States party to the Paris Convention for the Protection of Industrial Property (1883).

The PCT procedure consists of two main phases. As already mentioned, the first phase begins with the filing of an international application. The second phase begins with the international application entering into any number of countries to be evaluated under the patent laws in force in each particular country where you want a patent. Thus, there is said to be an “international phase” and a “national phase” to the PCT process.

www.ipwatchdog.com/2011/11/03

techcrunch.com/2012/08/25

Patent Quality

Unintelligible patents are the hallmark of patents written by someone who does not understand the invention or by someone who wants to make the patent so obtuse that they need to go to court. In either case, the patent does not have much value.

Many inventors boast that they did not understand their patent application because their attorney used “legalese.” Some even joke that it was so dense that they did not even know if their invention was in there.

Make no mistake about it: a good patent is easy to read. It is difficult to write a clear description, and it takes ingenuity, thoughtfulness, and a big effort (read: motivation) to fully understand the invention, digest it to its essence, and write a clear description.

One quick way to assess patent quality is to look at the list of cited prior art for an issued patent. If there are only 4-5 references, all with little stars indicating that they were cited by the examiner, there is a good chance that a searcher could find something to challenge the patent for an IPR proceeding. If there are lots of references, especially non-patent references that show competitor’s products, the patent is probably very strong.

ipwatchdog.com/2016/05/21 ipwatchdog.com/2016/05/31

New inventors are often unaware of the quid pro quo that is fundamental to the patent system. The inventors must show the world their innermost secrets of how to make or use their invention. In exchange, the government grants a limited right in the form of a patent.

There are many examples of patents that had virtually no value because the claims were undetectable, unenforceable, or ridiculously narrow. In the process of getting a worthless patent — a bad patent, the company gave up their complete roadmap for how to manufacture and use their product.

These bad patents are not just a waste of money, but their competitive advantage is eviscerated by disclosing everything they know. The bottom line: Some patent applications can be very damaging to a startup company.

Many investors want to check the box of “is it patented?”. However, most investors are not aware that the patent will post all the company secrets online for all competitors – with virtually no benefit to the company. The decision to get a patent or not needs to be made carefully and thoughtfully, and many companies are better off with no patent protection.

Trade Secrets #1

Protecting Your Startup Innovations - Patent v. Trade SecretFay Sharpe LLP,USA August 24 2016

Whether by patent, trade secret, or both, employees should be made aware of your plan for protecting your IP (“intellectual property”). An IP attorney can help you determine which inventions for products, processes, and internally-used technology are better suited to maintain in secrecy or to patent.

If trade secrecy is an appropriate protection plan, develop a trade secret program which apprises employees of the risks and goals of trade secret law, company information that constitutes a trade secret, the competitive value of the company’s trade secrets, and the respective employees’ role in the trade secret program. Trade secrets now more than ever are vulnerable to misappropriation from competitors or even ex-employees. Factors such as advances in technology, increased worker mobility, and expanded business opportunities through company globalization subject your trade secrets to misappropriation. An effective trade secret program should be tailored to recognize and address the vulnerabilities which exist due to these factors.

Similarly, a successful patent protection plan should inform all employees of the risks and goals of patent law, the innovations you plan on protecting in a patent, and the competitive value of patents. Informing and involving employees in your patent protection plan can prevent accidental public disclosure of products/processes or internally-used technology prior to filing for a patent. Such disclosures can prevent future patent protection, especially when a patent is sought in foreign countries where premature public disclosure or sale can completely bar patent protection outside the United States.

As your startup continues to establish itself and pioneer new innovations in your respective field, it may be important to distinguish which innovations to maintain as secrets and which to patent. Making sure your employees are up to date on your protection plan will go a long way in preventing, or at least mitigating, the potential loss to rights on your innovations

http://www.lexology.com/library/detail.aspx?g=7c436fd4-391e-4e3b-9b09-b8e59ab18079

IP Protection Strategy

Your IP protection should exist in form of a complex strategy, rather than scattered practices. IP protection comes in different shapes and forms. A lot of smaller companies with limited budgets typically opt for “trade secret” protection to avoid the hassle with patent registration.

However, as Lily Li, a patent strategist, mentions: “Though trade secret law allows you to go after employees who leak confidential information or companies that steal your technology, it does not protect you from competitors that independently develop your technology”.

Your competitors can freely patent the same invention and sue you afterwards for infringement. On top, separating manufacturing processes and disguising your technology may end up costing you more than patenting at the first place.

http://tech.co/tips-protect-startup-idea-intellectual-property-2016-03

Not all IP can be protected with patents. As Elon Musk said, "If we published patents, it would be farcical, because the Chinese would just use them as a recipe book."

Trade Secrets #2

www.starterincubator.com

Trade-secret laws allow for the recovery of monetary damages from, or even criminal penalties against, those that steal trade secrets. Annual losses to the U.S. economy from international theft of trade secrets has been estimated to exceed $300 billion. An effective system protecting trade secrets thus enhances the economy and promotes national security.

Our government recently enacted the Defend Trade Secrets Act (DTSA), a milestone for trade-secret protection. The DTSA creates a federal civil cause of action so that companies will no longer need to navigate a maze of state laws to enforce their rights when their trade secrets are stolen. In addition, the DTSA enhances remedies available to victims — in particular by providing for ex parte seizure orders under appropriate circumstances to limit further disclosure of the trade secrets. The DTSA is a great achievement that should both deter potential wrongdoers and ease the burden of enforcement on those that have been wronged.

The DTSA is also a “wake-up call” to companies that value and protect their intellectual property as trade secrets. Companies now have increased incentive to identify, capture, inventory and protect their potential trade secret information. Failure to do so now could forego the ability to leverage the DTSA downstream.

Recent court decisions have dramatically narrowed the eligibility of computer-implemented inventions for patenting. As a result, companies developing software-centric solutions are likely to rely more heavily on trade secrets to protect product innovations that can no longer be patented.

Companies may even choose to market their innovations in a way that favors trade-secret protection, i.e. by delivering innovations as services rather than products to avoid bringing the innovations out from behind their firewall (e.g. Google search services that do not reveal search algorithms or software delivered as a service).

Trade secrets and patents are not mutually exclusive — each can be of value. The DTSA improves trade-secret protection. Now that the DTSA is in place, we should turn our attention toward achieving a better innovation ecosystem by reversing or legislating away recent harmful court patent decisions so we restore the proper balance between trade secrets and patents. To best promote innovation, we need both strong trade-secret protection and strong patent protection going forward.

A person accused of misappropriating trade secrets might raise several defences. The most typical defence is that the accused developed the information independently. The accused also might defend a misappropriation claim by showing that the information was not in fact a secret, that it was authorised to use the information, or that the trade secret had been abandoned by the owner. More On http://www.fraud-scam.com/2016/0...

https://www.quora.com/How-do-startups-enforce-trade-secret-protection

Fragmenting the work is what I'd expect if you were the CIA. In reality, your product will suffer if you split up the work and withhold the "big picture" from your key contributors. Find someone you *think* you can trust, sign a good contract with them, then open up as much as possible about your vision for the product so that your designer can internalize that and add some value beyond your initial conception.

https://www.quora.com/Stealth-Startups

The DTSA defines “misappropriation” in terms of both improper acquisition or improper disclosure or use. These terms are broad enough that they include the typical unlawful means of obtaining trade secrets, such as theft, misrepresentation, and breach of a contract to maintain secrecy.

knowingstartups.com

Trademarks, Copyrights & Licenses

startups.co.uk

startups.co.uk

business.com March 9, 2016, Posted By Robert Klinck:

One of the ultimate ironies is that many entrepreneurs spend unimaginable time coming up with the perfect name for their company but then don’t take the step to run a trademark search for the name. This is a major mistake that could cost you dearly.

The best time to discover a trademark issue for your name of choice is at the outset. Sure, you’ve probably spent a good bit of time brainstorming for the perfect name, but you haven’t invested anything else in the name. If you discover a trademark issue for the name at that point, it’s easy to pivot and find a new name.

These business owners will spend time and money building a brand around their company name and building goodwill associated with that name without being sure that they will actually be able to continue using the name for the entire life of the business.

