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13

Aug

2014

Advancing Reforms to Spur U.S. Medical Innovation PDF Print E-mail

Kelly Sloane

Written by Kelly Slone   
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NVCA Provides Public Policy Recommendations to House Committee on Energy and Commerce to Address Current Challenges Hindering Medical Innovation 

The U.S. venture capital industry has always played a critical role in advancing medical innovation through investment in the life sciences industry, which includes biopharmaceutical, medical technology and diagnostics companies. The life sciences industry has revolutionized healthcare worldwide by preventing or curing serious conditions like influenza and cancer, and transforming once fatal diseases like HIV/AIDS into manageable chronic conditions.

However, our nation’s innovators—from federal research agencies to academic research institutions to emerging biopharmaceuticals, diagnostics and medical technology companies—have come under significant stress caused by several factors, including: limited access to capital, a burdensome and unpredictable regulatory environment, and constrained coverage and payment policies of insurance companies and government health care programs.

The result is that the U.S. innovators and investors, faced with lengthy and costly regulatory delays that prevent life-saving cures from reaching the market, are going overseas where faster, simpler, more predictable regulatory environments exist.

Flawed U.S. regulatory and reimbursement policies have led to a real crisis for medical innovation. Venture capital investment in early-stage life science companies continues to fall, reaching a 15-year low in 2013. The impact of the decline in early-stage funding is significant -- the lion’s share of breakthroughs in science and medicine comes from small companies. For example, in the medical devices industry, 80 percent of companies have fewer than 50 employees.

At the NVCA, we are committed to ensuring that entrepreneurs in the U.S. have the opportunity to bring life-saving medical innovations to market.  Through our ongoing engagement with federal agencies, Members of Congress and staff, and collaboration with our life sciences members, we are advocating for policies promote the growth of new companies that bring value to patients worldwide and the entire healthcare system. 

This year, the House Energy and Commerce Committee launched the 21st Century Cures initiative, led by Chairman Fred Upton (R-MI) and Rep. Diana DeGette (D-CO), to find solutions to ensure the U.S. remains the global leader in medical innovation.

In June, Alexis Borisy of Third Rock Ventures and Mike Carusi of Advanced Technology Ventures testified before the House Energy and Commerce Subcommittee on Health during the hearing “Examining the Role of Incentives in Advancing Treatments and Cures for Patients.” Their testimonies outlined the myriad challenges facing early-stage medical device and biotechnology companies and the factors that have led many entrepreneurs and investors to go to foreign markets first.

As part of NVCA’s ongoing work to enact reforms that will ensure regulatory and reimbursement policies keep pace with innovation, this week we submitted a set of high-level public policy recommendations to the House Energy and Commerce Committee. Our recommendations include:

  • Create a national advocacy strategy focused on preserving U.S. leadership in medical innovation;
  • Support for continued government funding of R&D which drives the discovery of breakthrough innovations;
  • Provide appropriate incentives for collaborative public/private partnerships that can help address key barriers to innovation;
  • Encourage and support continued FDA efforts to implement a patient-centered benefit/risk framework for drug and medical device development;
  • Continue to develop flexible and innovative regulatory pathways for cutting edge drugs and medical devices;
  • Review and ensure the effectiveness of FDA’s Special Protocol Assessment (SPA) process;
  • Develop clarity, transparency and flexibility in the regulatory process for laboratory developed tests (LDTs) that will keep pace with scientific advances and genomic science;
  • Provide greater transparency and use of clinical trial data;
  • Develop coverage and payment policies that reward investment in medical innovations that provide value both to patients and the healthcare system;
  • Provide greater patent and intellectual property incentives for medical breakthroughs;

Today, the rise of transformative technologies and advancements in science and engineering hold great promise for patients and health systems. Through these reforms, we believe the potential of the U.S. medical innovation ecosystem can be fully realized.

Last Updated on Wednesday, 13 August 2014 10:53
 

04

Aug

2014

Startup Day Across America Will Highlight The Scale of Opportunity and Innovation Across the U.S. PDF Print E-mail

Bobby Franklin

Written by Bobby Franklin   
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Tremendous opportunity exists for innovators across the U.S. to transform and improve the most basic ways we live, work and play. The convergence of accessible, affordable technologies and the development of new resources for entrepreneurs has made it easier than ever to start a company. High-growth startups are driving change across all sectors of the economy, sparking new life within entrenched industries such as transportation, biotechnology, healthcare and hospitality and, in some cases, spurring the growth of new industries.

