For some people, innovation is not enough. Gururaj “Desh” Deshpande is one of those people. Let’s just say the Boston-area tech entrepreneur and billionaire philanthropist has earned the right to make such a claim.

“For innovation to have impact, it needs relevance,” he says. “Innovation plus relevance equals impact.”

Deshpande is talking about global impact, but his latest project is in his own backyard. Last month, his foundation committed $5 million over the next five years to support a new innovation center housed at the University of Massachusetts Lowell. The Merrimack Valley Sandbox, as it’s called, will work together with local colleges and nonprofits to boost entrepreneurship among students and professionals, and to develop local leadership through mentoring and seed funding programs.

The new initiative has similarities to the Deshpande Center at MIT and a social entrepreneurship center Deshpande set up in northern Karnataka, India—with some big differences. But to understand what Deshpande is really trying to accomplish with the Merrimack project, you need to know more about his story.

Gururaj Deshpande grew up in India and studied electrical engineering at the Indian Institute of Technology in Madras (Chennai). He went on to do his PhD in data communications at Queen’s University in Ontario, Canada. Starting in the late 1980s, he founded a series of successful technology companies—Coral Networks, Cascade Communications (which sold to Ascend Communications for $3.7 billion in 1997), Sycamore Networks (NASDAQ: SCMR), and Tejas Networks. He currently serves as chairman of Sycamore, Tejas, and A123Systems, among other top-level duties.

The success of Cascade and Sycamore made Deshpande a wealthy man, and he and his wife Jaishree set up the Deshpande Foundation in 1995. Its unifying theme has been to foster innovation ecosystems and social entrepreneurship. Its first major initiative was setting up the Deshpande Center for Technological Innovation at MIT in 2002. That organization has been active in providing grants to MIT labs, connecting faculty with the business community, and more generally tying ivory- tower research to market realities.

“In society, thinkers all come together, and they come up with new ideas,” Deshpande says. “But as they keep coming up with new ideas, they have to play the game of impressing each other”—whether that means other professors or government funding agencies. “In the process they lose the ability to have impact,” he says, because of a lack of relevance to real-world problems (and products). “The center at MIT is about bringing that relevance.”

After a few years, Deshpande looked at setting up something similar in his native land. “But somehow doing nanotechnology in India didn’t sound that exciting,” he says. Instead, he thought, … Next Page »

Comments | Reprints | Share:          

Bellevue, WA-based SinglePoint, a mobile messaging software company, announced today it has acquired M2Junction, a leading mobile advertising startup based in Hyderabad, India. Financial terms of the deal weren’t given. The move should make it easier for SinglePoint to connect with and sell its services to content publishers, mobile operators, brands, and ad agencies in India.

It looks like a significant step in SinglePoint’s global expansion strategy. India is one of the fastest growing text-messaging markets in the world, with some 525 million mobile subscribers as of December 2009. And in general, text messaging (SMS) is considered one of the most powerful channels for brands to reach new audiences and do mobile marketing. M2Junction, for its part, is already a SinglePoint partner, and a collaborator in terms of market positioning and knowledge of the Indian mobile ecosystem and culture.

Gowri Shankar, SinglePoint’s new CEO, noted in a statement that there is “an incredible mobile advertising opportunity” in India. “We at SinglePoint want to be a part of this growth and revolutionize the Indian industry with our offerings,” he said.

SinglePoint makes a Web-based software platform for handling transactions in contextual mobile advertising—delivering things like brand messages and interactive coupons within text messages. With its move into the Indian market, the company says it is looking to deliver more than a quarter of all the mobile advertising opportunities in India in its first year, and within two years, to become the nation’s biggest player in SMS advertising.

That sounds pretty ambitious, given what must be fierce competition among local companies in India. But in the past few years, SinglePoint has become a leader in helping publishers and brands reach mobile subscribers, and it has expertise in the Indian market. The company, formerly called Wireless Services, was co-founded by former Microsoft and McCaw Cellular veteran Steve Wood in 1996. It has been backed by a slew of venture investors and private equity firms including Ignition Partners, Madrona Venture Group, SeaPoint Ventures, Intel Capital, Northwest Venture Associates, and Rally Capital.