What will happen if a trademark issue emerges for one of these companies a year (or more) after it was founded? Most likely, the company will have little choice but to rebrand. In the process, the company will lose its brand awareness and the value of the built-up goodwill.

Failing to run a trademark search is a critical mistake. There are plenty of attorneys and search firms who will perform this task at a reasonable fee. But at a minimum, entrepreneurs should run a search through the Federal registry and should conduct an Internet search for the name.

Copyright is a form of intellectual property that protects the expression of ideas. Books, music, art, photographs, architecture and even computer software are protected by copyright. While copyrights protect the expression of ideas, they do not protect ideas or concepts themselves. For example, a copyright can protect a particular photograph of a bird, but others may still create their own photographs of the same type of bird.

Businesses should include the "©" symbol or the word "Copyright" with all materials it distributes. They should also include the year of first publication, the name of the owner, and the language "All rights reserved."

Finally, because the author is the copyright owner by default, startups should take steps to ensure that they receive the rights to any copyrightable work performed by employees or third-party contractors. The Copyright Act lists specific requirements for works for hire, and employment and third-party contractor agreements should include specific language to address ownership of any copyrightable works.www.ey.com, By Michael J. Kasdan, Esq. and Richard P. Zemsky, Esq.

Does ImageNet own the images? Can I download the images?For researchers and educators who wish to use the images for non-commercial research and/or educational purposes, we can provide access through our site under certain conditions and terms. For details click here

http://image-net.org/about-overview

TensorFlow is for everyone. It's for students, researchers, hobbyists, hackers, engineers, developers, inventors and innovators and is being open sourced under the Apache 2.0 open source license.

The license allows the user of the software the freedom to use the software for any purpose, to distribute it, to modify it, and to distribute modified versions of the software, under the terms of the license, without concern for royalties.

Caffe is a deep learning framework made with expression, speed, and modularity in mind. It is developed by the Berkeley Vision and Learning Center (BVLC) and by community contributors. Yangqing Jia created the project during his PhD at UC Berkeley. Caffe is released under the BSD 2-Clause license.

The BSD 2-clause license allows you almost unlimited freedom with the software so long as you include the BSD copyright notice in it (found in Fulltext). Many other licenses are influenced by this one.

Licenses If you are building AI products, the most likely you are using open-source libraries in your product, and you need to check that licenses allow commercial use of them. For example below Caffe and TensorFlow can be used for commercial purposes whereas the popular ImageNet cannot be used as a basis for transfer learning for example.

IP Trolls

http://www.theverge.com/2015/9/21

hn.algolia.com

paulgraham.com/softwarepatents.html

techdirt.com/articles/20120915

venturebeat.com/2014/12/01

A study from Boston University estimates that patent litigation destroys more than $60 billion in firm wealth each year, and that doesn’t even factor in ancillary effects, such as curbed innovation due to decreased amounts of venture investing.

It is now abundantly clear to me that Patent Assertion Entities (PAEs, i.e. patent trolls) are, in net, detrimental to business and innovation. Despite what they say, trolls are not making the world a better place for anyone. It is time they lay down their arms and allow companies to use the patent system in the way in which it was intended. Frivolous lawsuits are nothing new, but recent shifts have made trade secrets a

particularly attractive claim for anyone looking to go after a deep-pocketed tech company. As courts weaken patent protection to counteract trolls, companies have been keeping more of their intellectual property as unregistered trade secrets. That means more legitimate claims as companies choose to keep their tools as trade secrets rather than patents, but it also gives potential trolls more cover if they want to puff up a shaky claim into a quick settlement.

Trade secrets occupy a strange place in the IP landscape, more limited than copyrights or patents but far more powerful when they do apply. In most states, the information has to be protected by an explicit contract — typically either an employment contract or non-disclosure agreement. As soon as that information escapes from the scope of the agreement, it's a crime, punishable by fines, injunctions or even prison.

The Defend Trade Secrets Act, currently facing Congress, would make those cases easier to mount and even scarier for defendants. The act would let civil cases like the one against Uber move to federal court, where the scale of the ruling can be far greater. Even worse for defendants, the law would let courts seize any contested property while the case is being tried, the same way they might seize allegedly counterfeit goods. It's one of the scariest legal threats a company can get, and some scholars are already concerned that that power will give way to a new generation of legal bullying.

The bill's proponents counter that the new powers are necessary to stem the growing trend of international trade secret thefts. Chinese companies have been particularly active, implicated in stealing everything from high-tech antennas to proprietary corn seeds. Since more and more of that information is digitally accessible, companies have had trouble protecting it with pre-electronic laws.

NDA non-disclosure agreement

by Stef Lewandowskicreator.wework.com

By putting secrecy around your idea, you run the risk of sounding like an ideas guy, or worse, a no-idea guy. Ideas guys (I am guilty of self-describing as such in the past) assume that because they’re good at riffing on things and coming up with good suggestions that their ideas are of high value. And no-idea guys are people who have a predisposition for thinking they can come up with few ideas, and that this current idea is their one big idea of their life. The thing is, idea-having isn’t a limited resource.

Non-disclosure-by-default introduces the risk that your company culture could be poisoned by secrecy at an early stage. I distinctly remember moments in a previous “stealth startup” company where I and those around me were so tied down with non-disclosure that we didn’t tell our own families what we were working on.

The effect of this after we launched was that nobody was sure when or if they were allowed to talk about what we were working on. As we all know, regularly communicating about what your company is working on is a big part of a good marketing plan.

Stealth can be poison to company culture. Through secrecy, you accidentally push your company into a closed, rather than open, mode. And that can be hard to cure.

In general, I am open by default, and only if there’s a very good reason to not talk about what I’m up to would I keep it quiet.

Will it really protect your intellectual property?

Many would advise you to get some legal protection around your idea somehow before launching a business. That could be a patent, an exclusive contract to supply something in a particular market, ensuring you retain copyright over certain components, amongst other things. Raising investment for something where you’ve not covered the basics could prove pretty difficult.

I work on the web, though, and most of what I do relies on free, open-source, patent-free software, so it’s about finding the right parts to protect. Twitter’s approach sticks out as an example of a company doing things in a new way—they patent defensively with their Innovator’s Patent Agreement.

If there’s a part of your idea that’s patentable, sure, patent it if you want to do that, but you don’t need to lock down all conversations about your thing just because a component is novel — it’s counter-intuitive.

And furthermore, if you think I’m the kind of person who might take your idea and register something as a result of a conversation, why are you even speaking to me about it?

Alternate your idea-openness

Idea-having isn’t a depleting resource. There’ll always be another idea. Unless you think this is the only one you’ll have, which is a worry in itself, and another article.

You could, as I have, alternate between a number of different modes in relation to your ideas. For instance:

Please disclose—immediately tweet the idea you just had, then publish a hack after one day of work, then follow through, probably with an open source or creative commons licence thrown in for good measure. On Thursday we did this and put out four things in a day, including Shhare.io and Rumbleroll.com.

FrieNDA—tweet “hey guys, looking for some folks to try out a hack I’m working on”, share it with immediate friends but ask them not to talk about it just yet, put up a landing page, slowly develop the idea. We’re doing this with Wrangler.

Hack-and-think—do a little bit of “hey guys!” but spend most of your time collecting great people around your idea, fulfilling regulatory restrictions and developing a product that is secure before you launch to market. We’re doing this with Savemates.

NDA for Investors #1

Many people these days do not understand the purpose or the need for an NDA. I politely decline signing the NDA and ask the startup founder not to tell me anything in detail and just keep the discussion at a high-level. The idea itself is NOT confidential! … Why would I want to sign an NDA for someone to just disclose their idea to me. The cliche goes like this ** ideas are a dime a dozen. It is all in the execution. **

I asked an attorney her opinion on this topic. She introduced a concept to me called the FrienDA (pronounced Friend - Dee – Yay, There is no real legal document called the FrienDA.). She said that for most purposes, when you are just sitting down and exploring an idea at a high-level, it should be a handshake and an understanding that you would not go about telling the whole world what you just heard. They are in stealth mode and may not be ready to let others know about their existence yet. There might be some real competition and they are not yet ready to reveal themselves to the competition. These situations might warrant a FrienDA but still not an NDA since there is no real business transaction context between the two parties.

