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Venture Revolution
Next Generation Startup Agronomy
Draft v5.2

by
Michael K. Madison II
Koichiro Nakamura
Edited by Anna M. Fitzpatrick

March 15, 2010

World TaSCforce and the World TaSCforce logo are trademarks of World TaSCforce LLC. All rights reserved.
Copyright © 2010 by World TaSCforce LLC. All rights reserved.
AUTHOR: MADISON et al.

CROSS-BORDER VENTURE REVOLUTION...............................................................1


FUTURE PERSPECTIVE....................................................................................................................2
THE ENVIRONMENT.......................................................................................................................2
Examining the Soil............................................................................................................2
Cross-Border Collaboration Context..................................................................................3
A CASE STUDY OF SUCCESS: SCIGINEER..............................................................................................4
Scigineer: A Story of Cross-Border Collaboration..............................................................4
CROSS-BORDER VENTURING CASE STUDY: COCOON VENTURES AND INNOVATION KITCHEN.....................................6
THE WORLD TASCFORCE™...........................................................................................................8
Overview ..........................................................................................................................8
Core Initiatives..................................................................................................................9
1. Global Venture Education Initiative.......................................................................................... 9
2. Cross-Border Venture Fund Initiative........................................................................................ 9
3. Global Intellectual Property and Venture Architecture (IPVA) Initiative...................................10
4. Global Research and Foresight Initiative................................................................................ 11
Putting It All Together.....................................................................................................11
CONCLUSION............................................................................................................................11

P a g e | 2
World TaSCforce and the World TaSCforce logo are trademarks of World TaSCforce LLC. All rights reserved.
Copyright © 2010 by World TaSCforce LLC. All rights reserved.
AUTHOR: MICHAEL K. MADISON II et al.

CROSS-BORDER VENTURE REVOLUTION


NEXT GENERATION STARTUP AGRONOMY
Just as energy is the basis of life itself, and ideas the source of innovation, so is
innovation the vital spark of all human change, improvement and progress
–Ted Levitt, late Harvard Business School professor and economist1
With an ocean’s distance between them, Cocoon Ventures (Mountain View, CA) and Mitsubishi
Corporation’s Innovation Kitchen (Tokyo, Japan) formed an alliance that functioned as a single
venture family unified by operational purpose. We fixed our focus on cross-border collaborative
investing between the United States and Japan, likening ourselves to venture agronomists, rather
than traditional venture farmers working the fertile regions of the Silicon Valley and Boston. We
were inspired by Norman Borlaug, the Nobel laureate agronomist who single-handedly increased
worldwide grain production more than 2.5 times by thinking more like a mad-scientist than a
farmer. Borlaug’s work is estimated to have saved more than 1 billion lives and fueled what is
now known as the Green Revolution—we wanted our venture capital efforts to fuel a Venture
Revolution. Just as Norman viewed adequate food supply as the fundamental element of social
justice, we view adequate venture supply as the basis for global economic stability, stimulation,
and equality.

The story of the Green Revolution serves as a parable for innovation within the venture industry.
In 1943, Mexico imported more than half of its grain for two reasons: endemic strains of wheat
did not thrive in Mexican soil, and traditional fertilizers caused the wheat to grow tall but too
top-heavy for the supporting root system, so that wind knocked it over. As a result, wheat crops
would die in droves and importing wheat was necessary to feed the people. Borlaug sought to
fix the problem by leveraging Mexican government support and implementing extreme
agronomic techniques. First, he located and evaluated foreign wheat seeds for use in Mexico,
eventually identifying the perfect candidate: a certain strain of Japanese wheat was very short
and would grow deep, strong roots. However, this wheat was unsuitable for Mexican soil.
Undaunted, Norman’s second step was to genetically alter the Japanese wheat seeds for growth
in Mexico—mad-science indeed. However, he didn’t stop there. After producing a variant that
would flourish, he altered it again to double the yield per stalk. Last, Borlaug instituted an
educational platform to support the needed behavior and process changes in the farming
community; although he had created “magic” seed, proliferation of his techniques would not
have been possible without this last step.