Last week, SinglePoint announced that Swedish mobile giant Ericsson had bought its mobile aggregation business, and that Shankar has become chief executive. Shankar succeeds Rich Begert, who led the company from 2004 until this year and remains on the board.

Comments | Reprints | Share:          

We may have similar names, but we come from different worlds. Greg Huey, the new program director of Seattle-based Alliance of Angels, has a business background and more than 10 years of investment and corporate development experience. He bears little resemblance to a certain Xconomy Seattle editor, besides having an avid interest in the local innovation community, a love of coffee, and a slight aversion to British food.

This is Huey’s first month on the job. He succeeds Rebecca Lovell, who became executive director of the Northwest Entrepreneur Network in February. Huey says his responsibilities at Alliance of Angels now include spreading the good word about the not-for-profit investor organization, attracting early-stage companies to present to the angel network, and positioning his group as “entrepreneur-friendly.” He also wants to coach companies on their business plans and presentations, and help angel members “feel more comfortable to step up” and lead investment deals. “Angel investing can be shoot-from-the-hip,” Huey says. “We want to provide a more systematic process in which to evaluate investments and portfolios.”

Before this job, Huey handled mergers and acquisitions and other corporate development for Hewlett-Packard in London for a year and a half. He focused on deals in Europe, Africa, and the Middle East. Prior to that, he spent six years as an investor at Frazier Technology Ventures in Seattle (2001-2007), and also worked at GTCR, a private equity firm in Chicago. He did his MBA at the University of Pennsylvania’s Wharton School, where he was a classmate of BuddyTV’s Andy Liu, a prominent entrepreneur and investor in Seattle. Huey is a native of Portland, OR.

I was particularly interested to hear how the economic doom and gloom of the past eight months has affected Huey’s outlook on early-stage investing, and what he sees in Seattle after being away from it for a little while. He noted that Alliance of Angels is coming off a strong year in which it made 36 investments, and five of its portfolio companies were acquired (including Insitu, which was bought by Boeing for some $400 million—Alliance of Angels’ biggest exit to date). And two weeks ago, the organization announced a new $4.25 million seed fund.

“We will focus on any growth opportunity,” Huey says, whether it’s in software, wireless, hardware, devices, or non-technology fields like coffee or nail salons. “We’re open for business. We have our first investment committee meeting next week.” And the first investment deal on Huey’s watch may very well come out of that meeting (which is for the new seed fund).

Here are some other highlights from our conversation:

Xconomy: Given your international perspective, what are your thoughts on Seattle as an innovation cluster? How does it compare to other regions?

Greg Huey: The U.S.—and Seattle—has got an entrepreneurial zeal and risk-taking [culture] and optimism that leads the world by leaps and bounds. In Israel and Europe, success is defined … Next Page »

Comments | Reprints | Share:          

On a gloriously sunny Seattle afternoon, venture capitalist Tim Draper stopped by to impart some words of wisdom. The founder and managing director of Silicon Valley-based Draper Fisher Jurvetson gave the keynote today at the Washington Technology Industry Association’s Fast Pitch Forum & Technology Showcase down at the Bell Harbor conference center. He was hosted by local DFJ venture partner Bill Bryant and WTIA president Ken Myer.

Tim Draper has previously backed such companies as Skype (now part of eBay), Overture (bought by Yahoo), Hotmail (acquired by Microsoft), and Baidu (the Chinese search engine). He serves on the boards of Glam, Tagworld, SocialText, Meebo, Wigix, and several other companies with intriguingly weird names. Besides all that, the Stanford and Harvard alum is also a singer and songwriter. “I recently got to interview Carlos Santana,” Draper said. “I wrote some other words to ‘Smooth’ and sang it while he played it. It was kind of interesting. My singing career does have its moments.” (More on that in a minute.)

Despite what he called “an economic nuke” and subsequent “nuclear winter,” Draper was bullish on the prospects for entrepreneurs, and he gave some inspirational advice. “One thing has not changed—innovation just keeps going. Where there is a problem, there’s innovation,” he said. “Ultimately, it’s the entrepreneurs who solve all these problems. Entrepreneurs are heroes.”

