What are the most powerful forces affecting innovation and the economy? That is one of the key questions facing the nation as we inch our way out of the economic mire.
Juan Enriquez may not have all the answers, but he has some deep insights into the path forward, and a way of framing the issues that few can rival. That’s why I’m particularly excited that Enriquez, a managing director with Excel Medical Ventures in Boston, will share his perspective two weeks from tomorrow, as the opening speaker at Xconomy’s Napa Summit: New Rules for Growth. There are still a few spots available at this exclusive get-together in the heart of California wine country (it starts with a dinner on June 3 and the event itself is June 4), and if you’d like an invitation, please visit our Napa Summit information page here, learn more, and send us a note. You should want to be there: Enriquez is part of a star-studded lineup that features sessions on cyber security and the economy, healthtech, foodtech, the outlook for venture capital, and a whole lot more.
I caught up with Enriquez for a quick look at how he sees the innovation landscape and a preview of what he will share with the audience in more depth. To start with, he identifies four nasty macro trends affecting the economy and innovation. At the top of his list was the U.S. economic situation and in particular sequestration, which “can bend the most carefully thought-through plans,” as he puts it. “It’s also sucking a lot of the oxygen out of the room” in terms of the willingness to do and to support new things.
Another macro trend is the ongoing schism between Republicans and Democrats. Alongside that is what’s happening in Europe, a typically friendly place for things like approving medical devices but with “deficits up the wazoo” that put a damper on innovation and make it harder to pay for new products there, says Enriquez. The fourth macro trend is medical costs and restructuring, which, like many others, he sees also weighing down medical innovation.
But alongside these macro forces is what Enriquez calls a “parallel universe” of advances in big data, robotics, life sciences, and software apps that are already spawning big companies. Another interesting trend he points to: a shift to the east coast (especially Boston) in the life sciences, in terms of both capital and activity. The interplay of these trends is creating a complicated and often confusing situation. For instance, says Enriquez, you see almost no employment in some areas, and almost no unemployment in others. “It’s kind of like a barbell,” he says.
Enriquez says venture capitalists have a big role to play in helping to bridge the gulf between the macro trends and advances in technology—but to do that, VCs on both coasts must find more common ground. Valuations have to become a little more grounded, approval processes streamlined, he says. “I think there is going to be more of a relationship and growth between syndicates. One odd disconnect is how few large VC funds do well. You need coalitions of small and mid-size agile players bridging east coast and west coast VCs, but they have different rules,” he says. A big question: “How do these various tribes reconcile these rules?”
I asked him what he meant by different rules, and this is what he said: “There’s all these nasty things people out here in the East ask people to make, like money, cash flow break even, and an income statement. I think people pay more attention to valuations here.” On the west coast, he says, a deal can more often be done on a handshake and without as much concern to these so-called fundamentals. Enriquez is quick to stress that he is not saying one approach is better than the other, but in order to maximize value, the two must reconcile some of these differences to work best together.
On the whole, despite the difficulties of the business, Enriquez remains quite optimistic. “If we can’t make it with the avalanche of new technologies and opportunities, then we have to blow up the VC model,” he says. “Few have been granted so many shots on goal. We just have to realize we may have to play a different strategy in this game.”
That is, of course, just a taste of what Enriquez has to say about the complicated relationship between economics, innovation, recovery, and growth. For a rare chance to talk in depth to him and other innovation leaders in a glorious setting, request your invitation to the Napa Summit here.