Together, Cocoon Ventures and Innovation Kitchen have started emulating Norman’s Green
Revolution for venture capital, leveraging our experiences to launch a global platform for
venture collaboration and innovation. Like Norman, we sourced foreign venture seeds for
planting in traditionally less entrepreneurial ecosystems. We genetically altered and tested
alternate venture models and seed structures to influence high venture growth and sustainability.
Venture education infrastructure is also at the core of our global platform, which we call the
World TaSCforce™.2 In this article, we describe this World TaSCforce™ platform for cross-
border collaborative venture investing. We begin by forecasting the future of venture capital,
because this future drives the need for such a platform. Next, we recount real case studies that
lead us to form the World TaSCforce™, and conclude with a platform description.

1
Pollard, Dave. Finding the Sweet Spot: The Natural Entrepreneur's Guide to Responsible, Sustainable, Joyful
Work. Page 122. Chelsea Green Publishing. 2008.
2
TaSC = Technology and Science Commercialization

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Copyright © 2010 by World TaSCforce LLC. All rights reserved.
FUTURE PERSPECTIVE
Some scholars argue that venture capital’s roots go back to when the pilgrims ventured to the
new world3. However, most agree that venture capital was born in the United States right after
World War II through the efforts of Georges Doriot, yet although the world has changed quite a
bit since 1946, major innovation in the venture capital industry has not happened, largely
because until now, it has not been necessary. However, our current global economic crisis is
driving cross-border venture collaboration like never before. The active globalization of venture
capital collaboration is changing the future.

Tomorrow’s governments will find peace and industrial growth through venture collaboration.
Collaborative innovation will be the language of choice for world economic policy and
diplomacy. But the source of this innovation will not be the familiar large corporations, R&D
laboratories, or current notions of entrepreneurial pedigree. Future disruptive technology will be
born from the genius of a young entrepreneur with no official affiliations—a first-time
entrepreneur working tediously in the comfort of his or her dorm or apartment. This newbie
entrepreneur will live well beyond the fertile borders of startup epicenters like the Silicon Valley
and Boston, and beyond today’s current venture capital reach extending to India and China.

Tomorrow’s Silicon Valley is not a geographic location, but rather a mindset and ecosystem that
began in the Silicon Valley and is spreading to the rest of world via venture education and cross-
border venture collaboration. In the future, the power of the Silicon Valley will not be in its
ability to draw the best entrepreneurial seeds to be planted in its own fertile ground and sprinkled
with capital support fertilizer; instead, the power of the Silicon Valley will be in the lessons that
can be adapted and exported across borders.

Tomorrow’s venture capitalists will no longer be farmers but rather mad-scientists and
agronomists who, like Norman Borlaug, are capable of genetically altering seeds that can grow
anywhere—irrespective of regional terroir fertility.
THE ENVIRONMENT

Examining the Soil

Germination success and failure can be known by the measured growth and fruit borne; the
properties of the soil are very important since it is the medium for this entire process. Although
for entrepreneurs, it is often easier to alter the seed than the soil, understanding the soil provides
the context for how the seed must change. For example, being an entrepreneur in Japan is not for
the faint of heart—it is far from easy.

First, in Japan, one’s personal status is almost entirely determined by one’s attachment to a large
corporation as well as one’s position within that organization. On the surface, this is also true in
the United States; indeed, parents universally brag about the swanky office gigs their
matriculating children land and business school friends naturally “oooh” and “aaahh when fellow

3
Frankly, it takes little effort to imagine our inheritance of phrases like “carried interest” potentially originating
from shipping terms used on the Mayflower, or transactional terms used within the original 13 colonies as they sent
crops and other goods back to their old world investors, keeping some portion for themselves.
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Copyright © 2010 by World TaSCforce LLC. All rights reserved.
Page |2
alums land jobs at McKinsey, Kleiner Perkins, JP Morgan, or Microsoft4. Socially, where you
work matters, even in the United States; however, in Japan the situation is quite different. We
asked every Japanese entrepreneur we could find: “Where do you tell your parents you work?”
And every single one of them admitted they lied to their parents: “Of course, I tell them I still
work at [insert big company here].” In the United States, it is often quite the opposite—
gainfully employed and unemployed people alike often exaggerate about just how “full-time” an
entrepreneur they really are. There is a certain “sexiness” associated with entrepreneurship, and
simultaneously, a certain tedium associated with being a part of “the big machine” or plugged
into The Matrix.