Here are my main takeaways from Draper’s talk:

1. It’s the regulations, stupid. Draper criticized the many rules and regulations that can harm or slow down innovation. As examples, he cited Sarbanes-Oxley and the Investment Company Act of 1940, NASDAQ and NYSE acceptance hurdles and fees, and accounting rules like FAS 157. He also said monopolies block liquidity. “It’s like putting friction on a path, it slows everything down. That means there’s less money for investment in risky things, less money that goes to venture capitalists and entrepreneurs.”

2. It’s the best time ever to start a business. People need jobs, existing companies are reeling, and there are fewer startup competitors and newer technologies, Draper said. “It’s a whole new game,” he added. “You are as young as you feel.” He pointed to a long list of successful companies that were started during recessions or depressions: IBM, Microsoft, Hewlett Packard, Adobe, Coca-Cola, GE, Johnson & Johnson, to name a few.

3. It’s all about starting a revolution. Companies like Amazon and eBay were transformative in that they did away with institutions that most of us thought would be around forever—things like bookstores and trading posts. “What can we start?” Draper asked. “Moore’s Law is starting to accelerate, … Next Page »

Comments (1) | Reprints | Share:          

If you want to understand the important local and national trends in talent flow, you need to know Davis Bae. The founder and managing attorney of the Bae Law Group in Seattle, which specializes in immigration law, works with many local startups and employers in the tech community on their immigration and recruiting plans.

I’ve been hearing rumblings lately that high-tech talent is leaving the Seattle scene at an ever-faster pace, in part because of layoffs of foreign workers. Foreign nationals on H-1B visas are having a particularly hard time in this recession. That’s because if they get laid off, they (and their families) usually have to leave the country immediately. What’s more, getting the visas in the first place has become such a pain that companies are increasingly opening offices in places like Vancouver, BC—where Microsoft and Big Fish Games have recently set up shop, to name a couple of cases I’ve previously reported on.

Bae emphasized that the situation is indeed dire, but the issue is much bigger than Seattle—in fact, the Northwest actually has it pretty good compared to other parts of the country. “We have been creating a brain drain in the U.S. for innovation,” Bae says. “A key way to stimulate the economy again is by embracing talent from other countries.” As for the Seattle area, he says, “my clients and the region are reasonably stable. But the real problem we have is that the entrepreneurial community is the most locked out. They can’t wait six months for a visa.”

He is referring to the process by which companies can apply for H-1B visas for their employees as early as April 1, but have to wait until October 1 to get the results. Which brings us to the big trend Bae is seeing now. In 2009, the demand for new H-1B visas has dropped around the U.S, he says. There is an annual quota of 65,000 new visas available for the whole country, and in recent years there have been around 150,000 applications for those slots. “For the first time in many years, usage was so low they didn’t run out on Day 1,” Bae says. “It’s a huge drop.”

Nationwide, the number of H-1B visa applications is down to around 30 percent of what it has been in recent years, but Bae says he has still filed 60 to 70 percent of his usual business, mostly for companies based in the Northwest. Although that may be an encouraging sign for the Seattle area, … Next Page »

Comments (1) | Reprints | Share:          

On Friday, we reported that Tiger 21, a New York-based network and support group for the very wealthy, is setting up a Seattle chapter, headed by the local entrepreneur and investor Andy Sack. (Tiger 21 had planned to announce the news today, but another media outlet jumped the gun on Friday.)

The point of Tiger 21 is to give high net-worth individuals (more than $10 million is the base criterion) a safe haven to discuss their portfolios and problems with peers who can relate to them. This is a serious issue for the wealthy. “People are either jealous or they can’t understand you have problems,” says Lewis Haskell, a managing director of Tiger 21. “They say, ‘I should have such problems,’ or ‘How hard can it be?’”

I thought it would be useful to share what actually goes on behind the closed doors of Tiger 21 meetings, as related to me by Haskell and Sack. The meetings take place once a month in each chapter. Besides New York, the chapters tend to be in wealthy cities like Miami, Dallas, San Francisco, Los Angeles, and San Diego. Chapters typically have 10 to 12 members, says Haskell.