Not a single VC or investor I know will ever sign an NDA. Why? They see hundreds of ideas every month and have so many discussions with several people. There is no way that they can even realistically know if they are protecting confidentiality at the level of an idea.

Entrepreneurs, no one really wants to steal your idea. Only you have that passion to execute your idea. I shared 5 suggestions in another post, to make your startup become successful. The investors really want you, the startup team, that is capable of execution. They probably already saw similar ideas from other people in the past.www.linkedin.com/pulse

http://learn.onemonth.com/

In this interview with Jeremy Glaser from Mintz Levin, we discuss the key elements of various forms of Non Disclosure Agreements (NDA). We go on to discuss when you should use what types of NDAs. Investors, including Venture Capitalists and Angel Investors typically will not sign NDA. Patrick Henry, the CEO of QuestFusion

http://questfusion.com/non-disclosure-agreements-critical-startup/

NDA for Investors #2

http://alexanderjarvis.com/2016/06/29/ By Alexander Jarvis

Why shouldn’t I ask for an NDA?

If it isn’t clear yet, here are the 6 reasons you really shouldn’t ask for an NDA:

1) Trust red flag: You are implicitly telling the VC you don’t trust them, this is not a great start to, what could end up being a very long marriage is it? Gold-diggers freak out at pre-nups, can you image sending one to a dude/chick on Tinder before a first date? Yes, that would be dumb and so is asking a VC. As Mark Suster at Upfront Ventures says: “If we had a reputation for sharing proprietary information we wouldn’t get too many entrepreneurs knocking on our doors.”

2) I have n00b stamped on my head: There are so many sources of information these days of how not to be a total n00b, that it’s almost a test VCs set to see if you have done any basic research and are taking this raise seriously. Asking a VC for an NDA is like a trip-wire for stupidity. If you set off that big badda boooom what happens next is unlikely to be auspicious

3) Implies your idea and what you have done are more important than what you will do- execution!: Ideas don’t matter, execution does. If you are so confident in your ability to hustle and get shit done, do you care if your competition knows something about you? Huh, aren’t you about to tell the VCs that you are going to out-execute everyone and you have a better team (your ‘special sauce!’).

4) Where you start and end may well be different: Startups sometimes make big pivots, focus on a new demographic etc, right? Twitter/Odeo, Instagram/Burbn etc. VCs know you will change and the value of an idea is limited. It’s only what you execute that matters

5) Your secrets are not as secret as you think: Very few things are unique and very few ideas are unique to you. Someone else has had your idea already, just not executed on it. unless you have a Theranos (that works) sort of startup or the formula for Coke, who cares about your new food delivery idea?

6) There is always a way to screw you, or brain rape you: Why can’t a VC have a series of meetings with you, bring in some ‘experts’ to evaluate your idea, take notes and get more value than the garbled attempt at communication you called your pitch deck? It happened in Silicon Valley right? It is called brain raping. I’ll show a little video about it later in the blog.

When is an NDA ok?

When you do sciency stuff I don’t understand and you need a PhD to evaluate it before a deal gets done. This is the only time you are going to have an NDA signed, and it is only going to apply to that tech, not the more general process or disclosed info too date. Theranos never shared how they did their witchcraft, which is also why they never got top-tier VCs and got Wellington instead (Who also invested in Powa Technologies, a total disaster of a company). They raised a ton of cash without sharing their special sauce.

quora.com

NDA for Entrepreneurs and team

I will look at NDAs from an entrepreneur’s perspective and make the argument that pursuing an NDA may not be a particularly effective strategy anyways. Note: This is not legal advice (I’m not a lawyer), but just one guy’s opinion on how NDAs (or the pursuit of them) may distort your reality.

One of the biggest problems startups face is that they invest time/energy/money into an idea under the false premise that they will be the first/only company in that market within a given window of time. In most cases, this is simply not true. By talking to people (that you trust at some level) and discussing your idea, you’ll get a better sense of who is out there doing similar things. If I try to keep the idea a secret, I’m likely not to discover this information until it’s too late. I would further argue that a founder’s basic fear – that revealing the idea will cause a bunch of people to hear about it, recognize its brilliance and then pursue the idea themselves, is very rare.

I would argue that the truly special/secret stuff you don’t want to reveal anyways (with or without an NDA) unless you’re so far along in a conversation with a potential investor/advisor that it becomes necessary and makes sense. The fallacy of the NDA in this situation is that it actually has any value. In most cases, it doesn’t. As a startup, your ability to actually enforce the NDA is minimal. What’s left is the vague notion that by signing an NDA, the person/firm you reveal your information to is less likely to cavalierly share it with others. This is an interesting notion, and I can’t refute it.

So, to summarize my points:

1) Its often in your interests to share the “what” (but not details of the how) as early in the process as possible. In this case, an NDA is not relevant.

2) Don’t rely on an NDA to protect the truly “secret” stuff. It’s likely not going to give you the protection you think it is.● Your odds of actually getting someone to sign the NDA are low anyway, so it’s likely not worth the effort.

onstartups.com

brightjourney.com

http://askstarting.com/

blog.legalhero.com

NDA Comments from community

#1: They are a waste of time both because most VCs won't sign them and because they are nearly impossible to enforce. The only enforcement avenue is a lawsuit, which the VCs can more readily afford to fight that you can, and the burden of proof is on you. The Facebook case is an outlier, and the Winklevi were able to fight it only because they came from a wealthy family already. And they still only got a small fraction of the value of the company .I'd also argue they are largely unnecessary. Most VCs and entrepreneurs are too busy pursuing their own ideas to steal other people's, and most ideas really aren't that special by themselves. Execution counts for a lot more.

#2: NDA's are good. VC's do have conflicts of interest and this NDA has the potential to keep them honest. So what if they do not sign it. Those are the ones that have current or potential conflicts or may have an ulterior agenda to reverse engineer your product with another company on better terms than your proposed. So what if they reject it. You wouldn't want to do business with them anyway.

#3: If you cannot trust VC for your idea, do you think they will trust you for money they are investing in your co? Idea is nothing, until and unless its executed well.... and if you doubt your VC, they will never be part of you. As such relation are along with alike minded

#4: NDA conversations at the beginning are definitely a waste of time. You either have to trust the people or don't send them your information. That being said, I would not initially send them your "secret sauce". but some publicly available information like a website, 10 words about what you do, management team information, etc.. The reason that I will not sign one is that I get 500 investment opportunities a year and the likely hood that some of them are very similar is very real. If the NDA is required, I will just go to the next opportunity. You are competing against the other 499 when I have limited funds for these types of investment.

#5: Complete waste. Ideas are everywhere - there's a surplus of ideas ( how many social networks have been created? ).Only a tiny fraction of patents have actually made it to market and most of those are forgotten today. Execution is everything.

#6: Employees should sign 4 documents: 1.) A Confidentiality Agreement; 2.) Conflict of Interest Document; 3. Invention Assignment Agreement (If you are working on my dime, I own it; and 4.) A Non-Competition Agreement

#7: This has been asked a lot. I've answered it a number of times. The answer is "it depends". It's true that VC's won't sign them, it's not for them. If you have some special IP though that need not be revealed to get them on board, it might be worth having an NDA for the technical people working on the project, and anyone else who wants to know to details of the IP. For the VCs all you need tell them is that you have IP and that it is protected, and thenfuhgeddaboudit. Of course to get it protected you'll need to file a PPA (until you get funding, then you'll file for an NPA which is permanent protection)... I strongly recommend ipwatchdog.com for assistance with that (I'm also happy to help).