The Japanese “soil” affects every stage of the innovation process. At the outset, it is difficult for
Japanese entrepreneurs to recruit employees: assumptions about your intelligence or how well
you did in college are drawn based on the name of your employer, so even if you are crazy
enough to want to be an entrepreneur, imagine how hard it might be to build a team of smart co-
founders. Securing a home loan can approach impossible if the name of your employer is not
high enough in the food-chain, irrespective of salary. Capital is also difficult to obtain, as there
are virtually no seed-stage venture capitalists in Japan. Imagine you leap past that hurdle, and
then manage to build an actual product for which customers have a need (this is what we call
“the hard part” in the United States), that is no guarantee of success. While U.S. companies are
often looking for any available edge, Japanese companies are much more conservative and are
typically not open to using a completely new technology.

Despite these significant challenges, the largest hurdle is the general Japanese attitude
concerning failure, which is quite different in comparison to the Silicon Valley. Failure in Japan
can be much more like career and social death; in Silicon Valley, failure is embraced and failing
a company is almost an honor badge. Steve Jobs was once fired from Apple, Carly Fiorina was
offered the head post at the World Bank the same day she was fired as Hewlett Packard’s CEO,
and Jay Leno recently managed to get fired twice from NBC in a short period of time, only to
emerge even more valuable. U.S. venture capitalists are often happy to redeploy recently fired
CEOs into new startups because failing develops an urgent “hunger” for success.

As this example illustrates, examination and understanding of the particular “soil” available for
venture innovation is vital to success in that region or country. “Soil” analysis helps determine
the best way to modify the “seed,” but in addition, the World TaSCforce™ also attempts to alter
the soil itself, through government partnerships and perhaps even policy support.

Cross-Border Collaboration Context

In this article, we fuse together the words cross-border and collaboration to fully embody an
agronomic view of venture capital. “Cross-border” alone is inadequate, as it might represent a
franchise approach to venture where a firm’s brand is a collection of loosely affiliated,
autonomous offices in multiple geographies—in this model, collaboration is not necessarily the
focus. The relationship between Cocoon Ventures and Innovation Kitchen was consummated for
the purpose of cross-border collaboration beyond geographic coverage. Our goal was not to
plant a flag by increasing our global office space footprint; we believed much more could be
done to take advantage of international technology exposure and the market arbitrage
opportunities naturally uncovered through cross-border venture operations.
4
In fact, we are so hopelessly impressed by these companies that we know them by first name—McKinsey being
short for McKinsey and Company, and Kleiner Perkins Caufield and Byers often shortened to just “Kleiner.”
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In a venture capital context, arbitrage means collecting technologies from one area of the world,
aggregating them with other innovations, and deploying them in the most convenient geographic
market. Focusing first on the United States and Japan, we looked for U.S. seeds that would work
well in Japanese soil—and vice-versa. However, our effort began with soil analysis: examining
Japanese startups and leveraging a U.S. network and entrepreneurial perspective while
concentrating our operations in Tokyo.
A CASE STUDY OF SUCCESS: SCIGINEER
Building on Norman Borlaug’s legacy, we began our efforts in a region where growth is
difficult. Our plant of choice was early-stage technology startups (with adequate founders), and
our target soil was Tokyo, Japan. At the right time, we would come to the United States to find
viable seeds for sowing in Japan, but before then, Innovation Kitchen would spend time
examining many domestic Japanese seedlings, probing for any sign of growth potential in U.S.
soil. After hunting for and considering existing Japanese startups, it was clear the Innovation
Kitchen would need to have a hand in building the company from scratch, laying a solid
foundation themselves with the proper structure, team, and resources.

And so, a search for great Japanese technology ensued. Enter Scigineer, a recommendation
service company built around a serendipitous discovery engine capable of generating
recommendations and divining relationships between seemingly unrelated data.

Scigineer: A Story of Cross-Border Collaboration

We first discovered Professor Shinichiro Yoshii at Hokkaido University; he was renowned in


Japan for his domain expertise around a behavior-based data discovery. After much discussion,
we wooed him away from the university, and two top level engineers away from a large
corporation—no easy feat given the business and academic culture in Japan. We initially hired
them as Mitsubishi Group Company employees; this essentially guaranteed the founder’s
business status until the company became more well-known. It also afforded the ability to hire
top-level talent in academia and engineers from big companies. Being aligned with Mitsubishi
Corporation avoided a number of hardships Japanese entrepreneurs usually face.

Our first task was to resolve any conflict with Hokkaido University, since the underlying
technology was at the school; however, much to our surprise Hokkaido University only cared
that patent filing costs were covered. So, securing the permission and support from Hokkaido
University was as simple as reimbursing the patent filing costs, without any additional license
expense.

The next major task was team-building, again, very challenging for a startup in Japan. In the
beginning we let Yoshii and other core technologists focus on technology development and
prototype-creation. Most other operational functions like legal registration, business model
development, hiring, and prototype sales were covered by Innovation Kitchen staff.

After structuring Scigineer, Innovation Kitchen used Mitsubishi Group and the Kauffman
Fellows network to do much of the business development. Cocoon Ventures later functioned to
fill this role and help Innovation Kitchen identify promising applications for the discovery
engine technology: web navigation optimization, a behavioral-targeted advertisement engine, or

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Page |4
a recommendation engine with future sights set on “crowd-computing” (a generalized
programming interface for generating behavior-based recommendations).

After we refined the product, initial sales inside Japan were set in motion using Mitsubishi’s
network; however, Japanese companies are not open to using a completely new technology, so it
was very difficult to acquire customers without existing customer validation. Furthermore, even
after gaining Japanese customers, they were not comfortable giving product feedback. As a
result, we could not rely on customer feedback to improve the product.

Scigineer and Innovation Kitchen again needed to leverage Kauffman Fellows classmates, asking
for introductions to prospective customers, and with their help we recruited ten beta customers
willing to test our raw product and give feedback. Scigineer reshaped its services based on U.S.
beta customer feedback; only then could we return to Japan to again leverage Mitsubishi’s
network. This time, customers swarmed and the pipelines filled faster than it was possible to
service.

Cross-border execution made it possible to gain local Japanese customers, and the same was also
true in securing Japanese investors for subsequent rounds. Until a U.S.-headquartered venture
capital firm invested (Doll Capital Management), Japanese venture capitalists and strategic
investors were hard to come by.

Scigineer illustrates the potential for native Japanese seeds to flourish in entrepreneurially tough
soil, though their success to date was not met without challenges. Overcoming each hurdle
required “agronomic experimentation,” with clinical trials seeking to foster conditions
advantageous to startup development. Each trial altered critical company structures and involved
collaboration with Cocoon Ventures, support from large Japanese corporations (like Mitsubishi
Corporation), capital endorsement from a U.S. venture firm (Doll Capital Management), and
strategic help from a network of Kauffman Fellows.

With this alignment of resources, Scigineer was able to accomplish much more than many
successful venture-backed Silicon Valley startups could within the same time period. For
example, within six months, Scigineer had 30 large customers including NTT Group, ANA,
CNET Japan, and Recruit, with several becoming strategic investors. Within another six months,
Scigineer more than doubled their customer base, adding market leaders like Expedia Japan,
Myspace Japan, NTT Docomo, KDDI and Nissen, with a pipeline exceeding 50 additional
customers waiting to use their service.

Such notoriety for a 15-person startup is unheard of in Japan. Within 18 months of launching the
company, Scigineer became Japan’s eighth most financially supported venture-backed IT
company within two years, earning Red Herring’s Global 100 status as well as CNET’s
technology venture award in Japan. Moreover, at the time of this writing, Scigineer and Cocoon
Ventures are mid-collaboration on the launching of a U.S. entity.

Scigineer’s case indicates the power of cross-border opportunities. Moreover, it demonstrates


how global connectivity begets local strength. This point is also well reflected in the Innovation
Kitchen’s project with Cocoon Ventures in bringing U.S. mobile technologies to the Japanese
market.

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Copyright © 2010 by World TaSCforce LLC. All rights reserved.
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CROSS-BORDER VENTURING CASE STUDY: COCOON VENTURES AND INNOVATION KITCHEN

Cross-border operations between Cocoon Ventures and Innovation Kitchen began by crafting
custom collaboration tools to facilitate communication, evaluate deals, and assess global deal
partners. These tools were critical given our physical distance and helped identify disparities
between managing directors, forcing conversations that drove efficient decisions untaxed by
cross-border latencies. Next, we explored investment theses that would best leverage our
venture model and yield competitive advantage.

In the end, we settled on a few areas of interest: mobile application middleware technologies,
native mobile application conversion technologies, and innovations around personalization-
driven serendipitous discovery. Our relationships in Tokyo afforded us the opportunity to be a
conduit between U.S. mobile technologies and mobile carriers in Japan—the most advanced
mobile market in the world. In addition, personalization and serendipitous discovery
technologies seemed far more advanced in Japan as compared to U.S. collaborative filtering
startups, and in our opinion the U.S. market benefit would yield greater returns.

Nailing down our investment theses meant that we knew which opportunities and entrepreneurs
to target, but we were concerned about the traditional entrepreneurial bias against overseas
collaboration. Silicon Valley entrepreneurs are the sun at the center of their very own galaxy,
with an ecosystem of venture capitalists, lawyers, educators, and venture banks orbiting around
them with Swiss-German precision. Ordinarily, these entrepreneurs care very little about
overseas collaboration; however, amidst the historic economic downturn, we found that
entrepreneurs were very interested in globalizing their venture if it meant survival. They were
most interested in taking on capital, even foreign capital. Furthermore, all of the U.S.
entrepreneurs we encountered were willing to provide a perpetual license to their technology for
use in a foreign country in exchange for equity-free capital to help them launch locally.

This realization sparked iteration on several different venture models. We were open to
incubation, which meant we did not have to shoehorn sourced deals to fit our theses—if the right
opportunity was not available, starting it ourselves and building a team around it was always an
option. Coupling this with the low cost of acquiring technology across borders (relative to a
traditionally priced equity), we effectively uncovered an arbitrage opportunity. Instead of only
seeking traditional venture capital transactions, we augmented our entrepreneur offering to
include agronomic licensing or “license-hatching,” joint venture, and venture architecture as
well.

License-hatching is a very simple but effective approach for a venture firm open to incubation: a
license can be collected in the United States but grown or “hatched” via incubation in Japan.
Instead of executing a traditional venture transaction, exchanging equity for cash, we also sought
inexpensive perpetual licenses from U.S. startups for exclusive use in Japan. This decoupled seed
technologies from startups and founders—with the hope that they could be effectively planted
and grown elsewhere with a different team.

Negotiating such a license turned out to be very easy, especially for U.S. startups that had no
plans to go overseas within five years; in fact, it was often easier than negotiating a traditional
term sheet. For example, one early-stage mobile startup passionately argued valuation, wanting
to give up less than 10% of the company for $1.5M invested, yet they were willing to give up

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100% of their technology in perpetuity for $300K so long as it was used overseas and required
no equity stake in the U.S. entity.

For our cross-border effort, since we were open to incubation with a full incubation team on
standby, license-hatching was as good as arbitrage. The process goal was to license great
technologies from the United States, build a team the original entrepreneurs would train, and
incubate with Japanese engineers and other Japanese corporate partners.

By contrast, a joint venture model enabled us to be on the same side of the table as the
entrepreneur and extend their reach by building out their foreign operations earlier in their
company lifecycle. An entrepreneur launching NewCo in Mountain View, CA could leverage
our structure to simultaneously launch a parallel NewCo Japan (in which the original corporation
had an equity stake). This approach not only aligns incentives but reverses the traditional equity
tension.

Lastly, we also explored an approach we call venture architecture, a method of building early-
stage but large scale platform-oriented ventures. Venture architecture builds on the idea of
separating technologies from the originating founders and startups and using them with a
different team in a different country. For example, we could “mashup”5 these technologies with
other innovations to yield an even stronger platform and venture.

This methodology relies on collaboration to build a “big picture” startup, in itself a small
ecosystem. It also involves a great deal of coordination to completely close a deal, as well as a
mental shift away from traditional ways of thinking about ventures. Here, the concept of a
“deal” shifts away from discrete, self-contained, portfolio companies and toward a collaborative
portfolio of technologies, team members, and carefully orchestrated partnerships. In this view, a
venture is completely formed after an architected integration of deals come together to form a
single solution—a superventure. Entrepreneurs responded very positively to this approach.

“Mashing up” startups into superventures could occur domestically or cross-border; the cross-
border approach takes significantly more time and adds complexities, but also lends itself to
corporate partnership and technology integration. This model suggests that venture capitalists
should begin as if they are building a wonder of the world, not a temporary structure built to last
just five or ten years. Imagine if the builders of the Great Pyramid of Giza, the Taj Mahal, or the
Roman Coliseum began with the same philosophy traditional VCs use to build ventures—they
would long since have been forgotten and crumbled to dust. Constructing a masterpiece of a
startup may require shedding fear of complexity and embracing the architecture of an entire
system, not just a single component. This approach opposes the natural inclination for traditional
venture capitalists to negatively weigh the increasing number of “stars” that have to align before
there is a clear pathway to success.

Open to these various possibilities, Cocoon Ventures sourced opportunities all over the United
States to be launched in the Japanese market in partnership with Mitsubishi Corporation’s
Innovation Kitchen. In the course of five months, we whittled thousands of companies down to
398 interesting deals, explored 19 opportunities in detail, and eventually settled on a single plan
using all three of the aforementioned models.
5
A “mashup” is a software development term referring to the act of combining the functionality of multiple services
into a single application. We submit that we can look at startups as a means of “mashing up” deals and that the sum
of the parts might represent exponential value increase as a full integration.
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We decided to combine three startups, and successfully negotiated the license of two U.S. mobile
technologies to be integrated with the third startup, which is a more traditional deal, ultimately
producing a single Japanese startup. This effort is in partnership with a large Japanese IT
company that hopes to leverage the integrated mobile platform to launch a newly branded
MVNO mobile service. This may all end in spectacular failure—after all, it is certainly
complicated and the market is ever-changing as each piece of the overall deal is closed. Only
time will tell if the overhead is worthwhile, but the potential and past experience suggest that this
approach is the future of venture.

THE WORLD TASCFORCE™


As these case studies demonstrate, cross-border venture collaboration is a source of innovation—
relatively untapped; this source may offer a resource in facing the global economic crises. The
World TaSCforce™ is our platform for cross-border venture collaboration, a unified innovation-
based diplomacy platform with a twofold mission:
• global economic development through venture education and collaborative cross-border
venture capital; and
• world-wide technology aggregation and proliferation through entrepreneurial venture
formation.

At the time of this writing, the World TaSCforce™ has secured support from a number of
corporations and government agencies in Japan and the United States, with a soft launch planned
by the year’s end and full launch within the next eighteen months.

The World TaSCforce™ mission is carried out through four core initiatives aimed at growing a
government’s innovation ecosystem. This platform is designed for use across the range of
developed and developing countries with synergistic initiatives providing maximum benefit to a
country when leveraged in concert but functioning individually as well. Each core initiative is
described in detail after an overview of the process and its benefits for various stakeholders.

Overview

A government taking advantage of all four components may begin by lending its support in
planting a resident venture firm that will sustain perpetual entrepreneurial growth. The new firm
can then sponsor ongoing venture education, training local venture capitalists through the
education partners like the Kauffman Fellows Program and including curriculum relevant to the
local environment and culture. This education includes cross-border modules that help member
firms fully leverage the World TaSCforce™ infrastructure. Through this process, the local firm
and trainees are connected to a global innovation network that empowers their local activities
and yields competitive advantage in the form of access to information, research, and technology,
as well as venture support from around the world. Both research, including tracking the latest
worldwide technology trends, and thought leadership ensure that members of the World
TaSCforce™ network can make globally minded decisions with up-to-date information.

