ENTERPRENEURIAL DYNAMISM AND THE SUCCESS OF US HIGH TECH INDUSTRIES

1

• ENTERPRENEURIAL DYNAMISM AND THE SUCCESS OF US
  HIGH TECH INDUSTRIES
• SLICON VALLEY AND VENTURE CAPITAL
• US RISING STARS
• -Software
• -Semiconductors
• -Biotechnology
• -Pharmaceuticals
• -Internet Related Industries

2

• Factors behind the recent success of the US
  Economic Growth
• Small Companies are leading in innovation and
  incubating new ideas .The resurgence of US
  high-tech industry occurred in an unstructured,
  unregulated, unplanned manner. The diversity of
  its business, entrepreneurs, and research
  opportunities generated pluralistic technological
  vision.
• -ENTERPRENEURIALSHIP
• -OPEN AND LARGE MARKETS
• -GENERATION OF IDEAS AND INNOVATION (KNOWLEDGE
  SPILLOVERS VIA GEOGRAPHICAL CLUSTERING OF HIGH
  TECH FIRMS)
• -INSTITUTIONS TO SUPPORT THE COMMERCIALIZATION OF
  IDEAS
• networks of business , universities, government
  laboratories
• involvement of private industry in research
  funding
• Funding 65 industry, 30 federal government, 5
  universities and other inst..
• Diffusion of inventions accelerated in US through
  government legislation in 1980 which allow
  universities to commercialize technology by
  patenting the results of the federally funded
  research and license the resulting technology to
  business and other entities.
• -GOVERNMENT PROMOTION THROUGH REGULATION, TAX
  INCENTIVES, TRADE, INVESTMENT POLICIES
  IMMIGRATION, EDUCATIONAL POLICIES, AND
  INFORMATION INFRASTRUCTURE.

3

• AVAILABILITY OF FINANCE OPPORTUNITIES (VENTURE
  CAPITAL, ETC.)
• SMALL BUSINESS INVESTMENT COMPANY PROGRAM (USA)
• equity and debt investment in young companies. In
  40 years of history, invested 21 billion USD.
• Birth of Apple, Federal Express, Compaq, Sun
  Microsystems, Intel and Microsoft
• VENTURE CAPITAL AND ANGEL FINANCING
• Angels are wealthy individuals who are high-tech
  entrepreneurs themselves and channel wealth and
  knowledge back into high-tech start-ups to create
  opportunities for new entrepreneurs.
• Microsoft (Paul Allen) invested 100 companies
• Michael Dell 1 billion USD for e commerce
  companies
• 5,5 of adults provided informal start-up funds
  due to high density of millionaires (3,5 million
  households with net worth of more than 1 million
  USD in 1996)
• In EU (Gr, Br, Fr, It, Sp, Sw, Hl) 965,000

4

• Venture Capital
• Venture capital provides equity funding, assist
  development of products and strategy, recruit
  experienced managers of young firms.
• Venture Capitals can be
• 1-early stage investors
• 2-later stage investors-financing expansion of
  companies and recapitalization
• 3-determine strategy of growth before IPO
• 4-determine MA strategy
• Main sources of Funds are
• 1-Pension Funds and Insurance Companies
• 2-Corporations
• 3-Wealthy Individuals
• 4-Banks
• Industry giants like Intel, Microsoft, ATT
  invest in start-ups which have complementary
  technologies. Intel holds an investment portfolio
  of more than 250 companies worth 3 billion USD
• In 1998 61 of venture capital investments went
  to information technology firms. 19 medical and
  bio-tech and 20 non-tech

5

• Public Equity Markets
• IPO-allows small high tech firms to raise
  substantial amounts of funds for rapid and
  open-ended future growth NASDAQ
• Stock Options
• employees who are skilled top level computer
  programmers, scientists, experienced business
  managers