Transcript Tim Taylor

Vanderbilt University
Biomedical Engineering
10.15.02
Why the Southeast?
Medical Device and H/C Trends
Day job or Your Own Company?
Timothy E. Taylor
Cofounder- Endius, Inc.
Venture Capitalist-HMC
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Timothy
E. Taylor
8.30.02
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Table of Contents
Fact Book:
Venture Capital Investment Climate in the
Southeastern United States
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I.
Economic Overview
II.
Entrepreneurial Environment
III.
Overview of Venture Capital Market
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Economic Overview
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Economic Overview
• Strong regional economy
• Substantial research support
focused on IT and Life Sciences
• Blue chip IT and Life Sciences
corporate presence
• Region dedicated to
entrepreneurial growth
• Leader in innovation
Harbert Venture Partners Locations
Other Harbert Southeastern Locations
Note: Southeast includes Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee and Virginia/Washington, D.C.
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Economic Overview
Strong Regional Economy
• 5th largest economy in the world
2000 Comparative Gross Domestic Product (GDP)
($ in trillions)
$8.0
$7.5
$5.3
$6.0
$4.0
$2.7
$1.8
$2.0
$0.0
U.S.
Excluding
Southeast
Japan
Germany
Source: Based upon most recently available data from the Bureau of Economic Analysis.
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France
$1.7
Southeast
$1.3
United
Kingdom
$1.2
Italy
$1.0
China
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Economic Overview
Strong Regional Economy
Gross State Product (GSP)
• The Southeastern U.S. economy is
expected to continue its historical
growth at a pace higher than the
rest of the U.S.
3.9%
4.0%
3.1%
3.0%
Southeast
2.1%
1.8%
2.0%
U.S. Excluding
Southeast
1.0%
0.0%
Historical
1980 - 2000
Projected
2000 - 2010
Projected Annual Real Gross State Product (GSP) Growth 2000 – 2010
(Highest growth states with 2000 GSP > $100 billion)
• Five of the ten fastest
growing, large ($100 billion+
GSP) states are located in the
Southeast
2.4%
2.4%
2.2%
2.2%
2.2%
2.2%
2.0%
2.0%
U.S. GDP Growth = 1.8%
1.9%
1.9%
1.9%
1.8%
1.8%
1.6%
Source: Bureau of Economic Analysis.
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FL
GA
WA
CA
NC
TN
TX
VA
WI
1.8%
MN
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Entrepreneurial Environment
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Entrepreneurial Environment
Substantial Research Support Focused on IT and Life Sciences
Virginia / Washington, D.C.
University of Virginia ($247M)
Virginia Tech ($123M)
Medical College of Virginia/Virginia Commonwealth
University ($122M)
Tennessee
Vanderbilt University
($218M)
Department of Defense ($48.5B)
National Institute of Health ($23.5B)
Environmental Protection Agency ($7.3B)
National Science Foundation ($4.8B)
NASA Langley/Goddard Research Center ($1.2B)
Virginia Biotechnology Research Park
Dept. of Energy –
Oak Ridge Lab ($2.1B)
North Carolina / Research Triangle Park
University of North Carolina ($510M)
Duke University ($478M)
North Carolina State University ($413M)
Wake Forest University ($187M)
North Carolina Biotechnology Center ($9M)
North Carolina Tech. Dev. Authority
Alabama
University of Alabama (Birmingham)
($296M)
Redstone Arsenal ($12.0B)
Cummings Research Park ($4.2B)
NASA Marshall Space Center ($2.2B)
Missile Defense Agency ($2.1B)
Southern Research Institute
Florida
Georgia
Emory University ($248M)
Georgia Tech ($101M)
University of Florida ($380M)
NASA Kennedy Space Center ($1.0B)
Bell Labs
Centers for Disease Control ($4.3B)
Georgia Adv. Tech. Dev. Ctr.
Southeastern Technology Center
Note: Dollar amounts represent annual R&D budgets/actual expenditures, based upon most recently available data.
Sources: Company annual reports, web sites and individual sources.
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Entrepreneurial Environment
Life Sciences and Blue Chip IT Corporate Presence in the Southeast*
-
* The depiction of the trademarks, service marks and logos on this page are for informational purposes only and are not intended to imply any affiliation with, or endorsement of, Harbert Venture Partners by their owners.
The trademarks, service marks and logos listed are in alphabetical order and their placement on the page is not intended to imply a specific geographic location or headquarters of any entity.
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c
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Entrepreneurial Environment
Region Dedicated to Entrepreneurial Growth
Tennessee
• Home to 30 publicly traded
healthcare companies with
> $36 billion in revenue
• Nashville high-tech job
growth – 2nd in nation
• Home to Vanderbilt Medical
Center and 16 other area
universities
Alabama
• One of the leading centers for AIDS,
cancer and heart research
• 8% of all anti-cancer therapeutic drugs
developed at Southern Research
Institute
• Cummings Research Park – 2nd largest
research facility in U.S.; 4th largest in
world
Georgia
• Atlanta software job growth – 2nd in
nation
• Atlanta high-tech employment – 7th in
nation
• Home of Center for Disease Control,
Emory University and Georgia Tech
Virginia / Washington, D.C.
• 5th largest high-technology center in the
nation
• Telecom employment – 3rd in nation
• D.C. area has 4,700 high-tech firms and
> 246,000 high-tech employees
• 50% of the nation’s Internet traffic
flows through Fairfax County
North Carolina / Research Triangle
Park
• Academic R&D funding – 1st in nation
• > 100 R&D facilities
• Concentration of science degrees – 1st
in nation
• Home of Duke University, University of
North Carolina and North Carolina State
University
Florida
• 7.5 million labor force – 4th in nation
• 3,149 patents in 2001 – 1st in Southeast
• $7B and $4B contracts for NASA and
Department of Defense, respectively
• 2nd in nation in healthcare employment
(300,000) and number of healthcare
firms (2,200)
Sources: AeANET/Cyberstates, Bureau of Labor Statistics, Capital IQ, META Group, Metropolitan New Economy Index, local Chamber of Commerce web sites and company web sites.
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Best Medical Device Cities
• U.S.: Boston, Minneapolis, San Francisco and
Warsaw, Indiana.
• Southeast: Memphis, Atlanta, RTP, NC.
Jacksonville, Nashville and Birmingham.
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Entrepreneurial Environment
Leader in Innovation
Patents Issued 1981-2001 (in thousands) 1
1,138
500
438
400
300
163
200
134
64
100
0
% of Worldwide
Market Share
62
48
37
28
U.S.
Excluding
Southeast
Japan
Germany
Southeast
France
United
Kingdom
Canada
Taiwan
Italy
49.7%
19.1%
7.1%
5.9%
2.8%
2.7%
2.1%
1.6%
1.2%
Relative Growth of Patents Issued Annually, Indexed to 1981
300
Japan
200
U.S. Excl. Southeast
100
Southeast
France
Germany
0
-100
'81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
By state or country of origin, patent is determined by the residence of the first-named inventor.
Source: United States Patent and Trademark Office.
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Overview of Venture Capital Market
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Overview of Venture Capital Market
Venture Funding by Region
• Southeast trails only California
and the Northeast in demand for
venture dollars
Venture Dollars Invested by Region
1995-2001 ($ in billions)
$105.7
$50.0
$47.7
$40.0
$27.1
$30.0
$20.4
$18.9
$20.0
$17.2
$15.9
$10.0
$0.0
% of U.S. Share
• Southeastern companies
accounted for approximately
12% of total venture deals done
between 1995 and 2001
California
Northeast
Southeast
West Excl.
California
Mid-Atlantic
Southwest
Midwest
41.8%
18.9%
10.7%
8.0%
7.5%
6.8%
6.3%
Number of Venture Deals by Region
1995-2001
10,732
5,492
6,000
5,000
4,000
3,296
3,000
2,329
2,219
2,055
1,941
2,000
1,000
Note: Northeast - CT, ME, MA, NH, NY, VT, RI;
Southeast – AL, DC, FL, GA, MS, NC, SC, TN, VA;
West Excluding California – AK, CO, ID, HI, MT, NV, OR, UT, WA, WY;
Mid-Atlantic – DE, MD, NJ, PA;
Southwest – AR, AZ, LA, NM, OK, TX;
Midwest – IL, IN, IA, KS, KY, MI, MN, MO, NE, ND, OH, SD, WV, WI.
Source: VentureXpert/SDC.
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% of U.S. Share
California
Northeast
Southeast
West Excl.
California
Midwest
Mid-Atlantic
Southwest
38.2%
19.6%
11.8%
8.3%
7.9%
7.3%
6.9%
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Overview of Venture Capital Market
Limited In-Region Funding Available
• Between 1995 and 2001, of the $20.8 billion1 venture capital invested in Southeastern companies
only 18% has come from Southeastern venture firms
• Between 1995 and 2001,
$16.9 billion has been
invested in Southeastern
companies by firms OUTSIDE
of the Southeast
Share of Venture Dollars Invested in Southeast1
1995-2001
82%
• Between 1995 and 2001, only
$3.8 billion has been invested in
Southeastern companies by
LOCAL Southeastern firms
18%
In Region
Out of Region
Excludes $6.4 billion of venture capital invested in Southeastern companies by unknown sources.
Source: VentureXpert/SDC.
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Medical Device and H/C Trends
U.S. spends $1.4 trillion, or 14% of its gross domestic
product on medical care.
• Could be spending close to $3 trillion, or 17% of the
total national output within ten years.