Monthly meetings are usually held in a board room from 9 a.m. until 4 or 4:30 p.m., and are followed by a social event. The first hour is called “world update.” Each member shares what’s been going on with his or her portfolio in the past 30 days, as well as their view of the landscape—concerns about anything from wars to interest rates to foreign competition. (I bet the October and November meetings were pretty ugly.) If there are personal issues to discuss, such as problems with children or relatives, they might be shared then too.

The next part of the meeting is about “issues and opportunities,” Haskell says. Members have an organized discussion about things like concerns over getting money out of a hedge fund, for instance. They might discuss relationship issues in more depth, like how to have difficult conversations with relatives who want to borrow money, or other people who want a piece of them.

Two guest speakers are brought in for each meeting, one before lunch and one after. Previous speakers include shareholder activist Carl Icahn, oil baron T. Boone Pickens, and former U.S. Senate Majority Leader George Mitchell. Topics range from economics and management to historical perspectives on war and other global issues.

In the final part of the meeting, one member gets up and gives a portfolio defense to the group. The individual shares his or her strategy, intentions, and ideas about their personal wealth and how to maximize it, and the rest of the group gives feedback—things like whether the member has too much stock versus other investments. “It’s really useful to have people look over your portfolio,” says Sack.

As one might imagine, it takes a special kind of person to be this open, and to be this invested in both learning and helping their peers. Here’s hoping the Seattle chapter of Tiger 21 finds the right mix to benefit both its members and the greater innovation community.

Comments | Reprints | Share:          

Yesterday, I gave a few highlights from a lunchtime discussion with Intellectual Ventures’ global head of technology, Patrick Ennis. The Bellevue, WA-based firm, founded by Nathan Myhrvold and Edward Jung, is sometimes called an “invention company.” It has gotten a lot of attention—and stirred controversy—for buying up large numbers of technology patents worldwide. So I wanted to hear Ennis’s thoughts on intellectual property, patent reform, and venture capital, among other things. (He’s a physicist by training, and a former VC from Arch Venture Partners.)

But first, Ennis gave me a little taste of how invention sessions work at the firm. He was fiddling with the Saran Wrap on his sandwich, wondering about its material properties and how they might relate to thin-film coatings for medical stents, say. “Inventors see inventions everywhere,” he says. “Invention is not taught, except for kids. When you’re a little kid on the playground, you’re allowed to do this. But as an adult, this would be viewed as weird—’this person is not focused.’ But that’s what inventors do.”

He ran through a hypothetical thought process with his sandwich. “Before we go to bed, we’d know if there are opportunities to invent a better film for food. I suspect we’d find the only opportunities are to reduce a little bit of cost, and maybe to change the marketing of it. A lot of the times at IV [Intellectual Ventures], we look at things like this and it turns out—because it was boring, or viewed as pedantic or mundane—people missed something obvious,” Ennis says. “You want to do a realistic market study. If it turns out there’s only 5 million a year of this sold around the world, it’s not worth your time to invent it. We’d quickly get a number for how much Saran Wrap is sold around the world….Then, someone will raise a hand. ‘You’re just talking about food preparation. These thin films are used for insulation to cover houses.’ Hmm, that’s 100 times bigger than a hamburger…That’s how invention sessions go.”

OK, on to the other highlights from Ennis:

—On patent rights and reform: “Everyone’s whining about there’s too many patent lawsuits, which isn’t true if you look at the numbers,” he says. “You can make a case that stealing someone’s intellectual property is a really bad thing. A lot of patents, people didn’t know they were infringing. Part of the reason they don’t know they were infringing is they’re told not to look. When I was at AT&T in the old days, you were taught as an engineer not to look. Because if you looked, and then it turned out you were … Next Page »

Comments (1) | Reprints | Share:          

It’s been a whirlwind month for Cliff Reeves. The Microsoft general manager just got back from Eastern Europe and China, where he was promoting the debut of BizSpark, Microsoft’s new outreach program for startups. The program offers free software, development tools, and technical support to early-stage startups worldwide, with the goal of helping local software economies—as well as getting Microsoft technology into the hands of the best young developers out there.

