In its fourth year, the University of Virginia Venture Summit has become an established part of the local entrepreneurial ecosystem, linking local startups, serial entrepreneurs and innovations coming out of U.Va. laboratories with investors from around the world.
Strengthening that ecosystem is an important element of becoming a national or global hub of innovation, said Mike Lenox, a professor at the Darden School of Business and executive director of the school's Batten Institute, who on Thursday presented the findings of new Batten research on "greentech" innovation clusters.
Charlottesville has "all the pieces" that are common to most innovation hubs: a world-class research university, a highly educated workforce – and even a rich art and music scene, an important element to support entrepreneurs, according to some research on "the creative classes," Lenox said.
Central Virginia's prospects for becoming the next Silicon Valley may be "a little bit of a pipe dream," because Silicon Valley has had 50 years to become what it is today, Lenox said. But Austin, Texas, with its strong green energy, biotech, digital media and software industries, could be a great model, he said.
"You don't become an entrepreneurial ecosystem overnight," he said. "This is a 30-year project, but there are a lot of benefits to the community."
Over the course of the summit, held Thursday and Friday at the University, organizers spoke to how the event unites the University and the broader Charlottesville community.
The goal is "to share ideas freely across what are now becoming an increasingly connected set of spheres and disciplines, to imagine solutions to some of society's most important challenges," said Thomas C. Skalak, U.Va.'s vice president for research.
Mark Crowell, executive director of U.Va. Innovation and associate vice president for research, said one goal of the summit is to "tee up" University projects to receive investment capital.
"Everything we do is about getting U.Va. innovation technology out into use," he said. "And because we are focusing wherever possible on doing that through startups, it will result in creating a more robust ecosystem here of new companies, new jobs and new investment."
The Value of Failure
The Venture Summit's first day, held in Old Cabell Hall auditorium, featured panel discussions on big-picture innovation and technology transfer issues, including a panel of veteran venture capitalists who discussed the state of the industry. Vonage CEO Marc Lefar and Weather Channel CEO David Kenny discussed "Opportunities and Challenges for Traditional Businesses in a Digital World."
U.S. Sen. Mark R. Warner, D-Va., spoke via video link to the audience of about 150.
Introducing Warner, venture capitalist Stephan Dolezalek, managing director of VantagePoint Capital Partners, highlighted the importance of learning from failures and mistakes. "Failure is an inherent part of who we are. Falling down, getting back up and succeeding is what made this country great," he said.
Dolezalek, a graduate of U.Va.'s schools of Law and Architecture, noted that along with Warner's experience as a successful entrepreneur and venture capitalist, he also went through "the experience of failing in business."
Warner echoed Dolezalek's emphasis on the value of learning from failure. He noted that his first two businesses failed miserably – in six weeks and six months, respectively. Afterward, and before he made his fateful decision to enter the wireless industry in the early 1980s, when he founded one of the companies that became Nextel, Warner spent six months living out of his car and on friends' couches. Several of his Harvard Law School classmates advised him to take a law firm job, because "no one would want a car phone."
Later, when he headed Columbia Ventures, a venture-capital firm, he always "liked to see a management team with one or two failures under its belt" when he evaluated companies.
Mixed News from Washington
Warner quickly turned to the challenges in Washington.
He lauded the bipartisan support for the recent JOBS Act – including backing from Rep. Eric I. Cantor, R-Va. – that President Obama recently signed into law.
The act fosters startups by enabling them to raise investment funds through online "crowd sourcing" and by easing some government regulations. Warner said online crowd funding could open "a whole new avenue of fundraising to entrepreneurial companies."
In December, Warner introduced another legislative initiative, the Startup Act, which would promote innovation and start-up businesses by relaxing several tax and regulatory hurdles.
One of the bill's significant provisions, which seeks to speed the transfer of research and technology from university laboratories to the marketplace, was written with major input from U.Va., led by Skalak and Crowell, as Crowell explained during a panel discussion.
The bill's U.Va.-influenced provisions were based on the model of U.Va.'s Coulter Translational Research Partnership, a $20 million program to provide early-stage investment funds to commercialize U.Va.'s most promising biomedical research. The partnership has invested about $1 million annually since 2006, typically in awards of around $100,000, and has generated a 7-to-1 return-on-investment ratio.
"We are trying to make sure that the impact of what we are doing here to foster innovation is getting reflected in policy," Crowell said.
Aneesh Chopra, former Virginia secretary of technology and former White House chief technology officer, addressed what Washington could and should do to better foster innovation.
"I spent the past three years in Washington and I lived in two cities," Chopra said. "There was the city of thoughtful, deliberative leaders – the republic that we were taught in high school where people on both sides of the aisle, even if they had different views, rolled up their sleeves and got to work in a substantive and thoughtful way.
"And then there's the embarrassing, silly, no data-driven stain on the country that makes you want to vomit," he said. "It just sickens everyone to their stomach because you feel like, 'How does the best country on the planet do this to itself?'
"I just want to give you hope that there's actually both, and that underneath the mess, substance happens," Chopra said.
Students, Faculty Pitch Start-Up Plans
On the summit's second day, held at Darden, business ventures with ties to the University pitched their ideas to a standing-room-only room of almost 150, including investors from across the country representing roughly $20 billion in active capital funds, according to Crowell.
Among the pitches from startups run by faculty and alumni, 2008 Darden graduate Jerry Nemorin shared his business, LendStreet, which plans to harness peer-to-peer, crowd-sourced funding to buy and restructure personal credit card debt. In what amounts to a "softer collection process," LendStreet would buy distressed consumer debt from banks and then offer more attractive refinancing terms to the debtor, along with counseling on debt repayment strategies, with the end goal of rehabilitating the debtor's credit and eventually reuniting them as a customer on good terms with their original lenders.
The student pitches were all business plans that have already won some sort of competition. Along with Pure Madi, WalkBack and Memoria, second-year Darden student Tom Giedgowd presented his business, called TeeGee, which offers a cute stuffed animal that can tell interactive stories and play games with children using speech recognition, motion awareness and smart accessories. The toy has embedded wireless sensors controlled by a nearby iPhone application, harnessing the iPhone's substantial computing power and app flexibility to enable sophisticated interactive behavior.
Introducing the pitch event, Philippe Sommer, director of the Darden School's Center for Entrepreneurial Leadership, reflected on how support for entrepreneurs at U.Va. has evolved. The University added the Coulter Partnership, and expanded the U.Va. Entrepreneurship Cup into a University-wide event that last year attracted more than 150 student teams from 10 schools. The McIntire School of Commerce created the Galant Center for Entrepreneurship. U.Va. students created the E*Society and Student Entrepreneurs for Economic Development, and recently helped launch the first Startup Weekend in Virginia. U.Va. Innovation, headed by Crowell, was formed in January and now comprises the former Patent Foundation. The Darden Business Incubator has expanded and will soon be open to anyone at U.Va.
And now there have been four Venture Summits.
"In 10 years this town will look a lot more like Austin and other innovation hubs," Sommer said.
– by Brevy Cannon