• Areas of highest growth: Cardiology; drug eluting
stents, Atrial Fibrillation, wearable devices, Spine,
Neurological and Osteobiologics.
• Areas of Low growth/upside: Dental, hearing,
diagnostics, Orthopedic Hip and Knee Implants,
Imaging and Laser Vision.
• Devices are viewed as “Defensive Play” on Wall Street
which should continue to drive growth.
• Returning back in favor for Venture Capitalist but
not as hot as early 80’s.
• Fifth largest funded sector by VC’s.
•
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INVESTMENTS BY INDUSTRY
Software
Biotechnology
Telecommunications
Networking and Equipment
Medical Devices and Equipment
Retailing/Distribution
IT Services
Semiconductors
Computers and Peripherals
Media and Entertainment
Healthcare Services
Industrial/Energy
Financial Services
Consumer Products and Services
Electronics/Instrumentation
Other
Business Products and Services
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$
Invest
%/To
t
$1016M
$958M
$657M
$633M
$556M
$394M
$360M
$284M
$185M
$161M
$144M
$138M
$72M
$55M
$35M
$28M
$27M
17.8%
16.8%
11.5%
11.1%
9.8%
6.9%
6.3%
5.0%
3.2%
2.8%
2.5%
2.4%
1.3%
1.0%
0.6%
0.5%
0.5%
Deals
199
81
75
57
73
90
50
31
27
28
19
33
14
14
10
8
10
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INVESTMENTS BY REGION
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$ Invest
%/Tot
Deals
Silicon Valley
$127M
22.8%
22
Northwest
$81M
14.6%
6
San Diego
$73M
13.2%
7
New England
$73M
13.2%
11
Southeast
$49M
8.9%
6
LA/Orange County
$47M
8.4%
5
South Central
$32M
5.8%
2
Colorado
$29M
5.2%
3
Midwest
$28M
5.0%
3
North Central
$9M
1.7%
1
SouthWest
$5M
0.9%
2
NY Metro
$2M
0.3%
2
Texas
$1M
0.2%
2
Philadelphia Metro
$0M
0.0%
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Day Job or Start Up
(Which should you do?)
Advantages of having a Day Job:
1.
2.
3.
4.
5.
6.
7.
8.
9.
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Good experience for your resume’.
Opportunity to learn backoffice operations and proven procedures.
Low stress after quitting time.
You can have a life outside of work.
Fairly stable income.
Mentoring usually available.
H/C benefits and forced 401(k) savings
Work 25 years, retire and start a new life at 50.
Helps you learn to be a team player.
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Day Job
Disadvantages
1. You are not the boss and corporate America is not a democracy.
At best, the company will be a meritocracy, if you find the right
company.
2. Advancement and pay increases are generally time based not
performance based and can be slower than you like.
3. Usually requires less creativity and more rule following.
4. Your manager may not be as bright as you but he or she will
determine your future.
5. Flex time/Family Friendly is still mostly lip service so be prepared
to punch a clock and drive the desk.
6. Over time you might get lulled into the low stress routine and give
up on your dreams.
7. You are at the mercy of the company. They own you.
8. Being Politically Correct is the important.
9. Leaders and self starters are often held back.
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Starting a Company
Advantages
1. Freedom and flexibility.
2. Will help you define who you are earlier in life.
3. Life will be more exciting and depressing. (more highs and lows)
4. Better opportunity to build real wealth. You normally don’t get
rich working for someone else.
5. Builds self esteem.
6. Allows you to live a balanced life once you’ve made it.
7. Serial Entrepreneurs are highly respected in the business world.
8. Better opportunity to help others and be a mentor.
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Starting a Company
Disadvantages
1. You sell your soul to investors and shareholders unless you bank
roll it yourself.
2. You won’t have a life for several years.
3. You will think about your business 100% of the time, even when
you sleep.
4. You will drive everyone around you who are not in the businesscrazy.
5. You will not be a good spouse or boy/girlfriend.
6. You will develop the curse of not being able to work for anyone.
7. You will think you are smarter than you really are if your business
succeeds.
8. You will think the world is here just for you and your business.
9. You lose sleep and fall out of shape.
10. Your attitude is determined by the price of your stock that day.
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My Suggestion
Career Path
• During college, work for a VC or investment firm even if you have to
work as a free intern.
• Post graduation, work for one or two large biomedical firms for no
more than five years. Get MBA at night and ask them to pay for it. As
you move up, try not to be forced into a technical position unless you
want to.
• Join a small company at the executive level.
• Get married but let the spouse know you are quitting your day job.
• Start your own company with a partner. (it may take three deals to hit
one.)
• Start your own company without a partner.
• Start family. (35-41 years of age)
• Semi retire when children are born thru K school.
• Go back to work when kids get in elementary school.
• Slow down at 55 working at the 60% level.
• Write book at 65 and consult at the 30% level as long as you can.
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