In this way, the World TaSCforce™ platform enables innovation-based diplomacy for any
government. A startup in any country may merge technology from Japan with innovations from

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Page |8
Israel and Holland to launch a startup in their own locale. 6 This can benefit local ecosystems by
giving small businesses a necessary technological advantage and can more rapidly increase
global innovation by bringing the best technologies to the local marketplace. In addition, local
market knowledge of global technology forces competitors to alter their technological course.

With government support, the World TaSCforce™ engages public and private research groups to
facilitate the commercialization of domestic technologies through a network of venture funds and
incubators. This technology proliferation increases a country’s influence on global innovation
and drives foreign capital to the originating research lab, once that lab’s innovations are licensed
to a startup in the network. This effectively rewards research labs that generate the most practical
breakthroughs, reducing their reliance on government capital.

Core Initiatives

The core initiatives of the World TaSCforce™ are as follows:

1) Global Venture Education Initiative


2) Cross-Border Venture Initiative
3) Global IP and Venture Architecture Initiative
4) Global Research and Foresight Initiative

1. Global Venture Education Initiative


Venture education is central to a country’s economic growth. Accordingly, the World
TaSCforce™ offers the Kauffman Fellows’ Center for Venture Education as one of its
educational partners. The Global Venture Education initiative leverages proven KFP curriculum
to train a government’s next generation of venture capitalists. Additionally, this initiative
leverages other partnerships with top-tier entrepreneur organizations as well as university
professors to educate a country’s entrepreneurs with ongoing workshops and “boot camps.”
2. Cross-Border Venture Fund Initiative
Cross-border venture investing is a critical part of the World TaSCforce™ and serves as the
operational hub of the organization. The responsibilities of the Cross-Border Venture fund
initiative involve direct investment in cross-border startups and active collaboration support
between member funds across various geographies. Consequently, of the capital we are currently
raising, 40 to 60 percent of the funds allocated to this initiative are dedicated to co-investing with
firms in the World TaSCforce™ network; and the remaining 40 to 60 percent is used for direct
investing and incubation.

Startups funded through this initiative can have a global vision and rollout plan from inception,
and can make strategic use of the World TaSCforce™’s globally sourced technologies and
relationships. The structure of this initiative relies upon local venture firms with dedicated fund
allocations as well as a centralized cross-border team whose allocation drives collaboration from
a “big picture” view. Member venture firms operate locally, but regularly cross-pollinate with
other venture capitalists within the World TaSCforce™ network as well as with the centralized
cross-border team, which focuses entirely on how the member firms can best collaborate. Global

6
With the exception of intellectual property transactions that are not International Traffic and Arms Regulation
(ITAR) compliant.

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team interaction ranges from sharing deal flow and technology to helping a member firm’s
portfolio company reach global customers or launch a foreign branch earlier in the startup life-
cycle.
3. Global Intellectual Property and Venture Architecture (IPVA) Initiative
The Global Intellectual Property and Venture Architecture (IPVA) initiative works with research
groups and government agencies to give technologies life outside of the laboratory.
Advantageously, intellectual properly (IP) is distributed by entrepreneurial means, not by the
(currently standard) transactional IP brokering. Worldwide distribution of IP through
entrepreneurial means rewards the application of technology and directly impacts local economic
development. In exchange for giving the World TaSCforce™ access to technology,7
collaborating research groups gain a network of venture efforts all over the world that may
choose to apply this IP into their products. As a result, research groups can focus on what they
do best (research) and effectively partner with commercialization and business-focused venture
capitalists, technologists, and entrepreneurs. The World TaSCforce™ thus enables technology
portability as well as venture arbitrage, since great technology born in one locale may have a
better market entry point in a different geography.

The World TaSCforce™ is composed of a network of affiliate venture firms as well as a cross-
border investment team. The cross-border team works alongside the Global IPVA initiative to
incubate startups whose products are the integral sum of technology components from the Global
IPVA group. Furthermore, the Global IPVA team may choose to work with venture firms in the
World TaSCforce™ network to build early-stage but large-scale platform oriented ventures. In
this hybrid approach, the concept of “deal” shifts away from discrete, self-contained portfolio
companies and toward a collaborative portfolio of technologies, team members, and carefully
orchestrated partnerships.