#8 If your idea is easy to copy or do, somebody will, and you most likely will not have the time, nor the money and energy to sue. Short time to market is your only chance to succeed..If your idea has some sort of a complex process, R&D, or requires big funding to copy, you are fine anyway. Probably a patent of sort is in the works. So, you are protected if the idea needs huge investment. Either way, NDA will help you nothing, only irritate your potential investors or partners. On the other hand, there are people that still think NDA is worth anything. And may say they will not invest in you, because you are not doing the minimum required to protect your idea and product. The best approach for me is to have an NDA ready, just in case, but don't require it to be signed, in order to discuss your startup.

http://members.founderdating.com

IP & VC Technical Due diligence what is due diligence?Angel Due DiligenceGetting Started – Key Factorsforbes.com/sites/mariannehudson/2015/01/15

There are some very good practice resources for angels to learn about comprehensive due diligence, including questions to ask, checklists that angel groups use, best practice papers summarizing recommendations from top angel investors, andcourses on investment best practices.

quora.com

onstartups.com

betakit.com

Due diligence is a rigorous process that determines whether or not the venture capital fund or other investor will invest in your company. The process involves asking and answering a series of questions to evaluate the business and legal aspects of the opportunity. Once the process is complete, the investor will use the outcomes of the process to finalize the internal approval process and complete the investment. marsdd.com

Due diligence applies to both assessing the startup from the investors' perspective as from the startup's perspective as you want to have 'good money' to your company rather then 'bad money'

techcrunch.com/2011/06/18

I hear a lot of horror stories about investors. There are countless stories of mysterious Middle Eastern angels who put teams through painful pitch, due diligence and negotiation processes only to bail (post-term sheet) after months of promises and B.S. about the money being delayed/lost/stolen/on the way. This kills companies. I’ve watched great entrepreneurs with brilliant ideas sink because they’ve been fucked around and because they made poor choices.

medium.com/point-nine-news

Technical debt in one image (source)

amazon.co.uk Due Diligence Techniques and Analysis: Critical Questions for Business Decisions by Gordon Bing

IP & VC Technical Due diligence what iP is shared?

telecareaware.com

seekingalpha.com

It seems the company doesn't really have any intellectual property and is worth closer to $0, versus the $9 billion valuation it once had.

The story of a revolutionary technology commanding a multibillion dollar valuation without any real due diligence being done would not have worked for too long in the public markets.

Third and finally, the main lesson in the Theranos story is to always do your due diligence and get the answers on your own. Do not rely on other people to have done their due diligence, because the Theranos fraud was engineered by a whole group of people all thinking that the other ones had done in-depth research on the company. In fact, it appears that no one had done the research on the company

startups.stackexchange.com

Argument for keeping trade secrets secret from VC

The best argument for keeping trade secrets secret from investors comes from Justin Camp in Venture Capital Due Diligence: A Guide to Making Smart Investment Choices and Increasing Your Portfolio Returns (Wiley, 2002). On page 123, he discusses due diligence with respect to trade secrets. Investors should check to make sure trade secrets are carefully protected - among other things

Allowing access to the company's trade secrets only to those for whom access is absolutely necessary.

and

Requiring all business partners, investors, and any other parties for whom access to the company's trade secrets is absolutely necessary, to sign NDAs or confidentiality agreements.

In other words - the VCs should be ensuring that even they don't get access to trade secrets unless they absolutely need them.

quora.com

IP due diligence is essentially an audit to assess the quantity and the quality of IP assets owned by, or licensed to, a company. It should also include an assessment of the IP related risks facing the relevant company plus details of if and how these IP related risks are being mitigated.

Trade secrets are a crucial part of the IP portfolio of most companies, and of course should be included into any IP due diligence exercise. Auditing the trade secrets of a target company is therefore a crucial part of any such exercise, but one which poses major challenges, given the very nature of trade secrets.

linkedin.com/pulse

Due Diligence Startups for venture fundsThe funniest joke (for SV insiders) from the season finale Of Silicon Valley TV Show ....https://www.reddit.com/r/SiliconValleyHBO/comments/4q1f4h/the_funniest_joke_for_sv_insiders_from_the_season/?st=itz2rz0t&sh=0d75d94c

omnipedia[S] 6 points 3 months ago: Here it is: http://www.thefunded.com

Sometimes you can get good dirt on the partner you're talking with. An excellent resource for deciding who to let on your board (eg: they will get called douchbags here if they are, or defended by those who haven't yet discovered they are douchbags.) Just checked, and people are still posting shenanigans (like a VC firm that is top tier taking a meeting just to pump the company for info before funding a competitor who they are much further along with.)

VCs will always tell you that it's all about relationships and that you can trust them because they need to maintain a good reputation. It's bunk, and this includes VCs outside the valley. So, on TheFunded I take negative reviews as %85 gods honest truth, and positive review as %40 true. I'll be honest, in 30 years I've never done a deal or worked at a company funded by a VC who I would want to do a deal with a gain. That's not the case with angels. No really bad angels that I can think of (some didn't live up to my standards but that's ok, not everyone will, doesn't mean they are bad.) Most angels have been great.

http://www.thefunded.com/funds/show/Andreessen+Horowitz

http://www.thefunded.com/funds/show/Ariadne+Capital

http://www.thefunded.com/funds/show/Fidelity+Growth+Partners+Europe

http://www.thefunded.com/funds/show/Y+Combinator

“Glassdoor” for VC companies assessed by the entrepreneurs

http://www.thefunded.com/

Intellectual Property and VC Investment #1

http://dx.doi.org/10.1007/s40812-015-0023-4

http://dx.doi.org/10.1093/icc/dtw035

Elasticity of log(l) or log-link of Y (number of patents) with respect to intellectual property rights (IPR, copyrights and patents) (based on 2010 data).

http://dx.doi.org/10.1016/j.jbusvent.2016.07.004

Most of the literature on IPR and VC has focused on patents (Hsu and Ziedonis, 2013 and Mann and Sager, 2007). However, far less is known about the impact of trade secret protection on VC. In this paper, we focus specifically on the IDD, a strong form of trade secret protection. By exploiting a longitudinal variation in inevitable disclosure rule in the United States, we show that a rule in favor of inevitable disclosure increases VC investment per start-up in a state by about 27%. This result is driven by an increase in the number of companies receiving VC financing, mainly in industries where trade secret protection (vis-à-vis patent protection) is more important and in states where non-competes are less enforceable.

Intellectual Property and VC Investment #2

http://dx.doi.org/10.1016/j.respol.2011.05.003, Cited by 71

In summary, there is statistically significant evidence to claim that patents help start-up firms to grow faster (between 8% and 27% per annum) than non-patenting start-ups.

Boldrin and Levine (2008, p. 42) assert that [n]either Google nor YouTube nor Skype is the golden egg of the patents’ chicken, and in fact they do not use patents to retain their competitive advantage, suggesting that these firms do not owe their spectacular success to patent protection. While this may be true for these companies, our findings suggest that patents may play some role in improving new firms’ performance more generally.

http://dx.doi.org/10.1080/10438599.2015.1076200

http://dx.doi.org/10.1142/S1363919615500061

Highlights● Among the first studies to examine patents and trademarks from an integrated

view.● There exists a complementarity between patents and trademarks in VC financing.● Complementary effect of the two IP rights brings higher VC valuation to a start-up.● This complementary effect exists only for initial VC funding rounds.● This complementary effect diminishes in later VC funding rounds.http://dx.doi.org/10.1016/j.technovation.2015.11.005

Intellectual Property and VC Investment #3

Department of Technology Management and Economics Division of Innovation Engineering and Management

Chalmers University of TechnologyGöteborg, Sverige 2016

Report No. E 2016:075publications.lib.chalmers.se

This study examines how venture capitalists use patents when evaluating early stage tech companies. From interviews with 13 venture capitalists we find that there is great heterogeneity in how investors evaluate and regard patents. As such, the content and depth of their evaluations differ; some investors almost never value or evaluate patents while others always evaluate them. Given these vast differences it has not been possible to find a generalizable approach followed by VCs in all situations.

Our research implies that there has been an overemphasis from the literature on the signaling value of patents. Most commonly, patents were not evaluated before the term sheet was signed other than through discussions with the founders and as such the patent documents did not serve to reduce information asymmetries.

Author: Line Lage; Exam No: 410248, Department of LawAarhus School of Business and Social Sciences Aarhus University August 2015pure.au.dk

The thesis also finds that patents are the least important appropriabilty mechanism for software SMEs. In fact, the most important approriability mechanisms lie outside the intellectual property right (IPR) system, as first to market and complementary assets are the most important mechanisms. This is due to the rapid technological development of software as well as the short life cycles and lead-time of many software products.