I spoke with Reeves on Friday, to hear about how BizSpark’s first 30 days have gone. The program, which launched on November 5, offers free downloadable tools and server software, including Visual Studio, Live Platform, Windows Server, and Azure, the company’s new cloud-computing service, which is still in the adoption process. Startups are eligible for consideration if they are less than three years old and generate less than $1 million in annual revenue. They pay a small fee (on the order of $100) upon exiting the program.

Reeves is excited about how it’s going. “We wanted to make sure we had an offer to reach startups,” he says. “We designed it in such a way as to reach out to the startup community more broadly.” So BizSpark has signed up “network partners”—investors, venture firms, university incubators, and other organizations—who are connected with local startup communities and can help with outreach. “The fundamental principle is to make this available through the local software economy,” Reeves says.

So far the effort seems to be paying off. “Thirty days in, we’re starting to see a switch from Microsoft people reaching out to startups to network partners generating demand,” Reeves says. He adds that BizSpark has about 800 network partners worldwide and sees between 100 and 200 startups a day, primarily in software and services with a consumer Web focus. The National Venture Capital Association, the European Business Angel Network, and the TiE entrepreneur group are some of Microsoft’s bigger partners.

I also talked to a couple of Seattle-area startup folks to get their take on the program. Nathan Kaiser, the founder of nPost, a resource site for entrepreneurs, is a network partner for BizSpark and says he has sponsored about 40 companies—some local, some national. “It’s a cool way for Microsoft to work with the startup community,” Kaiser says. “Everyone’s been really excited about it. It gives [startups] the resources they need.”

Which made me wonder how Microsoft is really doing in the startup community. Another local expert gave me some interesting context. “I think it’s a great thing for startups that qualify,” says Marcelo Calbucci, founder of Redmond, WA-based Sampa and the Seattle 2.0 startup site, via e-mail. “Who doesn’t want cheap/free software to get started? Microsoft has a huge disadvantage … Next Page »

Comments (1) | Reprints | Share:          

Whether it’s John McCain or Barack Obama, what should the new American president do to promote technological innovation and global competitiveness? Computerworld asked a collection of tech luminaries from around the country for their advice, and published their thoughts today. Here are contributions from three info-tech experts in Xconomy cities.

Rick Rashid, senior vice president at Microsoft and head of Microsoft Research, writes, “Over the past 10 to 15 years, there has been a retreat from the successful research investment strategies of the past—strategies that created modern computing and the Internet.” Rashid advises that the new administration “work toward restoring a balanced system of support for long-term basic research in science and technology with a goal of ensuring the future competitiveness of the U.S.” Specifically, he advises that the administration “work with Congress to eliminate or limit [noncompetitive] earmark funding for science, restore the ‘long-term risk-taking’ parts of DARPA to its 1970s/1980s form, and fund the American Competitiveness Initiative.”

Ed Lazowska, professor of computer science and engineering at the University of Washington (and former chairman of the President’s Information Technology Advisory Committee), gives a five-point plan that begins with restoring integrity to U.S. science policy. “It is essential that federal policy benefit from the most complete, accurate and honest scientific and technological information available,” he writes. Lazowska also advises doubling federal investment in fundamental research over the next 10 years, making a “national commitment to science education at all levels,” making the R&D tax credit permanent, and using technology to address the critical challenges of the 21st century. That includes energy independence, climate change, global hunger, national security, and urban infrastructure. “None is optional,” he says.

Victor Zue, director of the MIT Computer Science and Artificial Intelligence Laboratory (and advisor to the U.S. Department of Defense and National Science Foundation), writes, “Advances in information technology and computer science…are the primary force that powers our economy.” Achievements like the Internet, mobile communication, and user interfaces “typically originated from university research and often took more than a decade to realize a $1 billion market.” So Zue says the new administration should “significantly increase its budget for long-term, fundamental research, e.g., by doubling the NSF budget annually for the next four years. We must invest in educating the next generation of [information technology] professionals.”