On August 5th, Members of Congress will participate in Startup Day Across America to connect with the entrepreneurs that represent the backbone of the nation's innovation ecosystem. The Congressional Caucus on Innovation and Entrepreneurship, 1776, Engine Advocacy and the National Venture Capital Association (NVCA) have worked together to organize the 2nd Annual Startup Day to showcase entrepreneurship through a series of nationwide events and to ensure the voices of the newest, youngest companies are heard.

Today, startups are able to take root anywhere thanks to the entrepreneurial ecosystems developing in America's rural and urban communities. The rise of incubators, accelerators, crowdfunding, and pitch sessions that work in tandem with universities, angel investors and the venture capital community provide the mentorship, resources and capital that enable companies across America to go from the idea-stage to growth-stage.

For the first time in 2012 and again in 2013, high-growth startups in 48 states and D.C. received venture capital funding. This geographic diversity demonstrates that startup ecosystems in small- and mid-sized cities from Richmond, VA to Kansas City, KS are succeeding in attracting talent and driving economic growth, factors that have an impact well beyond the region where companies are founded.

Startups create the most value for the economy when they are able to enter the public markets. By this measure, 2013 was the most successful year for high-growth companies in the past five years, when 81 venture-backed startups went public. To maintain the momentum for startups to go public, a process which often takes eight to ten years and sees one-third of companies fail in the process, Members of Congress must engage with entrepreneurs and understand the challenges that prevent startups from growing.

The cycle of innovation will only continue if Members of Congress work with entrepreneurs, business leaders, professors, researchers and community leaders to forge policies that support the growth of new ideas everywhere.

With the passage of the JOBS Act in 2012, the White House, Congress, the venture capital community, and entrepreneurs came together to create new ways for startups to receive capital through crowdfunding. In addition, the JOBS Act successfully spurred the entrance of more companies to the public markets through regulatory relief for small and young companies.

Together, we have continued to work on policy measures that drive innovation; to propel the commercialization of university research, improve the efficacy of existing regulations that can hinder innovation, and to create new visa categories for foreign-born entrepreneurs who come to the U.S. to build businesses and earn degrees from American universities.

The U.S. will only remain the most innovative country in the world if we ensure regulatory predictability, enact policies that encourage capital formation, attract a qualified workforce, and provide a visible pathway to success for innovators. Otherwise, we risk losing entrepreneurs and capital to competitors abroad.

The decisions made in Washington, DC have a huge impact on entrepreneurs and the ability of young companies to grow and create jobs. We encourage all Members of Congress to participate in Startup Day this August to meet local entrepreneurs who are building early-stage companies and driving change in districts across the country.

 

Participate in Startup Day on Twitter using #StartupDay2014 and learn more by visiting Startup Day Across America

Last Updated on Monday, 04 August 2014 16:25
 

30

Jul

2014

NVCA Supports Legislation to Increase Access to Capital for Women Entrepreneurs PDF Print E-mail

Emily Baker

Written by Emily Baker   
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The National Venture Capital Association (NVCA) today offered its support for the Women's Small Business Ownership Act of 2014. Introduced today by Senator Maria Cantwell (D-WA), the bill focuses on promoting women-owned small businesses through small business counseling, federal contracting opportunities and greater access to capital.

"The venture capital community is committed to identifying and implementing solutions to provide women in the startup community with greater access to capital," said Bobby Franklin, President and CEO of NVCA. "This bill creates more opportunities for women to access the early-stage capital necessary to launch groundbreaking companies that disrupt entrenched industries and bring innovative products and services to market. We applaud Senator Cantwell for her leadership in taking this critical step to ensure the innovation economy better represents women entrepreneurs."

"In the venture community, we know from experience that women drive economic growth and job creation by building capital-efficient companies that create game-changing products and services," said Maria Cirino, Co-Founder and Managing Director of .406 Ventures and NVCA Board of Director and Member of the Executive Committee. "I strongly support reducing obstacles to innovation and growth in our economy. Senator Cantwell's legislation creates greater opportunity for more women entrepreneurs to build companies that make the U.S. a global leader in innovation."

The Women's Small Business Ownership Act of 2014 includes a "Sense of the Senate" supported by NVCA expressing support for venture capital and angel investors as an important source of capital for women entrepreneurs.

 

 

Last Updated on Monday, 04 August 2014 16:26
 

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.

 
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