The use of copyright and trade secrets are also widespread among software SMEs due to the lack of registration- and maintenance costs and the instant protection as opposed to patents. As such, it is found that software SMEs can- and do use several complementary appropriability mechanisms at the same time.

Patents for AI technology

One signal of this change is the dramatic increase in the number of companies making serious investments in Machine Learning. IBM is the most famous example with Watson and their innovative cloud service. But Google, Amazon and Microsoft are also deeply involved. Even Uber just bought a whole department of strong University talent from Carnegie-Mellon. These actions are not those of crazed corporate lemmings pouring their money off the cliff. No, not at all. The investment is increasing because finally, after decades of disappointment, Machine Learning algorithms are solving useful problems and delivering useful results.

Who actually owns the IP with AI? Patent law was designed to protect the work of inventors. Inventors are the ones “who conceived the invention.” Patents give inventors an exclusionary right to their particular invention. Patent protection provides a mechanism to compensate inventors for their investment in developing the invention, e.g., by permitting others to practice their invention for a fee.

But the rising capability and prevalence of AI seem to pose a threat to this system. First, as discussed before, identifying the problem itself is not patentable. In some jurisdictions, problem identification by the inventor does not protect against a claim of obviousness when the solution combines prior known elements.

Consider then the case where the researcher presents the AI entity with a problem to solve. The AI entity then crafts (or “deep learns”) the solution. Who is the inventor of that solution? Certainly not the researcher, since current law does not credit problem identification by itself worthy of patent protection. Furthermore, the researcher didn’t actually create or even discover the solution (the AI did).

The arrival of IBM’s Watson and his cousins from other companies is a game changer. The new technology affects many things including the world of Intellectual Property. Those who hate patents anyway will likely cheer this coming world.

With some predicting that artificial intelligence (AI) will allow a patent to be filed and granted without human intervention within the next 25 years, WIPR assesses the potential impact of AI on the IP landscape.worldipreview.com

cipa.org.uk/policy-and-news

Eventually level the field by reducing the need for lawyers

Data Security for IPData Security

During the early stage most probably you’ll prefer to save some dollars and opt for a free cloud storage, email and data sharing solutions. However, if you use unprotected channels constantly, you increase the risks of losing the key IP data. Consider moving your operations to encrypted channels as early as possible. Make email encrypting part of your web security policy, especially when it comes to sensitive communication about finances and product specifications. Requireusing strong passwords both on desktop devices and portable gadgets, especially fleshing drivers, which are typically neglected. Require your business partners to adhere to your security policy as well. Make sure your partners are using their own safeguards with equal diligence and don’t provide them with supplementary data accesshttp://tech.co/tips-protect-startup-idea-intellectual-property-2016-03

www.shaked-law.com/eight-common-startup-data-security-and-privacy-mistakes

1) The biggest single problem is not prioritizing data security.2) No one is responsible for data security.3) Failing to have clear privacy policies and terms of use on their

websites. 4) Not paying attention to data security “boilerplate” clauses in contracts

they sign. 5) Not paying attention to laws in different countries. 6) Allowing employees to use weak passwords. 7) No controls over “BYOD.” “Bring Your Own Device” 8) Lax personnel procedures.

While entrepreneurs are loathe to spend time on the “administrative” task of data security which does not “add value” in the same way as raising money or finding new customers, ignoring data security can come with a very heavy price tag down the road. A little attention can prevent a big disaster.

The single most effective way to protect yourself from a data breach is...

Security awareness training. Its cheap and for the very small - it is free. The vast majority of data breaches come from human error and social engineering. Ransomware is one of the top ways and can affect any size company. Here are some specific security tips I would advise:

(1) Don't click on anything suspicious or any type of attachment you are not expecting.

(2) Hover over a link to make sure it is a valid link.(3) Back up your data. Use multiple forms of backup as backup

often fails. Test the restore function and make sure it works.(4) Train your staff on security awareness training.(5) Don't pick up any stray USBs and don't plug them in!(6) Use a password tool like LastPass to protect your passwords.

digitalguardian.com

http://www.businessnewsdaily.com/6020-cybersecurity-solutions.html

Although the public typically only hears about cyberattacks against high-profile companies, banks and government websites, small businesses make prime targets for cybercriminals, competitors and disgruntled parties. Yet, due to their lack of resources, small businesses have the least-protected websites, accounts and network systems — making cyberattacks a relatively easy job.

Disrupting HealthcareEspecially in USA, the problem in healthcare is not really technical. The financial model and incentive metrics need to be disrupted which is opposed by various lobbyist groups that fear for lost profits.

disruptive healthcarehttps://techcrunch.com/2016/01/09/fee-for-value-drives-trillion-dollar-healthcare-opportunity/

https://www.youtube.com/watch?v=J-GVd_HLlps

Disruptive meaning now actually transformative and truly game-changing technologies.

https://www.bvp.com/

But even as waves of technological and economic disruption have washed over almost every industry in the United States over the last decade or two — commerce, finance, media, telecommunications — the everyday experience of healthcare stands unperturbed, stuck somewhere in the mid- to late-1990s.

Why is the nation’s $3 trillion creaky, monstrous and convoluted healthcare sector seemingly impervious to technological change?techcrunch.com/2016/05/11

disruptive healthcare Areas

Through Frost & Sullivan’s research, we have identified nine areas that are expected to see the most disruption and transformation within the eco system. Figure one discloses the areas that will be targets for disruption. Companies that provide solutions addressing the needs in the following areas will be the winners to come.

The Companies Disrupting Healthcare In 2015

Reenita Das I cover healthcare issues related to transformation and convergence

Healthcare is the worlds largest industry today – it is three times larger than the banking sector. After lagging behind for almost five decades, this industry is revitalizing and transforming itself faster than any other vertical.

JUN 11, 2015

disruptive healthcare Overview #1

In 2012, Vinod Khosla predicted that in time, "technology will replace 80 percent of what doctors do." He is spot on, according to Fahad Aziz (co-founder of Caremerge). "If we add machine learning, the field of study that allows computers to self-learn without specific programming to do so, to existing artificial intelligence (A.I.), the resulting machines will be better able to diagnose and heal patients than their human counterparts can now," he notes. However, to physicians who might become upset about making the sick bay in Star Trek the new reality, Aziz warns not to "overlook what Vinod was really saying--that big data, properly harnessed and utilized, has the potential to help physicians simply do their jobs better."

He continues, "While farfetched at the time, big data and machine learning have come far enough in just four years to provide gravitas to Vinod's argument. With a trillion gigabytes of patient data collected from devices, EHRs, labs, and DNA sequencing, alongside surrounding factors such as weather, geo-location, and viral outbursts taken into account, computers learn quickly, and they learn everything. The depth of information provided at such a scale suggests that in the future, patients won't need to consult with various specialties to figure out what's ailing them. Instead, consolidated data will enable a fully coordinated treatment plan -- something that even Steve Jobs couldn't create in the last few years of his treatment for pancreatic cancer."

inc.com/kate-l-harrison

Answer by David Chan, MD from UCLA, Stanford Oncology Fellowship, on Quorahttp://www.forbes.com/sites/quora/2013/12/11,

http://medicalfuturist.com/medical-specialties-with-the-biggest-potential-in-the-future/

Artificial intelligence, wearable sensors, virtual reality, medical robots – these disruptive technologies are completelychanging the way patients and doctors think and act about healthcare. It also seems inevitable that medical robots, automation and artificial intelligence will replace many jobs in healthcare. But as with other fields of innovation, there will be areas which will thrive with the help of new technologies.

disruptive healthcare Overview #2

According to the San Francisco-based venture fund Rock Health, funding for US health-tech start-ups exceeded $4.5bn in 2015, more than quadruple the 2011 total.

The boom in “digital health” has now given way, however, to a more sober mood as companies set about the difficult task of delivering on their ambitious and often unproven plans.

“There has been a lot of learning in the past 12 months — for companies and investors,” says Unity Stoakes, president of StartUp Health, a New York-based technology “accelerator” which helps nurture digital health companies.