On this path toward the architected integration of a superventure, rather than merely
(traditionally) funding a single company, member funds can choose to become a source for
finding components to larger-scale ventures being architected by this team. For example, if the
Global IPVA team is incubating a web application for window shopping, the Japanese TaSC
Fund may source a next-generation user interface component to the application, while the Dutch
and Euro TaSC Funds may source a product recommendation engine and ecommerce
technologies. Together, these items can comprise the superventure: the web application the
Global IPVA team ultimately builds. In this case, all venture funds involved may choose to
syndicate the deal across countries with the help of the cross-border team. Alternatively,
technology components can have effective licenses and revenue share when the web venture is
successful8. Another option still may be to give each venture firm the option to launch ventures
with identical technologies and their rights of use in their respective countries; the success or
failure of which is individualized to each venture fund. There are a multitude of structures that
yield profit incentives for all parties involved.
7
The nature of the technology access is determined on a case-by-case basis. The extent of the access depends on the
agency: Some government agencies are not significantly concerned with profit, while private research groups may
be very focused on profit. All approaches are welcome. For example, we currently work with agencies that give us
exclusive use of their innovations without license fees or royalties, whereas others require deal-by-deal negotiation
for each technology use and license.
8
The word “effective” here refers to the potential for World TaSCforce™ internal transfer pricing that produces
proper motivation for all parties involved. This is similar to the way HP might increase sales by bundling a
computer with a “free” printer. Internally, there is likely an effective transaction that doesn’t penalize the profit and
loss motivation of the printer business unit.
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Copyright © 2010 by World TaSCforce LLC. All rights reserved.
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4. Global Research and Foresight Initiative
The Global Research and Foresight initiative tracks worldwide innovation trends. These trends
are developed by the Global Research and Foresight team and are augmented by “signals”
received from forward-looking groups around the globe. The reporting of these trends is shared
with LPs as well as corporate partners of the World TaSCforce™. This improves the ability of
associated venture firms to make quality decisions about technology deployment, investments,
and global expansion of their investments. Additionally, the Global Research and Foresight team
has developed tools to aid in crowd-sourcing signals and trends from individuals, which thus
improve the ability of World TaSCforce™ network members to leverage industry experts for a
sense of the micro-trends or for an instant reaction to an investment thesis from experts both
inside and outside the World TaSCforce™ network.

The research function of this initiative tracks thought leadership concepts relevant to the venture
—as opposed to technology trends—ensuring that World TaSCforce™ venture capitalists and
entrepreneurs have up-to-date information regarding proven best practices as well as the newest
perspectives that innovate on venture capital models. This Group also conducts venture-relevant
experiments and generates whitepapers published within the World TaSCforce™ network.

Putting It All Together

Governments may blend World TaSCforce™ initiatives in any permutation between all-inclusive
and standalone. For example, a research group in France may solely work with the Global
Intellectual Property initiative to have their technologies distributed to portfolio companies.
Additionally, large corporations may collaborate with the Cross-border Venture Fund initiative
in order to source innovation and partner with cutting edge startups from around the globe.
Moreover, groups targeting the developing nations may collaborate to use technologies collected
by the Global IP initiative from other nations. Japan’s Ministry of Economy Trade and Industry
may use all components simultaneously; the process might begin with the Global Venture
Education initiative training local venture capitalists and entrepreneurs. With our help,
graduating venture capitalists may found a local fund that is government and institutionally
supported via the Cross-border Venture Fund initiative, which in turn connects this new fund to a
network of other funds for collaboration. While collaborating with another venture firm in the
network, both groups may use the Global Trend initiative to highlight areas of interest and
validate their investment theses. Lastly, before launching technology companies from scratch,
they may peruse the vast catalogue of technologies collected by the Global IP initiative in search
for innovations that will short-cut their development time.

CONCLUSION

The launch of the World TaSCforce™ is ground zero for cross-border venture collaboration.
Just as the Green Revolution doubled the worldwide production of grain, years from now, we
hope our efforts will universally catalyze sustainable GDP growth without one region loaning or
borrowing benefit from another; instead creating productivity where there was once abyss.

World TaSCforce and the World TaSCforce logo are trademarks of World TaSCforce LLC. All rights reserved.
Copyright © 2010 by World TaSCforce LLC. All rights reserved.
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