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15

Jul

2014

NVCA to FCC: Keep The Internet Open to Innovators PDF Print E-mail

Bobby Franklin

Written by Bobby Franklin   
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The venture capital community is deeply committed to working alongside entrepreneurs to grow next-generation companies, the vast majority of which depend on the Internet to create new products and services and reach customers. The choice we face as a nation is whether to ensure equal and open access to the Internet for everyone or give preferential treatment to industry giants over early-stage companies through paid fast lanes.

In our filing with the Federal Communications Commission (FCC) today as part of the first round of comments related to proposed rulemaking on net neutrality, the NVCA and the nearly 400 member firms we represent voiced our strong support for keeping the Internet open to innovators. The venture capital community invests time, expertise and capital to build new ideas into sustainable, high-growth companies that impact that way we live, work and play. Because many of these innovative companies depend on the Internet to compete globally, it's critically important that the venture community does all it can to ensure these companies continue to have unfettered equal access to the Internet.

When venture-backed companies achieve scale, everyone shares in that success. People around the world benefit from new products and services, high-quality American jobs are created and the U.S. economy grows. Last year, the venture capital industry invested $19 billion in 2,281 Internet-related companies in the U.S., driving the advancement of innovations that exist specifically because of the Internet.

If we want to see the growth of thousands more companies next year, policymakers must protect and defend the unique opportunity the American entrepreneurial system offers. We live in a country where new companies can challenge industry incumbents by bringing innovative ideas to market. We must ensure innovators, from high school students to serial entrepreneurs, all have equal opportunity to access potential customers on a level playing field to build new companies.

 

Please read the NVCA press release and the full text of our letter to the FCC: 

 

July 15, 2014

The Honorable Tom Wheeler
Chairman
Federal Communications Committee (FCC)
445 12th Street SW
Washington, DC 20554

Dear Chairman Wheeler:

On behalf of the National Venture Capital Association (NVCA), I am writing to express our views on Federal Communications Committee (FCC) rulemaking in the matter of protecting and promoting the open Internet. The nearly 400 member firms of NVCA play a critical role in building the innovation economy, both through the essential capital they invest in early-stage companies and the mentorship they provide to entrepreneurs and their teams. As you well know with your recent background, no other investors assume more risk, employ more patience or partner more closely with entrepreneurs to bring breakthrough ideas and technologies to the marketplace.

Because many of our members invest in innovations that increase global access to content, products, services and information on the Internet, we are keenly interested in how the proposed rulemaking by the FCC would impact the free and open Internet. Open access to the Internet provides venture-backed companies with the opportunity to create new products and services that drive the growth of the U.S. economy and create jobs for the American workforce. Indeed, global leaders of the Internet economy, including the likes of eBay, Tumblr, Skype, Zipcar and Kayak, can all trace their roots back to venture capital funding.

In 2013, the venture community invested nearly $30 billion towards more than 3,000 companies. Of that total investment, $19 billion went toward Internet-related companies and a record $7.1 billion went towards companies which exist specifically because of the Internet. Additionally, annual investments into the software industry also reached new heights in 2013 with $11 billion flowing to software companies whose products and business models depend on the Internet, including Genband, Uber and Pinterest.

In order for venture capital investment to continue to flow into the Internet economy, entrepreneurs must maintain their ability to develop products and services and reach the global markets through equitable access to the Internet. The concept of paid prioritization to create so-called "fast lanes" could turn the entire concept of a fair and open Internet on its head at the expense of the startup ecosystem. These companies often struggle to have enough capital to build new products and services, let alone the financial resources to pay for priority access to the Internet. If they can't afford to compete against those with deep pockets and established businesses, we as a nation will surely suffer from the lost opportunity of innovation.

While we understand the desire to respond to decisions by the courts, the most important issue to our members is that the Internet remains fair and open to everyone. On behalf of the entrepreneurial ecosystem, we implore you and your colleagues to ensure innovation continues to prosper and startups are not disadvantaged against more established business concerns.