While the froth may have subsided, the underlying current is still running strongly in favour of digital innovation. Research by McKinsey last year concluded that healthcare had greater potential than any other industry for value creation from “connected technology” by 2018 — more than twice as much as retail and three times the estimates for carmakers and utilities.

Mr Stoakes says large and small companies can learn from each other. “In technology the idea is usually to bypass the established companies. In healthcare it is better to take a collaborative approach. Established companies that engage with start-ups are likely to emerge as the healthcare leaders in future.

Prof Lionel Tarassenko of Oxehealth says some start-ups have made the mistake of seeking shortcuts to market in an industry where painstaking accumulation of evidence is essential for credibility. “Some of the things I read make me cringe,” he says. “Exaggerated claims will not help anybody.”

APRIL 1, 2016 by: Andrew Wardhttps://www.ft.com/content/0fcae4c2-e61f-11e5-a09b-1f8b0d268c39

What’s Wrong with Health Care

Similarly, the vast majority of research funding from the National Institutes of Health is aimed at learning to cure diseases that historically have been incurable. Much less is being spent on learning how to provide the health care that most of us need most of the time in a way that is simpler, more convenient, and less costly. hbr.org/2000/09

is it a disruptive product – one that fundamentally changes the way things are done, one that could turn an industry upside down? Examples of disruptive healthcare products include the Invisalign invisible bracing system developed by Align Technology and the Da Vinci robot from Intuitive Surgical. Both were clearly disruptive in very conservative, slow-to-change categories, but they were also really challenging, costly projects. Yet, for investors, whether crowdfunders or those involved in medtech venture capital, disruptive products can be very exciting and potentially worth the considerable risk to develop.

https://medtechengine.com/article/getting-a-medical-device-venture-capital-yes/

disruptive healthcare Overview #3

https://www.brookings.edu/wp-content/uploads/2016/06/rauch.pdf

HealthBeat’s tagline is “Smart Hospitals. Smart Patients.” Hospitals generate $1 billion in waste annually, according to some estimates. However, hospitals make up only a small percentage of the number of providers. So we’re including Smart Practices in our focus, too.

venturebeat.com/2013/02/15

Ben Popper: This was the year the tide went out in tech, and we learned who was swimming naked. After five years of ever larger funding rounds, the market threw some cold water on the party. From Dropbox to Square to Snapchat, a lot of "unicorns" failed to live up to their sky-high valuations. The poster child for this was Theranos.

I’m confident 2016 will be full of startups trying to help people find affordable health careand crunch the numbers on how to cure cancer, using the strengths of software and big data inside the life science industry. And in the wake of Theranos, I bet there will be less snake oil and pseudo-science that somehow gets funded. Meanwhile, Larry and Sergei will keep throwing their money at the search for eternal life, but eh, who are we to complain?

theverge.com/2015/12/29

hks.harvard.edu, Spring 2008

New York, April 10, 2014 –New entrants are poised to draw tens of billions of dollars in revenue from traditional healthcare’s $2.8 trillion revenue pie as these market disruptors rapidly develop products and services like the innovations that transformed banking, entertainment and publishing, according toHealthcare’s New Entrants: Who will be the industry’s Amazon.com?, a new report released today by PwC’s Health Research Institute (HRI). HRI found that consumers are ready to embrace new options being developed by new entrants from the retail, technology and telecommunications sectors, from smartphone otoscopes to online evaluations of digital photos of rashes.

pwc.com/us/en/press-releases/2014

disruptive healthcare Overview #4

FRANCINE HARDAWAY 08.15.2011 12:15 AM

(1) Conversion of physicians to electronic health records.

(2) Removing the reponsibility of records-sharing from the patient.

(3) The rise of the genomic signature as part of the medical record.

(4) Moving the responsibility care and outcomes from the provider location to the consumer location.

(5) The rise of health avatars.

(6) The change in physician compensation from fee-for-service to fee-for-outcomes.

https://www.fastcompany.com/1773215/6-major-disruptions-still-come-healthcare

http://www.healthcaredisruption.com/

This intensive learning experience takes you on a whirlwind tour from the San Francisco and New York, where you will meet a select set of disruptive startups and technologies, radical thinkers and visionaries, get acquainted with likeminded peers and learn new insights from the expert tour guides…All of this will give you a solid framework to assess future trends in healthcare – and of the threats and opportunities they pose for your business.

We will visit established players, as well as exciting new healthcare startups and disruptive players, have input from leading experts and visionaries in their fields, and try to understand the strategies for incumbent players in the healthcare space.

http://dx.doi.org/10.1136/amiajnl-2011-000094The EEOC framework was empirically developed as a tool to tackle organisational communication challenges in the implementation and evaluation of health information systems.

disruptive healthcare and design

Posted Dec 8, 2015 by John Maeda (@johnmaeda)

John Maeda, design partner at venture capital firm Kleiner Perkins Caufield & Byers, is an American designer, technologist and served as the 16th President of the Rhode Island School of Design (RISD).

The eponymous design firm IDEO is another organization for which the intersection of health and design isn’t new. Back when I was at MIT, I first came to know IDEO in the late 90s through their medical device practices formerly based in Massachusetts.

If you look at IDEO’s long list history of design for the medical space — ranging from a kidney transporter to a heart monitor — you can see that IDEO’s vaunted “design thinking” has long been grounded in a lot of “design doing.” The kind of design that IDEO has brought to bear in this space is, “Design to improve usability.”

Michelle Kim, lead designer at Mango Health, thinks designers should be gamifying healthcare apps so they are fun to play. Kim posits that the same person who enjoys playing Candy Crush Saga, should also have as much ease managing their chronic illness.

Kim enhances understandability by leveraging a patient’s familiarity with something they already know. Designers tend to have a broad vocabulary of objects and experiences in the world that they use to help a user “rhyme” something new with what is already old to them. In doing so, they create a context for a new user to be more apt to feel they can understand something new.

Practice Fusion, the cloud-based electronic medical system, mirrors the real-life workflow of a doctor’s office. Patrick Morrow, principal visual designer at Practice Fusion, explained that the front desk person spends a lot of time in the calendar system, while a nurse requires charting workflows for one-on-one meetings with patients. Morrow’s example illustrates how usability cannot be designed for without understanding the social and physical mechanics of the context for a real-life user

techcrunch.com/2015/12/08

http://pulse.embs.org/november-2014/creative-intelligence/

Investing to disruptive healthcare

Investing in disruptive healthcare Intro

The Eyes. Startups that address eye problems drew $848.9 million last year, making eyes the organ that was most attractive to venture capital in 2013. Venture investors have kept up the pace this year, sinking $442.7 million into vision disorders in the first half. Investment has surged because of rising demand for better treatments and technological advances that are making improvements possible. More than three million Americans age 40 and older are blind or have impaired vision, according to the Centers for Disease Control and Prevention.

A leading cause of blindness in people over 50 is the "wet" form of age-related macular degeneration. In the past decade, the introduction of drugs such as Lucentis,sold by Roche Holding Ltd. and Novartis AG, provided a breakthrough by helping patients maintain or improve their vision.

In more recent years, venture firms have funded startups that could provide patients with additional treatment options using drugs. These startups include such companies as Iconic Therapeutics Inc., which secured $20 million in April to develop a therapy that might improve vision in macular-degeneration patients.

By BRIAN GORMLEY, Updated Sept. 15, 2014 12:58 p.m. ET

What body parts are seeing the most striking rise in venture-capital funding?

The answer in recent years has been the eyes and ears, as investors have poured money into treatments for diseases causing blindness, hearing loss and other diseases affecting an aging population. At the same time, venture capital is pulling back from two historical leaders, heart and orthopedic conditions, in part because of difficulties in bringing medical devices for those ailments to market.

MORE FROM VENTURE CAPITAL DISPATCH

● Venture Capital and the Human Body: What Attracts Investors?● Five Takeaways From the WSJ Report on Venture Capital and the Human Body● Medical Investors Take a Whole-Body Approach● Gene Therapies Push Investors to Examine New Areas of Human Body

Investing in disruptive healthcare Venture capital #1

http://www.mddionline.com/links/venture

Startup Health recently called 2014 “the year digital health broke out,” and when you look at the numbers, you can see why:

● Digital health startups received $6.5B in funding in 2014, up 125% from 2013.

● Total venture investment for U.S. healthcare companies clocked in at$11.93B in 2014, composing nearly a quarter of all venture capital investment for that year ($48B).

● 2015 is on track to be a record year for venture investment in healthcare: through Q3, we’ve already seen $11.67B invested in healthcare companies.

● The number of healthcare venture funding deals grew 200% between 2010 and 2014.

● Startup data aggregator Angel List shows there are some 10,230 healthcare startups vying for the attention of 29,102 investors in that space.

Healthcare startups have always been attractive to venture capital, but where did this sudden interest come from? Quite simply, healthcare is overdue for disruption, and tech startups are in the perfect position to modernize the industry. The technologies we’re developing can and will overhaul how healthcare providers, workers, and families work together — so naturally, venture capitals want to get in on the ground floor.

http://www.huffingtonpost.co.uk/?icid=hjx004

Investing in disruptive healthcare Venture capital #2

Florence Comite, M.D. (@ComiteMD): “One VC that has had tremendous success in bringing healthcare businesses, such as Athenahealth,Ironwood Pharmaceuticals andIllumina to market despite these dynamics is Bryan Roberts, a partner at the Silicon Valley venture capital firm Venrock. He is known for investing for the long term, avoiding fads and investing broadly across healthcare, from biotech to health IT.”

As part of our Q3 Venture Pulse Report, developed in partnership with CB Insights, we highlighted a number of trends related to venture capital activity worldwide. One key trend was the growing interest in healthcare by VC investors. In fact, a number of mega-rounds globally meant Q3 was an active one. But with larger funding rounds has come a slight change in the profile of health investors. During Q3, corporate venturing arms of large pharma companies and large funds were particularly active in later, pre-IPO rounds.

While healthcare interest is rising, there are challenges in the healthcare investment landscape. The breadth and variety of sub-sectors makes it difficult for investors to be true domain experts in every area of healthcare. To compound this, consumer technology is playing an increasing role in healthcare – for example, through wearables and activity tracking. This requires patience and often collaboration with experts in other sectors – such as consumer technology and data analytics. But for investors who have such patience, the healthcare sector could offer some excellent opportunities in the future

home.kpmg.com

Investing in disruptive healthcare Impact Investment #1● The profit margins with disruptive healthcare might be lower as monopolies/cartels

are destroyed which makes the idea also harder to sell for investors.

● Enter Impact Investors

– Impact investing refers to investments "made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return" - wikipedia

– For example Khosla Impact (Vinod Khosla's) has invested into disruptive eye care startup EyeNetra.

https://www.crunchbase.com/organization/eyenetra

what we invest inEnables radically new unit economics that could destroy a monopoly, or obviate traditional means of resource allocationhttps://www.crunchbase.com/organization/khosla-impact

https://eyenetra.com/services-nayantara.html

fortune.com/2012/12/04

Investing in disruptive healthcare Impact Investment #2

For example Bamboo Capital Partnershttp://www.bamboocp.com/publications/bamboo-finance-impact-report-2015

Florian Kemmerich

Healthcare Fund

Bamboo Finance

http://www.medtechinvesting.com/

Social Impact Investment: Building the Evidence Basehttp://dx.doi.org/10.2139/ssrn.2562082

http://dx.doi.org/10.1007/978-3-319-25604-7_1

http://dx.doi.org/10.1016/j.jbef.2016.06.001

New and innovative approaches are needed for addressing social and economic challenges. Social impact investment has become increasingly relevant in today’s economic setting as social challenges have mounted while public funds in many countries are under pressure. This report provides a framework for assessing the social impact investment market and focuses on the need to build the evidence base. The report highlights the importance of further international collaborations in developing global standards on definitions, data collection, impact measurement and evaluation of policies. In a fast evolving new area, experience sharing between players in the market is also vital. International organisations, such as the OECD can play an important role in facilitating these collaborations as well as conducting further analysis and data collection.

Investing in disruptive healthcare Sample companies

With the goal of hacking Obamacare, Josh Kushner built Oscar in-house with cofounders Kevin Nazemi (a former director at Microsoft’s health care division) and Mario Schlosser (a data junkie who worked previously at Bridgewater Associates and McKinsey & Company ).

Launched in October of 2013, Oscar offers a simple and user-friendly website with a Google Map-style doctor-finder and a search tool that lets you enter symptoms in plain English. Other features allow you to compare prices of commodity services like MRIs and make free phone calls to doctors any time of day.

It will take more than free calls to make a dent in the highly regulated (and highly lobbied) health insurance industry dominated by giants like United Health, Aetna and Humana. Receiving big money from some of the tech world’s biggest investors is a good first step.

forbes.com/sites/stevenbertoni/2014/05/14

Oscar Health, the hipster insurance company, works with the wearable maker Fitbit. Insured people can submit their Fitbit data and if they reach their fitness goals, they get $1 every day. It helps keep people healthy and motivated with a simple but quantifiable reward.

The digital health platform, PatientsLikeMe, who want patients to share their health information to create collective knowledge about disease, health and treatments, executes informed consent by asking users to agree to their privacy policy, which clearly specifies which data is shared and which is restricted.

nanalyze.com/2016/08

Investing in disruptive healthcare Venture capital UK

Angel CoFund The fund is generalist by design, and naturally the portfolio splits roughly 1/3 life-sciences, 1/3 digital media and software and 1/3 everything else (cleantech, semiconductors, food & drink etc.). Life-sciences are thriving at the moment,driven by some strong macro trends around healthcare. We usually invest post seed level in small series A or pre-series A rounds, anything between £250,000 to £5 million round sizes where we are partnering with angel investors.

Passion Capital Average seed investment is less than £200,000. We particularly like fintech, cyber security/infosec, edtech, health/medtech and any other sector.

techworld.com/news/startups

www.imperialinnovations.co.uk/ventures

TVC 2015: Inga Deakin (Imperial Innovations) on "Investments in Life Science and Healthcare"www.youtube.com/watch?v=xJW_20Z2FwM

Scottish Equity Partners London and Glasgow based, it is one of Europe's leading growth equity and venture capital firms investing in sectors such as IT, energy and healthcare

Spark Ventures is a European early stage venture capital company making investments in early stage European (mainly UK) TMT and healthcare businesses

Wellington Partners based on London, Zurich, Munich and Silicon Valley, the firm invests in Digital Media, Cleantech, Electronics and Healthcare

newstatesman.com/politics/health/2015/12

Our main focus is European companies looking to expand to North America, however we also cooperate with healthcare service ventures in emerging countries. We accept mainly referrals through people we know and have worked with.

http://www.bbch.com/, Two Temple Place, London WC2R 3BD

Longbow Capital is a leading investor in UK-based, unquoted companies, predominantly in the health and well being sector.

Draper Esprit was founded in 2006 with a mission to back Europe's most ambitious entrepreneurs. We invest in every stage of building disruptive technology companies (incl. Health & Wellbeing).

Deepbridge Capital LLP (Manchester, UK) invests in medtech and life sciences.

Entrepreneurs Fund In life sciences we tend to invest in biotechnologies, medical devices, diagnostics, digital and mobile health.

Forward Partners From fashion & food to legal & luxury, we partner with the most talented founders at Idea and Seed Stage.

Therapeutics / Big Pharma investmentshttps://evobiotalent.com/news-analysis/2016-us-venture-capital-investment-into-life-sciences-companies-an-analysis-by-evolution-global/

With regards to disease indication, 35% of the VC deals analysed by Evolution involved the treatment of cancer. Of the deals analysed, 12% were involved in the treatment of Autoimmune Diseases, followed by Infectious (9%), Ophthalmology (7%), Orphan & Rare Diseases (6%), Metabolic (5%), Neurology (5%) & CNS (4%).

www.bio.org

The report, Money, momentum and maturity: UK biotech financing and deals in 2015/16, details trends in follow-on funding, venture capital activity, the strength of the R&D pipeline and rate of regulatory approvals, all of which are promising as the UK aims to become the third global biotech cluster.

AI Investments

European AI Landscape by Project Juno Aihttps://medium.com/project-juno/european-machine-intelligence-landscape-43a22b44e961#.hmg9xxfsi

● http://biobeats.com/● http://benevolent.ai/● https://cardiologs.com/● http://www.dexstr.io/

http://www.kheironmed.com/● http://www.mint-labs.com/● http://www.sophiagenetics.com

/● https://www.your.md/● https://www.zebra-med.com/

INVESTING IN AI #1

The AI startup landscape report has been divided into two sub-sectors — infrastructure companies, which provide cloud infrastructure, algorithms, libraries for creating AI based applications. Examples of infrastructure services include AI as a service (Data Robot, Sentient), NLP as a service (Nuance, SpinVox), and computer vision as a service (Face++).

The second sub-sector — AI applications looks at companies developing applications based on artificial intelligence technologies for different verticals. These include companies leverage AI techniques to build applications tailored for end use in enterprise (Palantir, Dataminr, Cylance), industry (ButterFly Network, Zest Finance) and consumer (X.ai, Anki) markets.

Over $1.2B has been invested in AI infrastructure startups since 2010 with ~$540M being invested in 2015-16. The top business models by funding are machine learning (Sentient.ai, Vicarious), enabling technologies (Attivio, Movidius), and NLP companies (Mobvoi, SpinVox).

Comparatively, AI application startups attracted over $8.5B investments since 2010, with over ~$3.5B being invested in 2015-16. Enterprise applications, which includes BI and analytics, marketing, security and surveillance, customer service, and sales attracted the most funding, followed by industry and consumer businesses.

Tracxn Research — Artificial Intelligence Startup Landscape, September 2016 from Tracxn

blog.tracxn.com/2016/09/01

INVESTING IN AI #2

https://techcrunch.com/2015/12/25/investing-in-artificial-intelligence/

Artificial intelligence is one of the most exciting and transformative opportunities of our time. From my vantage point as a venture investor at Playfair Capital, where I focus on investing and building community around AI, I see this as a great time for investors to help build companies in this space. There are three key reasons.

Third, we’ve seen significant improvements recently in the design of learning systems, architectures and software infrastructure that, together, promise to further accelerate the speed of innovation. Indeed, we don’t fully appreciate what tomorrow will look and feel like.

We also must realize that AI-driven products are already out in the wild, improving the performance of search engines, recommender systems (e.g., e-commerce, music), ad serving and financial trading (amongst others).

Companies with the resources to invest in AI are already creating an impetus for others to follow suit — or risk not having a competitive seat at the table. Together, therefore, the community has a better understanding and is equipped with more capable tools with which to build learning systems for a wide range of increasingly complex tasks.

How Might You Apply AI Technologies?

With such a powerful and generally applicable technology, AI companies can enter the market in different ways. Here are six to consider, along with example businesses that have chosen these routes:● There are vast amounts of enterprise and open data available in various data silos, whether web or

on-premise. Making connections between these enables a holistic view of a complex problem, from which new insights can be identified and used to make predictions (e.g., DueDil*, Premise and Enigma).

● Leverage the domain expertise of your team and address a focused, high-value, recurring problem using a set of AI techniques that extend the shortfalls of humans (e.g., Sift Science or Ravelin* for online fraud detection).

● Productize existing or new AI frameworks for feature engineering, hyperparameter optimization, data processing, algorithms, model training and deployment (amongst others) for a wide variety of commercial problems (e.g., H2O.ai, Seldon* and SigOpt).

● Automate the repetitive, structured, error-prone and slow processes conducted by knowledge workers on a daily basis using contextual decision making (e.g., Gluru, x.ai andSwiftKey).

● Endow robots and autonomous agents with the ability to sense, learn and make decisions within a physical environment (e.g., Tesla, Matternet and SkyCatch).

● Take the long view and focus on research and development (R&D) to take risks that would otherwise be relegated to academia — but due to strict budgets, often isn’t anymore (e.g.,DNN Research, DeepMind and Vicarious).

There’s more on this discussion here. A key consideration, however, is that the open sourcing of technologies by large incumbents (Google, Microsoft, Intel, IBM) and the range of companies productizing technologies for cheap means that technical barriers are eroding fast. What ends up moving the needle are proprietary data access/creation, experienced talent and addictive products.

Some companies are already hacking away at this problem:

● Sano: Continuously monitor biomarkers in blood using sensors and software.● Enlitic/MetaMind/Zebra Medical: Vision systems for decision support (MRI/CT).● Deep Genomics/Atomwise: Learn, model and predict how genetic variation influence

health/disease and how drugs can be repurposed for new conditions.● Flatiron Health: Common technology infrastructure for clinics and hospitals to process oncology

data generated from research.● Google: Filed a patent covering an invention for drawing blood without a needle. This is a small

step toward wearable sampling devices.

A point worth noting is that the U.K. has a slight leg up on the data access front. Initiatives like the U.K. Biobank (500,000 patient records), Genomics England (100,000 genomes sequenced), HipSci (stem cells) and the NHS care.data program are leading the way in creating centralized data repositories for public health and therapeutic research.

INVESTING IN AI #3

forbes.com/sites/louiscolumbus/2016/06/22

Conclusion

The 256 AI startups tracked in CrunchBase have generated a combined $1.62B in funding year-to-date. The majority have received an initial funding round (133 or 51.9%), with 61 (23.8%) having received two funding rounds. Just 32 (12.5%) have received three funding rounds. The majority of funding occurred in 2015 and continues to accelerate in 2016, showing how quickly investor interest in AI is growing.

INVESTING IN AI #49 Artificial Intelligence Applications That Won’t Work

If you’ve been keeping up with the latest technology trends then you will know that artificial intelligence has the potential to be perhaps the most disruptive technology ever. The bright minds at CB Insights recently put out a graph that shows just how much money is being poured into startups that are “involved in AI”:

https://angel.co/deep-learning-2

Recently IBM’s Watson was able to diagnose a patient and save her life buy using machine learning. When no other doctor could diagnose this patient, AI could by analyzing and learning from massive amounts of big data. In both these examples AI is doing things that are impossible to do using traditional programming methods.

A good litmus test for an application of artificial intelligence technology is to ask one single question; can this application of AI identify things that we weren’t able to using traditional algorithmic approaches? We fully expect to see loads of startups claiming to be “powered by AI” just to increase their appeal at their next funding round. So what’s the most ludicrous application of AI that you’ve seen yet?

crunchbase.com

INVESTING IN AI #5

An analysis of Facebook and Alphabet’s Google by research firm Innography shows a surge in AI patent filings that began in 2010. Alphabet currently has more than 3,000 AI patents that are active or pending government approval. Facebook has about 870.

http://briandcolwell.com/2016/08/investing-in-artificial-intelligence/.html

My 9 Rules For Avoiding the Downside of AI and VR1) Stay away from ‘Start-ups.’2) Stay away from big promises.3) Stay away from that which I don’t understand.4) Don’t try to make predictions.5) Don’t try to chase momentum.6) Don’t get sucked into the fear of missing out.7) Avoid businesses with management teams that are in denial or trying to delay new technology.8) Avoid companies that are fuelled by excessive debt and high hopes.9) Avoid companies running at a loss or generating no earnings. My 9 Rules for Finding the Upside of AI and VR1. Invest in businesses with ‘sticky’ customers and proven products and services.2. Invest in businesses with a vision they have a track record of achieving.3. Invest only in businesses that I can understand the dynamics of.4. Stick to fundamental analysis of individual businesses.5. Stick to purchasing investments at a discount to their intrinsic value.6. Focus on finding great businesses with the intention to hold long term.7. Focus on companies that have dynamic, open and personally invested management teams.8. Focus on companies that have low debt and plentiful earnings to re-invest into their

businesses.9. Prefer companies with at least 5-10 years of consistent earnings growth.

sharedinvestor.co/investment-philosophy

Like previous iterations of the internet and computing technology, the AIrevolution will reward new players who learn to use it to their advantage. AI will play a role as a fundamental predictive enabler to help us solve large-scale problems, and startups are poised to lead the way.

techcrunch.com/2016/08/27