Comments (1) | Reprints | Share:          

Things are really heating up in the casual games business. Today, Hong Kong-based Infinity Equity announced it has invested $20 million in Oberon Media, a major developer of casual games and gaming platforms. Oberon is based in New York, but has a publishing office in Seattle called I-Play. The news comes on the heels of last month’s $83 million financing of Seattle-based Big Fish Games (which was led by U.K.-based Balderton Capital), which seems to reinforce the strength and global reach of the Seattle-area gaming cluster.

Oberon is known for building gaming platforms, including billing and advertising tools, as well as publishing and distributing casual games across various online, mobile, and interactive TV platforms. Oberon acquired I-Play in 2007, which led Oberon to merge its Seattle-based game studio (Oberon Games) into the I-Play publishing division. Earlier this year, local gaming guru Don Ryan, who oversaw Oberon’s Seattle office, moved to New York and was promoted to chief operating officer.

Now it appears Oberon is making a play for China’s exploding casual-gaming market, which currently stands at 50 million users and $2 billion in annual sales, according to Infinity Equity. It will be interesting to see whether the company’s Seattle office plays a role in building relationships overseas. “Expanding our business into China is an important part of Oberon Media’s global strategy,” said Tal Kerret, chairman of Oberon, in a statement. “This new partnership will serve as an asset for extending our pursuits there and establishing an Oberon Media presence on the ground.”

Comments | Reprints | Share:          

Microsoft’s chief strategic thinker, Craig Mundie, believes the United States’ situation with broadband access represents a “total policy failure.” In an interview with the Washington Post, Mundie decries the fact that, by some measures, the U.S. ranks 14th in the world when it comes to rolling out broadband Internet service. He says Internet access in Tokyo is much faster, and much cheaper, than it is in Seattle. (That fits with last month’s report from Cambridge, MA-based Akamai that said Washington state has the largest percentage of slow Internet connections in the U.S.—Eds.)

Comments (1) | Reprints | Share:          

When corporate R&D rains, it pours. On the heels of Intel Research Seattle’s annual open house, an even bigger tech giant across Lake Washington is stirring up some serious action across the pond. Microsoft announced today it is opening a European Search Technology Center, with three main offices in the Paris, London, and Munich areas. Its goal is “to tap into local expertise and fuel local innovation with job opportunities that will help reinvent the European consumer online and search experience,” according to a Microsoft statement. The center will be headed up by general manager Jordi Ribas, who hails from the Microsoft Connected TV business group.

The European effort is being viewed as another way to compete with Google and other search engines in the battle for Internet advertising revenues, according to the New York Times, which quotes Microsoft CEO Steve Ballmer as saying, “Investing in anything at this time can be a tough sell…But when economic times are tough, we have to keep our faith in the promise that technology holds to transform the future.” Ballmer did not say how much Microsoft is investing in the new search center, but did confirm it will employ several hundred workers.

In a statement, Ballmer said, “To compete in a global, innovation-driven economy, we need to draw on the world’s smartest, most creative minds. Increasingly, we are finding the talent we need here in Europe.” Ballmer called the new search center “an important step forward in our long-term strategy to invest in local development of search technology in Europe. We believe search is still in its infancy. Developers at the Search Technology Centre will play a key role in helping us redefine search as they create new search products and services for consumers and advertisers here in Europe and around the world.”

Comments | Reprints | Share:          

Last Friday we reported that three distinguished Microsoft employees, all formerly of the firm’s Beijing research lab (Microsoft Research Asia), were slated to run with the Olympic torch in the lead-up to the Summer Games. On Saturday, we learned that Microsoft search VP Harry Shum’s run in Lhasa, Tibet, went off without a hitch, and that the other two are upcoming. Now we’ve learned that Kai-Fu Lee, the founding director of Microsoft Research Asia—and currently the founding president of Google China—beat them all to it, by serving as a torchbearer in Shanghai the last week of May.

A bit of backstory: Lee was a Microsoft (NASDAQ: MSFT) vice president in Redmond from 2000 to 2005 before defecting to Google (NASDAQ: GOOG), which spawned an infamous non-compete lawsuit that was settled out of court in December 2005. Before all that, Lee was a close friend and mentor to the Microsoft research guys; now he’s a competitor. It’s hard to say whether running with the torch earlier or later is the greater honor, though—either way it’s a big deal. (Ya-Qin Zhang, VP and chairman of Microsoft’s China R&D Group, is scheduled to run with the torch on the final leg of the relay, in Beijing.)