Sincerely,

Bobby Franklin
President & CEO

Last Updated on Tuesday, 15 July 2014 14:56
 

09

Jul

2014

NVCA Interview with REEcycle, the Winning Team of the Department of Energy’s Clean Energy Business Plan Competition PDF Print E-mail

Jessica Straus

Written by Jessica Straus   
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REEcycle Team Image

This June, the REEcycle team from the University of Houston's Bauer College of Business became the first undergraduate team to win the U.S. Department of Energy's (DOE) Clean Energy Business Plan Competition with their plan to create a sustainable domestic supply of rare earth elements.

REEcycle won each of the top three prizes including the overall competition, the People's Choice Award, which was decided by a public vote on Energy.gov, and the Audience Investor Choice Award.

Now in its third year, the DOE Clean Energy Business Plan Competition brings together student teams from U.S. universities that are taking next-generation clean energy technologies to market. Following months of regional competitions among 300 teams, six regional finalists advanced to the national competition in Washington, D.C. to present their business plans to a panel of judges from the private and public sectors. Members of the venture capital community participate in every step of the process, serving as judges at the regional and national competitions and providing mentorship to finalist teams.

REEcycle earned their spot in the competition by winning the First Look West consortium's regional competition, which is led by the Resnick Sustainability Institute at the California Institute of Technology, the University of Southern California, UC Los Angeles and DOE.

REEcycle commercializes technology developed by UH researcher Dr. Allan Jacobson, the Robert A. Welch Chair of Science and director of the university's Texas Center for Superconductivity. REEcycle has developed an organic, nontoxic method to extract rare earth elements from magnets found in discarded electronics. Their technology creates a sustainable domestic supply of critical rare earth elements that are essential to manufacturing clean energy technologies, including wind turbines, energy-efficient lights, thin-film solar cells, and motors and batteries for electric vehicles.

Following their recent win and as part of their DOE award, NVCA spoke with REEcycle team members Susan Tran, Casey McNeil, Cassandra Hoang and Bobby Jacobs about how they are building their company and advancing their vision to impact the U.S. clean energy economy. To see how their technology works, watch the REEcycle video

 

"Success for REEcycle is being recognized as a fundamental driver of the clean energy and defense sectors. We look at all of these different areas that we still have to prove out, which people have been telling us from day one can't be done. As entrepreneurs, the challenge of overcoming these obstacles is very exciting."

 

National Venture Capital Association (NVCA): Congratulations to the entire REEcycle team for your recent win of the Department of Energy Clean. The growth and success of early-stage companies like yours often depend on strong mentorship and support from institutions and individuals. How have the resources at the University of Houston and the Wolff Center for Entrepreneurship played a role in the development of REEcycle?

REEcycle: Several key mentors from the University of Houston, the university's Wolff Center for Entrepreneurship and Caltech have been critical to getting REEcycle off the ground. Dr. Allan Jacobson at the University of Houston, our technical advisor, and Pradeep Samarasekere, a Ph.D. student and co-inventor of the process, have played a critical role in bringing our team and the technology together. They are part of the team.

Another mentor who has been key is Dr. Jim Kane within the Wolff Center for Entrepreneurship. He has stood behind us since day one. He believed in us, believed in the technology and has been one of the biggest driving forces keeping everything together.

Recently, Stephanie Yanchinski, Program Director of the FLoW Consortium and Director of Operations and Finance Enterprise Forum with Caltech's Resnick Sustainability Institute has been invaluable in forging significant connections for us, including with the Ames Laboratory and ARPA-E. Stephanie and the Resnick Institute have been essential in helping us for the recent competition; particularly with the funding we just received through their competition, which will propel us right through pilot stage to commercialization stage. Without these key individuals, there is no possible way we could have done it. All of these resources combined have helped us to accomplish some of our goals much faster than we would have been able to otherwise.

 

"Several key mentors from the University of Houston, the Wolff Center for Entrepreneurship and Caltech have been critical to getting REEcycle off the ground...All of these resources combined have helped us to accomplish some of our goals much faster than we would have been able to otherwise."

 

NVCA: Dr. Allan Jacobson, the Director of the Texas Center for Superconductivity at University of Houston has been instrumental in building your technology. Can you tell us about the tech transfer process and how you plan to commercialized it?

REEcycle: Dr. Jacobson and his PhD student Pradeep are the inventors of this process. As the University of Houston's faculty have been patenting all of these technologies and seen them dying on the shelf, they have increasingly prioritized finding teams that are able to commercialize the technologies. More often than not, the scientists will not be the ones to take technologies to market.

Our team was given an exclusive license to the technology. In our opinion, the tech transfer has worked well up to this point and we will be able to enter different markets where we see the potential for growth.

The only reason all of this has been possible is because of Ken Jones, the Director of the Wolff Center. He has allowed the Wolff Center students to get behind some of the technology that was ready to be commercialized. In the process of putting together the REEcycle team, we were met with some opposition from those who didn't think that it would be possible that undergrads could get behind these technologies and reach any viable commercial scale. Their belief was that you have to have a PhD or an MBA to be able to approach some of these technologies.

We hope that we have changed that paradigm and hope we have made a lot of advancements for the University and the Wolff Center to be able to grab ahold of these technologies that are coming through the research facilities.

 

"In the process of putting together the REEcycle team, we were met with some opposition from those who didn't think that it would be possible that undergrads could get behind these technologies and reach any viable commercial scale. We hope that we have changed that paradigm."

 

NVCA: To bolster U.S. production of rare earth elements, NVCA has been engaged with the Minerals Make Life coalition to encourage lawmakers to support legislative that furthers research and development of our domestic resources. As you all know, the concentration of rare earth elements outside the U.S., particularly in China as you reference in the REEcycle video, raises the important issue of supply vulnerability. Do you have a sense, if you are successful, how market disruptive your success would be and how it would provide a critical missing link in the supply chain?

REEcycle: I think it will be game changing for the United States to have an alternative supply, but I don't necessarily believe that we will be competing with China in any way. They still are going to be producing the same amount of rare earths as they always have been and they will be exporting the same amount. We are just adding an extra and much needed supply that the U.S. needs to have to build new products.

One of the issues that we are seeing with a lot of mining operations, even at the Molycorp mine in Mountain Pass, California, is that they are not able to single out the critical materials or the critical rare earths such as neodymium and dysprosium. In mining, they have to extract all of the minerals together, which means they extract about 60% cerium, which at this point in time is one of the worthless rare earths. They can't find enough places to use cerium. This is one of the key problems facing mining companies. They are not able to cost-effectively go after the more critical rare earth elements.

This is something that we have fundamentally changed. We are able to single out the rare-earths depending on their criticality. We can recycle specific elements at high purity levels and we know exactly which elements we will be retrieving. For instance, if there becomes an apparent need to begin recycling one of the other 17 rare earth elements critical to a particular industry, we could begin to retrieve those critical elements in high concentrations from end-of-life products. Fluid cracking catalyst would be a great example of where this may be a possibility.

One thing that isn't often mentioned is that China produces the majority of the world's dysprosium from one particular mine. Similarly rich deposits of dysprosium have not been found anywhere else in the world. Our ability to produce dysprosium presents a huge opportunity for not only the United States, but other countries that rely heavily on this critical element.


"It will be game changing for the United States to have an alternative supply [of rare earth elements]. Our ability to produce dysprosium presents a huge opportunity for not only the United States, but other countries that rely heavily on this critical element."

 

NVCA: Can you explain a little bit about the REEcycle supply chain? Do you have an international pipeline or do you rely on recycling U.S. products?

REEcycle: We are focusing on recyclers close to home right now, because we want to keep our shipping costs down, but as we grow we will expand to different facilities.

In addition, we have been looking to forge strategic partnerships with international companies. The European market has been historically ahead of America, a lot of their recycling directives are centered on electronics. If we had European backing and strong connections there, it may make sense to start up operations there. But at this point in time, our relationships with recyclers in the U.S. are highly beneficial.

One of the arguments against our process we often hear is that with low labor costs in China and India, they will be able to dominate us in terms of the prices we pay for some of these materials. One thing that should be noted with that, is almost every electronic recycler is trying to be certified under an E-Steward certification or an R2 certification. Those are both certifications that show that the recycling company is recycling in an ethical way; that they are not exporting waste; they are not exporting a lot of their scrap goods. They are almost forced through those certifications to keep those products within the US. So that hugely supports our goal of keeping these materials within the U.S.

NVCA: Tell us about how you put your team together and the role you each play, as well as how you balance the technical and marketing elements.

REEcycle: We formed this company within the Wolff Center for Entrepreneurship. There are thirty-five students accepted every year. We had known each other for a semester when we started to come together as a team and started to develop a company around this technology.

When we came together, we didn't know the exact skillset that everyone would fit. We only knew that we worked well together, that the technology was important and we saw the vision early on as to where the company could go. Over time and through working together, we have learned the specific needs everyone fits. Casey has some years experience in the recycling of electronics and understands that market. Cassie has worked in import-export companies for some time and she shines in the logistics of how we will transport a lot of these materials. Susan is a double major in accounting as well, so she does really well in the organization of financials and she will play a key role in the management of the financial framework we have to build out. Bobby Jacobs is great with marketing and sales. Many of the companies he formed early in his entrepreneurial career have been centered on that. He shines pitching to clients and meeting with customers.

NVCA: What does success look like? Whether it's an exit, or advancing your mission, what does success look like for REEcycle?

REEcycle: Success for REEcycle is being recognized as a fundamental driver of the clean energy and defense sectors. If we are able to provide our materials back to these markets, we can establish a strong customer base and if we can supply rare earth elements in a feasible and economical way where they can be used to develop new innovative technologies; that would be success in our opinion.

When we see the need in the clean energy sector and we hear all of these directives that are being passed down through the Obama Administration and through the Department of Defense, we see how necessary we are. It's really surprising to us that we don't see anybody entering this market in the US and that really drives us to move forward. It's a matter of making something work, instead of being just a project we worked on in class.

The challenge is really what keeps us going. We look at all of these different areas that we still have to prove out, which people have been telling us from day one can't be done. As entrepreneurs, the challenge of overcoming these obstacles is very exciting.

Last Updated on Thursday, 10 July 2014 08:25
 

08

Jul

2014

Nasdaq Support for Wider Tick Size Program is Welcome News PDF Print E-mail

Bobby Franklin

Written by Bobby Franklin   
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Nasdaq CEO Robert Greifeld penned an op-ed in today’s Wall Street Journal providing cover for SEC Chairman Mary Jo White as she embarks on a comprehensive agenda to reform the U.S. equity markets.  Specifically, Mr. Greifeld lays out four key areas where Nasdaq is prepared to support White’s reform efforts.  

While not all of them are necessarily important to NVCA members or the innovation economy, I was encouraged to see Nasdaq come out in support of one specific reform area that is important to our community: the SEC’s pilot program for wider tick sizes.

“The program is designed to test whether a wider ‘tick size’ for small and midsize companies will generate more interest in their stocks, including research, as well as enhanced liquidity in the market for their stocks,” wrote Greifeld.  “The pilot program is a good starting point, but even more should be done to ensure the U.S. leads the world in funding innovative business ideas through the public markets.”
On that last point, I couldn’t be in more agreement with Greifeld—the U.S. absolutely needs to lead the world in funding innovation and more can be done to help small companies access the capital they need to grow.  

As I said in my statement when the SEC formally announced the new pilot program, while limited in time, market and scope, the wider tick size pilot program is the first step toward a solution to help small companies generate the robust investor interest necessary for maintaining strong valuations and opportunities for secondary issues.  Moving forward, NVCA is eager to work collaboratively with the SEC to iron out the specifics and operationalize it in a way that bears the most fruit for small and midsized companies.  

If you haven’t had the chance to read Mr. Greifeld’s piece, I highly encourage you to read it, and if you are interested in learning more about NVCA’s position and work on the wider tick size pilot program don’t hesitate to drop us a line.

 

23

Jun

2014

NVCA provides key data and, more importantly, the context PDF Print E-mail

Ben Veghte

Written by Ben Veghte   
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Conner Forrest of TechRepublic published an article today, How 2014 could become the year of the startup, making the case that we could see a strong year for startups due to a rise in venture capital investment and exits through mergers and acquisitions and initial public offerings.

Our most recent quarterly PwC/NVCA MoneyTree™ Report based on data provided by Thomson Reuters reported that in the first quarter of 2014, venture capital activity increased from the previous quarter with $9.5 billion invested in 951 deals.

John Taylor, Head of Research for NVCA makes clear to TechRepublic that context is everything. According to Taylor, the increase in venture capital investment from the first quarter of 2014 may portend a strong year, but more importantly, the data show that startups are progressing through a healthy lifecycle.

"What is happening, and the numbers clearly show this when you look at stages, is that the spotlight shifted," Taylor said. "So, in 2012, 2013 we had a record proportion of the deals being seen in early stage, and now those companies are starting to mature. So, you have more of these companies that have left the early stage category and are now in the expansion stage category. They're through proof of concept and they just take more capital."

Increased venture capital activity is also the result of new entrants to venture capital, like corporate-led venture capital investments.

"What we are seeing in parallel with all of this is an increase in corporate venture capital activity," Taylor said. "Whether it be a smoke stack traditional industry of whether it be one of these tech groups such as Google or Intel. We see their corporate venture groups really ramping up in terms of how early they're getting into these companies."

Visit TechRepublic to read the article and stay tuned for the next PwC/NVCA MoneyTree™ Report to be released on July 18, 2014.

Last Updated on Thursday, 26 June 2014 15:44
 

20

Jun

2014

Why It Matters That Rupert Murdoch Joined the Push for Immigration Reform PDF Print E-mail

Emily Baker

Written by Emily Baker   
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The much-talked about Wall Street Journal piece from Rupert Murdoch on the urgent need to pass immigration reform shines a bright light on the need for Congress to come together and act. While Murdoch is one of many, many voices championing this issue, his piece stands in contrast to the cacophony of voices who are sending immigration reform to the legislative graveyard.

Murdoch's voice is important because he makes one point crystal clear: Immigration reform is not dead. As a nation we cannot pass on this opportunity to reform our immigration system because the engine of the U.S. economy—innovation and entrepreneurship—depends on the foreign-born entrepreneurs who come to America to build new businesses.

Murdoch, an Australian-American, is the founder and CEO of News Corp, a media conglomerate significant not only for its size (24,000 employees) and influence, but also for its roots. Murdoch writes, "I chose to come to America and become a citizen because America was—and remains—the most free and entrepreneurial nation in the world."

Immigration is always a lightning rod issue fraught with political landmines, but more progress has been made in this Congress than at any time in the last decade. The future of U.S. innovation depends on the decisions we make today. Congress needs to act now to ensure America welcomes the talent that can build next-generation companies and drive economic growth.

As Murdoch argues, legislative action that reflects the will of the people and the diversity of stakeholders involved in this debate, ranging from the agricultural groups to the evangelical community and to law enforcement to entrepreneurs, will be embraced and upheld to a degree that would not be possible should the President act alone.

Despite the significant political hurdles in place that go well beyond the midterm elections and changes in the House Republican leadership, our coalition of entrepreneurs, corporations and organizations like the Partnership for a New American Economy and FWD.us know that we must march onward toward victory.

NVCA has long advocated for immigration reform through the testimony of our members like Venky Ganesan of Menlo Ventures, Jason Mendelson of Foundry Group and Shervin Pishevar of Sherpa Ventures who testified before the House Subcommittee on Immigration and Border Security and Jeffrey Bussgang of Flybridge Capital who testified before the Senate Commerce, Science and Transportation Committee. They have been instrumental in building the case for a Start-Up Visa for foreign-born founders who come to the U.S. to start and build companies.

Within the venture capital community; many investors, like the entrepreneurs they work with to build tomorrow's technologies, come from across the globe and have seized the opportunities America offers.

Shervin Pishevar is an incredible example of what is possible in the America. Pishevar's family escaped the regime of Ayatollah Khomeini in Iran and arrived in Washington, DC. Despite hardships, Pishevar attended a magnet high school, went onto Berkeley and eventually founded the pioneering company WebOS. Since then, Shervin has continued to shape the world we live in as a serial entrepreneur, venture capitalist and angel investor. The companies he founded have reached an aggregate of 100 million users.

Immigrant-founded public companies have a total market capitalization of $900 billion and employ approximately 600,000 people worldwide, the majority of which are in the United States. Our future depends on welcoming people from across the world to America, not just because they play an outsized role in our economy, but because the contributions immigrants make to our country benefit everyone.

As Murdoch writes, "Do Americans really wish Google, eBay, Pfizer or Home Depot were headquartered in Eastern Europe or China instead of America? Whether it's a high-profile tech company or a small business employing just 10 people, 28% of all new American businesses started in 2011 were founded by immigrants. Those are entrepreneurial people we want to continue to attract to our economy."

Last Updated on Friday, 20 June 2014 08:27
 

19

Jun

2014

Reflections from a New NVCA Chairman PDF Print E-mail

Scott Sandell

Written by Scott Sandell   
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As I begin my term serving as the 2014-2015 Chairman of the National Venture Capital Association (NVCA), I wanted to use this first blog post as an opportunity to provide the venture community with my outlook on the coming year and discuss NVCA's role as a resource, champion and unifying force for our dynamic industry. Along with our newly elected board and the NVCA staff, I am looking forward to serving our members in the coming year, as well as the broader entrepreneurial ecosystem our industry supports.

In recent years, NVCA has led the charge to implement policies that encourage the emergence and growth of next-generation companies. We have also successfully defended against a slew of regulatory measures that we believed would prove detrimental to innovation; policies that would hinder our ability to fund groundbreaking advances in science and technology, or make it harder for us to help build great companies—companies that fuel economic growth, create jobs, and change our lives and our world for the better.

Despite a commendable track record and numerous recent successes, I think we all know that significant challenges still lie ahead. By embracing more stakeholders that drive the entrepreneurial and innovation ecosystem, I believe our voice will grow even stronger with policymakers in Washington, DC. We will work aggressively to build consensus and create an environment conducive to the kind of economic growth and progress that only a thriving innovation ecosystem can deliver.

While our industry may be relatively small, it is increasingly diverse and its impact is incredibly far-reaching. As the flow of funding to what you might call 'mainstream' venture capital has slowed and concentrated over the last decade, corporate venture capital and later-stage entrants have become a vital part of the innovation ecosystem for more mature companies. Angel investors and angel funds, too, have become important sources of seed capital for thousands of entrepreneurs every year.

Of course, our constituency also extends well beyond the suppliers of capital. The challenges and opportunities that matter to venture capital, matter to entrepreneurs. These issues matter to many thousands of small startup companies—companies that are the Googles, the Microsofts, and the Amazons of tomorrow, but that today have virtually no voice in Washington, DC.

I believe we have a responsibility to ensure that the broader startup ecosystem has a voice. We all know that we win when they win—and it's only natural that the entrepreneurial community plays a role in venture capital's efforts to influence and help define the policies that will shape the future of our industry and our country.

We all have a stake in this, and we can all participate. The NVCA's core strength lies in the countless contributions of its members—the many venture capitalists who are deeply committed to advancing the NVCA's mission, and who devote countless hours to ensuring that our voice is heard, and that it grows stronger. I encourage everyone in the venture community to think about how you can help make our entrepreneurial and innovation ecosystem better, and if the NVCA can help, please let us be your partner.

I feel deeply privileged to work alongside all of you, this year and in the years that follow, to support the industry we are today and shape the industry we will become. If I can ever be of assistance, please don't hesitate to ask. It's an honor to serve as your chairman and I look forward to the year ahead.

Last Updated on Thursday, 19 June 2014 16:00
 
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