The torch business isn’t just in good fun—it’s also symbolic of the global competition between the tech giants. The game within the game. Whether it’s hiring talent, selling ads, or global branding, whether it’s Seattle or Shanghai, the Bay Area or Beijing, these guys will do almost anything to one-up one another. And we’ll be watching closely to see who brings home more of the real gold from China.

Comments | Reprints | Share:          

Let’s take a global view of innovation. The Boston and San Francisco clusters may anchor the U.S.’s dominance in biotech, but Europe is gaining ground—and in areas like telecom and clean energy, there is already strong competition from both Europe and Asia.

That’s the news today from the 2008 Global Venture Capital Survey, conducted by Deloitte LLP and the National Venture Capital Association (NVCA). The annual survey measured the opinions of some 400 venture capitalists worldwide. The aim was to recognize distinct pockets of technological leadership and to track where investments are flowing worldwide as a measure of the globalization of innovation.

First, a quick overview. The study found that VCs around the world still view the U.S. as being at or near the top in all the tech sectors surveyed—as evidenced by the percentage who rank the U.S. number one or two in various industries: telecom (71 percent), cleantech (79 percent), semiconductors (81 percent), and especially software (91 percent), biopharmaceuticals (94 percent), and medical devices (94 percent).

Drill down a bit and you find more interesting trends. Telecom is still seen as being dominated by the familiar top five: the United States, Japan, Israel, Finland, and South Korea. In cleantech, the United States was ranked number one by fewer respondents than either Germany or Japan, so there might be cause for competitive concern there. In software, the United States is still perceived to be dominant, but the U.K. (and Europe more generally) is coming on. And biopharma is still dominated by the United States and Europe—with the latter making some gains—and no Asian countries rank in the top five.

The stats and figures weren’t broken down by U.S. region, but there are a couple of booming areas that should be of interest to local entrepreneurs and investors. The first is telecom and entertainment in Asia. Just to give an idea, in Japan last year, five of the top 10 bestselling novels were marketed primarily for reading on mobile phones. And the total number of people in Asia involved with “virtual world” gaming is something like 20 million, a group that’s producing some $15 billion in services annually. If they were a country, they’d rank in the world’s top 100 for GDP.

So U.S. investors are following the Asian infotech scene very closely. “The biggest advantage of all is they know how to build services optimized to local users and culture,” said Dixon Doll, a general partner at Silicon Valley venture firm DCM, in a press conference about the venture survey.

Meanwhile in biopharma, most of the assets are still going to the United States and Europe, roughly in an 80-20 proportion, said Jean-Francois Formela, a partner in the life sciences group at Waltham, MA-based Atlas Venture, also in the press conference. Here’s how he sees the situation: “You look at the clusters of excellence in companies that are driving activity. Boston and San Francisco are equivalent in terms of the number of companies—they both have roughly 250 companies, 60 public. The next largest global cluster isn’t in the U.S., it’s in the U.K., in two regions—Oxford and Cambridge [in the southeast], and Manchester in the northwest, with about 30 public companies.”

After that comes another European cluster, near Basel, Switzerland. For a successful cluster, Formela says, “You need a critical mass of academic researchers, entrepreneurs, venture capital, and industrial partners. In Europe, pharma has been big, while in the U.S., the entrepreneurial component was much stronger. But the entrepreneurial gap between Europe and the U.S. is closing very rapidly.”

And it’s not just in biopharma. “What we see at Atlas is it’s changing rapidly on the tech front,” says Formela. “We see a big change in this decade from last. Now in wireless and consumer Internet, it’s very interesting. The online spent in Europe is bigger than the U.S., and wireless is 30 percent higher than the U.S.” In terms of building a company, he adds, “You can stay in Europe, you can find entrepreneurs, investors, and more importantly find the market. They don’t stop by the U.S. for any components. In the next 10 years, we’ll continue to see higher growth in Europe, and the currency has an effect.”

Boston (and the rest of the U.S.), take note—sounds like it’s time to raise your game.

Comments | Reprints | Share: