Accelerators in Silicon Valley

Front matter

Accelerators in Silicon Valley

Building Successful Startups

Peter Ester

Table of Contents

Foreword Acknowledgements The Interviewees and their Accelerators

1 Silicon Valley The DNA of an Entrepreneurial Region

Introduction Europe and Silicon Valley Accelerators: Pillars of Silicon Valley's startup support infrastructure Accelerators: their role, research, and results Methodology Overview

Foreword

Peter Ester brilliantly captures the varied but vital role that accelerators play in minting new entrepreneurs essential for economic development and new job creation in America. Based upon recommendations from various people, myselfincluded, Peter set out on a mission to thoroughly study two dozen accelerators in Silicon Valley, the mecca ofinnovation. He chose the interview method with carefully defined questions in a quest to contrast his discoveries in Silicon Valley with Europe.

In an easy-to-read-and-grasp style of writing, Peter does an excellent job of communicating his findings. His conclusions are descriptive and prescriptive. The target readers — whether established entrepreneurs or aspiring ones and policymakers or concerned citizens imagining new ways of economic development — are in for a treat here.

Peter highlights the notion of ‘culture’ rather prominently in his analysis of critical success factors in Silicon Valley. He goes on to suggest that culture — which includes a winning mindset and the ability to take risks, try, and fail without a stigma being attached in European society- is an essential ingredient for success. What is common to all effective accelerators, Peter notes, is the existence of an ecosystem of successful role models and mentors who are eager to offer advice and guidance to new entrepreneurs, something that is lacking in Europe. The prevalence of investors — both angels and venture capitalists — who are willing to take risks on unproven entrepreneurs is another key ingredient in Silicon Valley that is also missing in European society.

Istrongly encourage all success-seeking Europeans to pay close attention to what Peter Ester, a European, has to say in this book. This includes developing a mindset of risk-taking that is free from stigma, stepping forward to coach and mentor others, and setting up more angels and venture capital funds.

Lastly, I encourage readers to study more of Silicon Valley’s successes to build better European innovations, which in turn should lead to increased economic activity, more jobs and wealth creation, and, ultimately, better societies.

Silicon Valley has stood the test of time, so it’s a very safe bet to emulate a piece of it!

Vish Mishra

Venture capitalist, Clearstone Venture Partners Accelerator advisor and startup mentor Former president of TiE Silicon Valley

Acknowledgements

I would like to thank the founders and chief executives of the 23 Silicon Valley accelerators whom I interviewed for this study. They generously took the time to talk to me about their passion for bringing talented startups to the marketplace and to co-create new innovative businesses that may make a difference. They all share the same ambition, enthusiasm, and vision to help startups to realize their business ideas and their dreams and to grow their new venture. It was a delight to interview such able and dedicated entrepreneurs. I learned a lot about how accelerators in Silicon Valley select and foster new startups, how they empower startup teams, how they coach startups in developing their product and in sharpening their marketing strategy, and how they prepare them for entering the competition. My gratitude goes out to Saeed Amidi (Plug and Play), Sunil Bhargava (Tandem), Gary Coover (Samsung NEXT Start), Danielle D'Agostaro (Alchemist Accelerator), Doug Davenport (Prospect Silicon Valley), Cyril Ebersweiler (HAX), Marlon Evans (GSVlabs), Tom Ferguson and Nimesh Modak (Imagine H,0), Ian Foraker (Cleantech Open), Brian Hoffman (StartX), Ari Horie (Women’s Startup Lab), Emily Kirsch (Powerhouse), Cindy Klein-Marmer (Butler Venture Accelerator), Naomi Kokubo (Founders Space), Duncan Logan (RocketSpace), T.M. Ravi (The Hive), Prashant Shah (TiE LaunchPad), Prem Talreja (The Fabric), Harm TenHoff (BayLink), Marco ten Vaanholt (BootUP), Matt Walters (Runway), Jun Wong (Hacker Dojo), and Elizabeth Yin (500 Startups).

Iam greatly indebted to my good friend Vish Mishra, a successful Silicon Valley entrepreneur and prominent venture capitalist, for introducing me to several accelerators and for writing the foreword to this book. The San Jose Mercury News has described Vish Mishra as one of the ten most influential people in Silicon Valley.

Peter Laanen, an equally good friend, was gracious enough to open up his accelerator network in the Bay Area to me. The Dutch Consulate in San Francisco was helpful in various phases of my research, as they had been in my previous projects on Silicon Valley’s remarkable innovation track record.

Iam grateful to a number of outstanding experts on Silicon Valley whom I interviewed on the vibrant Bay Area accelerator scene and its broader economic and technological impact. They include Aiaz Kazi (Head of Platform Ecosystem at Google and startup advisor), Susan Lucas-Conwell (innovation catalyst and accelerator mentor), and Sean Randolph (Senior Director of the Bay Area Council Economic Institute). I am also grateful to Anuradha Basu, Director of the Silicon Valley Center for Entrepreneurship at San Jose State University, for her insights into how the Silicon Valley ecosystem works to build successful businesses.

I want to thank Guy Bauwen and Arjen van Klink, respectively the previous and current director ofthe Research Center Business Innovation of Rotterdam University for Applied Sciences, for supporting this study. I greatly value the discussions on the dynamics of the startup (and scale-up) economy with my colleagues Ron Ainsbury, Guy Bauwen, Leo Klienbannink, Maaike Lycklama á Nijeholt, and Arie de Wild, and with Rotterdam Business School lecturers Peter Anker, Frits Berkhout, Rengenier Rittersma, and Bert Vermeulen. They all share a fascination with the role of startups in boosting innovation and growth.

Tim van Duren, my research associate, had a significant input as well. His accuracy was highly valuable in logistically complex projects such as this one. Jan de Kok did an excellent job of acquiring background information on the accelerators that were interviewed for this study. I have much respect for Flatworld Solutions (Bangalore, India) for making professional transcripts of the interviews I held.

Many thanks to Amelia Roman, Professor of Entrepreneurship, for her professional English language correction of the manuscript and for helping me to understand Silicon Valley. I am indebted to my colleague Ron Ainsbury for his critical reading of this text, his helpful comments, and his humor. I also owe a great deal to Rengenier Rittersma, lecturer and researcher at Rotterdam Business School, for his careful examination of the manuscript.

I would like to thank Arne Maas, my friend and former colleague at the Research Center Business Innovation and co-author of my previous book Silicon Valley: Planet Startup. Disruptive Innovation, Passionate Entrepreneurship & Hightech Startups (Amsterdam University Press, 2016). Arne was so taken by the energetic startup culture in Silicon Valley that he decided to quit his academic career and found his own new venture (https://www. soundies.eu). Best of luck, Arne!

This research on accelerators in Silicon Valley is part of a larger study that also includes Dutch and other European accelerators. The parallel study is conducted by co-principal researcher Ferry Koster (ICOON/TIAS, Tilburg University) and his research associate Merijn Bernat. It was a pleasure working with Ferry and Merijn: our cooperation based on scientific curiosity, i.e., the need to understand and explain, has been an unbeatable asset.

Many thanks to Gioia Marini, Maryse Elliott, Chantal Nicolaes, and Thijs Borgers of Amsterdam University Press for their professional guidance of every phase of this book project. It was a pleasure working with you.

ACKNOWLEDGEMENTS 13

Finally, I want to express my gratitude to the Dutch Van Spaendonck Foundation for commissioning this study. I cherish the Board discussions on innovation and entrepreneurship I had with Hans Kamps, Dick van der Laan, and Carmen de Jonge, as well as with Jan Gevers, CEO of Van Spaendonck, on the role of startup accelerators in the new economy.

Isincerely hope that the conclusions from this study will help to advance a pro-accelerator climate in the Netherlands and in the rest of Europe. In order to remain economically and technologically competitive, Europe must substantially invest in building a dynamic and entrepreneurial startup ecosystem. As Silicon Valley demonstrates, accelerators play a distinctive role in taking (and retaining) the lead in the global innovation arena.

Peter Ester Rotterdam/Silicon Valley, Summer 2017

The Interviewees and their Accelerators

Below, I provide brief descriptions of the people I interviewed and the accelerators they lead.

Saeed Amidi, founder and CEO of Plug and Play, a large accelerator housing nearly 400 startups, with 22 locations worldwide. Plug and Play has accelerated over 2,000 startups, which have raised an additional $5 billion. It invests anywhere from $25,000 up to $500,000 in its startups. Offers different industry-specific, three-month accelerator programs (in brand and retail, financial technology, food, health, insurance, Internet of Things, mobility, new materials, logistics, travel and hospitality). Plug and Play may take equity in its startups.

Sunil Bhargava, founder and managing partner of Tandem, a seed fund. Small accelerator for hardware and software startups. Its focus is on mobile. Investing both sweat and financial capital. The current fund, Tandem 3, is $100 million in size. Tandem offers a six-month program in which it works hands-on with portfolio companies to find product-market fit. Investments in early-stage seed deals up to $500,000 and later-stage investments up to $2 million; it may take about 10% equity in its startups. Small batches: two to six teams. It currently has investments in over 30 companies.

Gary Coover, head of global operations at Samsung NEXT Start, a corporate accelerator. It invests in seed-stage startups and entrepreneurs-in-residence who it supports in co-located spaces with funding, expertise, mentoring, and an alumni community. Its focus is on software startups (both consumer and enterprise-oriented) in frontier technology such as AR/VR, IoT, mobility, data and analytics, machine learning and AI, mobile health, payments, and smart cities.

Danielle D’Agostaro, partner and COO at Alchemist Accelerator, a venture-backed general accelerator focusing on growing seed-stage enterprise startups. Alchemist seeds about 40 startups per year with an average cash investment of $36,000. Co-working space is available. Strong emphasis on technical founding teams. The length of the accelerator program is six months, and it accepts a maximum of 17 teams in three batches per year. Its program consists of mentoring, coaching, and group activities. The average equity required is around 5%.

Doug Davenport, founder and former CEO of Prospect Silicon Valley, a non-profit urban-tech innovation hub for next-generation smart and sustainable cities. Its focus is on transportation, energy, and the built environment. Prospect works with industry and government. It helps startups to demonstrate and commercialize their products and scale their companies. It has a 23,000 square-foot Technology Demonstration Center, over 25 corporate sponsors, and over $go million funding and financing. It takes no equity in its startups.

Cyril Ebersweiler, founder and managing director of HAX, an investment company that accelerates hardware startups — both consumer hardware and B2B. Its focus is on lifestyle, health, robotics, Internet of Things, and manufacturing. Provides seed funding, mentorship, office and lab space. Selected teams spend 15 weeks of the four-month program in Shenzhen, China — the ‘Silicon Valley of hardware’ — to finalize their prototype. HAX accepts two classes per year and 15 teams per class. Equity is 9% for $100,000.

Marlon Evans, CEO of GSVlabs, a large 72,000 square-foot campus and co-working space that provides a community for startups and established companies who wish to accelerate their vision. Its focus is on education technology (EdTech), sustainability, big data, and mobility. It is backed by GSV Capital. GSVlabs offers virtual and onsite programs, innovation labs, mentorship, and events. It currently houses about 170 startups. Startups pay a monthly desk fee. GSVlabs does not make direct investments, but it does take equity in startups participating in its quarterly accelerator.

Tom Ferguson and Nimesh Modak are respectively vice president of programming and director of Imagine H,O, a non-profit, grant-funded accelerator aiming to bring new solutions to global water challenges to the marketplace. It offers a virtual program on turning water challenges into business opportunities, including mentorship and access to customers and investors. It also organizes a boot camp. Imagine H,O has supported over 550 startups in 30 countries. It has an annual ten-month program of about 10-12 startups in which no costs are involved. It takes no equity in its startups.

Ian Foraker, executive director of Cleantech Open, a large, non-profit accelerator of early-stage clean technology companies. Its mission is to find, fund, and foster entrepreneurs with ideas to solve our greatest environmental and energy challenges. It has a volunteer community that it relies on. Cleantech Open works with about 150 startups per year (across the U.S.). Awarded over $6 million; over 1,000 participating startups raised more than $1.1 billion. Cleantech Open is funded through sponsors, fees, and memberships. It offers mentoring, webinars, boot camps, events, a prize

THE INTERVIEWEES AND THEIR ACCELERATORS 17 competition, and capital raising. It works on the basis of a participation fee. No office space is provided and it does not take equity in its startups.

Brian Hoffman, vice president of revenue and director of legal affairs at StartX, an educational, non-profit accelerator for Stanford University startup founders, from students to professors and alumni. StartX is industry and stage agnostic. Its programs are based on access to Stanford community, mentors, education, and resources. Offers one-to-one mentorship, drop-in office space, legal advice, and three ten-week sessions per year. It is backed by an uncapped StartX-Stanford Fund. StartX deployed over $90 million in 185 StartX companies. It boasts over 350 alumni companies, which have raised a total of over $1.9 billion. It offers a special medical program. StartX does not charge fees, and it does not take equity in its startups.

Ari Horie, founder and CEO at Women’s Startup Lab, which aims to catalyze and empower women-run startups. Year-long program, of which two weeks is a residential program and six months is via remote coaching. It is highly selective and will take only a maximum of nine female founders. Its programs consist of workshops, coaching, network expansion, advising, leadership skills, assessments, and access to investors. Unique features are its high-impact engagement and interaction and its personal approach. It charges a $10,000 tuition fee.

Emily Kirsch, co-founder and CEO of Powerhouse, a for-profit but mission-driven incubator and accelerator for solar software startups. Powerhouse Accelerator offers a six-month program, two batches per year, eight startups in total. It has 14,000 square feet in co-working office space. Cold hard investments of $10,000. Startup investment up to $50,000; equity: 5%. One-to-one coaching, free office space, and access to investors and contacts in solar industries. Its workspace currently hosts 20 solar startups; nine solar organizations, and 80 solar entrepreneurs.

Cindy Klein-Marmer, associate director of the Butler Venture Accelerator Program of Babson College; branch in San Francisco. The program is for both students and alumni, and startups are aided in everything from ideation via business model, team recruiting, minimal viable product, and marketing to business launch and growth. Its resources include faculty advisors, outside mentors, work space, seed funding, legal advice, workshops, events, and peer groups. Offers a summer venture program and organizes a rocket pitch and a prize competition. Cross-campus collaboration. 365 entrepreneurs participated in 2015-2016.

Naomi Kokubo, co-founder and COO of Founders Space, a global, for-profit accelerator focused on educating and training seed startups as well as early-stage startups. It provides an online incubation program, innovation workshops, co-working space, startup pitch events, a two-week intensive startup accelerator program, a three-month online program as well as access to lawyers, marketers, VCs, serial entrepreneurs. Equity under 5%; startups may opt to pay a fee. Founders Space has a branch in Shanghai.

Duncan Logan, founder and CEO of RocketSpace, a large, co-working campus to help grow tech startups. It currently has 200 startups on its campus and has hosted more than 800 startups since 2011. RocketSpace offers 24/7 turnkey office solutions (private office, dedicated desk, drop-in desk); community education (workshops, speakers); access to VCs, mentors and advisors; and meeting and event spaces. 16 ofits alumni companies are valued at over $1 billion. The average total of funds raised by startup members is $18 million; 1.5 startups secure funding per week. Special Industry Accelerator Program. It takes no equity in its startups.

T.M. Ravi, co-founder and managing director of The Hive, a small, co-creation studio and specialized fund focused on Al, context computing, autonomous agents, ambient intelligence, and blockchain. It targets startups in the enterprise, IoT, security, and financial services markets. Disruption driven by data. The Hive is involved in the intensive co-creation of new ventures and provides seed financing of $1.5 to $2 million. It takes in only four to five startups a year. Its equity policy is that ifa company is started, The Hive also becomes a founder.

Prashant Shah, managing director of TiE LaunchPad, an accelerator dedicated to fostering entrepreneurship in the Bay Area with a focus on B2B startups, e.g. cloud apps, IT infrastructure, mobile, big data. Linked to TiE group, that has 13,000 members globally. The funding of startups is arranged through TiE Angels & TiE5o (awards program). Beyond idea stage; demo or prototype. Co-working space. Seasoned TiE entrepreneurs are startup mentors. TiE LaunchPad accepts eight companies per five-month batch. Funding $50,000; 4% equity.

Prem Talreja, vice president of marketing at The Fabric, an accelerator based on a collaboration model that works hands-on with startup entrepreneurs to help them refine their product, team, and business model and prepare them for series A funding. Seeds between $1 million to $1.5 million. Its focus is on cloud infrastructure technologies, and it has a Technology Innovation Lab in India. Only a few startups a year are accepted, for about six months. Network of mentors, investors, technologists, professionals. Equity proportional to investment.

Harm TenHoff, founder and CEO of BayLink, which combines a global medical incubator with a business accelerator. Its focus is on high-tech medical devices, life sciences, IT, and online retailing. Its incubator

THE INTERVIEWEES AND THEIR ACCELERATORS 19 concentrates on product ideas and concepts, while its accelerator focuses on product introductions. It links Silicon Valley to Europe, and vice versa. BayLink offers one-on-one coaching and mentoring. Invests in kind, soft money. No cash investments. Its business model is based on consultancy fees and sometimes equity.

Marco ten Vaanholt, co-founder and managing partner at BootUP, a micro-ecosystem for startups to create better entrepreneurs and accelerate their companies. It works on the basis of four pillars. BootUP World is a Silicon Valley launch pad and global hub. BootUP Corporate Acceleration empowers corporate ventures. BootUP Capital accelerates and funds startups; post-seed and series A/B. BootUP Wings is a private club of startups, VCs, and seasoned Silicon Valley CEOs. It offers co-working space and currently has 55 startups under its wing. Takes equity, between 5-10% for early-stage and between 2-5% for later-stage companies.

Matt Walters, former managing director of Runway, a 30,000 square-foot co-working space and startup hub for new business incubation. It provides office space to about 80 startups and 200 entrepreneurs; educational events, lectures, and network meetings; access to VCs, legal advice, domain experts; a Zen area; and demo days. Valuations totaling over $600 million. Virtual EdTech accelerator; $25,000 future equity investment. Runway itself does not require equity.

Jun Wong, executive director of Hacker Dojo, “a community for hackers and startups” that supports everything from launching a software startup to building a robot. It hosts a mix of software developers and hardware engineers and offers them 24/7 co-working space, an events venue, maker space, seminars and workshops, code tutorials, parties, and a startup program. Hacker Dojo cherishes its community feeling and emphasizes participation. There is no selection process for members. Its business model is based on memberships, sponsoring, and donations. Hacker Dojo takes no equity in its startups.

Elizabeth Yin, partner at 500 Startups, a global venture capital seed fund and startup accelerator with over $250 million in assets. It has invested in over 1,800 startups from more than 60 countries and has had over 50 exits. Its accelerator programs emphasize internet marketing and customer acquisition, design and first-use experience, lean startup practices, and metrics. It has a four-month in-house program for four batches per year, with 40-50 startups per batch. 500 Startups provides 10,000 square feet in co-office space and organizes investor pitches, demo days, events, workshops, and presentations. $150,000 gross investment for 6% equity. $500K follow-on right.

The DNA of an Entrepreneurial Region

Introduction

For over half a century, Silicon Valley — the 60-mile strip in the Bay Area between San Francisco and San Jose — has been the world's premier hightech hotspot for innovation and entrepreneurship. It houses more startups than any other region on the globe and has managed to perpetually renew itself. The Valley is a magnet for high-tech startup entrepreneurs who want to excel, and its business climate is based on a unique combination of talent, ideas, creativity, competitiveness, perseverance, and passion. It is an amazing innovative economy filled with ambitious entrepreneurs who are mission-driven and positively obsessed with the aim of disrupting existing markets and mainstream technologies. Silicon Valley is the headquarters of iconic high-tech companies such as Google, Apple, HP, Oracle, Cisco, Facebook, LinkedIn, Uber, Airbnb, WhatsApp, Twitter, Dropbox, Instagram, Salesforce, WMware, and many more: all innovation giants that have changed our lifestyles and our very way of thinking, working, and communicating, and which all began as small but eager startups. These high-tech companies have had an unparalleled social and economic impact and have inspired thousands of hungry startups to shoot for the moon as well. The fact that most startups fail to hit this objective is part of the prevailing Darwinian business logic in the Valley.

A few simple but telling statistics illustrate Silicon Valley's success in cultivating corporate and startup performance. It has been calculated that if the Bay Area, with Silicon Valley as its technological and economic nucleus, were a country, it would rank 19'* in terms of GDP.' The Valley has the highest concentration of startups (between 14,000 and 19,000) in the world, and this has been the case for decades. It houses more U.S. and Global Fortune 500 companies than anywhere in the U.S. except for New York.” The region is home to the headquarters of practically all major social media companies as well as half of the top 100 U.S. private clean technology companies. Silicon Valley high-tech firms are worth over $3 trillion, hold more than one-third of U.S. corporate cash reserves, and earned over $100 billion in aggregated profits (in 2014). Five out of ten U.S. venture capital dollars are spent in Silicon Valley, mirroring the ample availability of VC (venture capital) funding there. It has launched more unicorns than any other place in the US. In

2014 alone, the Valley had 14 initial public offerings (IPOs: first sale of stock of a private company to the public), which was slightly less than 10% of the total number of U.S. IPOs in that year. The Valley’s exit volume represents half of the value of startup exits within the top 20 global startup ecosystems and dominates these top rankings in terms of performance, funding, and talent. Its focus on high tech is reflected by the large number of patents originating in the Valley: almost 16,000 in 2013 (13% of the U.S. total in that year). R&D is clearly vital for a region that makes its business out of innovation. Apple and Google, two leading Silicon Valley players, together spend over $12.5 billion on their R&D efforts. With world-class private and public universities such as Stanford and Berkeley in its midst, the Valley offers access to an abundant pool of talented graduates and high-quality fundamental and applied research. Moreover, the region is home to a large number of renowned corporate and non-corporate R&D labs.

All this happens in an area of some 1,800 square miles and a population of about three million people. Unlike in Europe, immigrant entrepreneurship flourishes in Silicon Valley: about half of all startups are founded by first-generation immigrants, particularly from India and China. Some immigrant entrepreneurs have become extremely successful and serve as important role models: they include Sergey Brin (Google), Andrew Grove (Intel), Vinod Khosla (Sun Microsystems), Jan Koum (WhatsApp), and Elon Musk (Tesla). Immigrant human capital is an indispensable part of the Silicon Valley saga. There is no Silicon Valley without its highly educated army of immigrant coders, software engineers, and technologists.

Europe and Silicon Valley

For many European countries, regions, and cities, Silicon Valley is the global paragon of innovation, startups, and high-tech entrepreneurship and a place they want to emulate. Cities such as London, Berlin, Paris, Amsterdam, Eindhoven, Barcelona, Madrid, Dublin, Milan, Tallinn, and Helsinki are quickly developing into profiled European startup innovation hubs.* Europe understands that it needs to invest in a dynamic startup economy and to boost entrepreneurship. The Netherlands, for instance, has concluded that it needs more ambitious entrepreneurship and has accelerated its agenda for innovative entrepreneurship and new ventures. The European Union has declared that small and medium-sized enterprises (SMEs) must become more innovative if Europe is to strengthen its vulnerable post-crisis economy and to stimulate economic growth. In 2014, the EU launched its comprehensive Horizon 2020 program to boost research and innovation. With nearly € 80 billion in funding made available, the program aims to enhance Europe's global competitiveness, drive sustainable economic growth, and create jobs.

Silicon Valley's innovation and startup architecture is a global benchmark. Every year this high-tech region is toured by busloads of European (and non-European) policymakers; politicians; entrepreneurs; venture capitalists and other investors; university representatives; and national, regional, and city authorities who want to learn from Silicon Valley — to taste its secret sauce, so to speak. They all want to see what makes the Valley tick, to understand the anatomy ofthis exceptional innovation area, and ultimately, of course, to explore what Europe needs to change in order to energize its level of competitive innovativeness and entrepreneurship. This is not an easy challenge. Major institutional and cultural obstacles need to be overcome, entrepreneurial attitudes must become stronger, governments must redefine their role, educational systems need to become more entrepreneurial, more venture capital must become available, and a more elaborate startup support infrastructure must be established.

In considering Silicon Valley asthe startup and innovation mecca, Europe should understand that there are at least three constraints to adopting this model: the impact of path dependence, the role of culture, and the risk of an increase in social inequality. Let me briefly explain these issues.

Silicon Valley is not the intended outcome of an innovation and pro-entrepreneurship policy that was designed a priori. It was not created overnight, nor did it start as a technological tabula rasa. Rather, it is rooted in an innovation history that advanced through a series of technological paradigm shifts. The history of Silicon Valley, going back to the early 20" century, clearly embodies this primacy of path dependence (Scaruffi 2014; Sturgeon 2000). Its current high-tech dominance is embedded in a long chain of technological disruptions and innovation waves that spanned decades. It started with vacuum tube radio technology that later became a fruitful breeding ground for technologies such as microwave tubes, semiconductors, and integrated circuits (Lécuyer 2007).

Both World Wars, the Korean War, the Cold War, and the Space Race led to massive government spending on new defense technology from which Silicon Valley greatly benefited (Leslie 2000; Mazzucato 2014), spearheading the Valley’s role as a center of innovation and technology. These developments in technology and their new applications paved the way for the more recent computer and software revolution, which quickly reached mass consumer markets — facilitated, of course, by the rapid expansion of the Internet. It spurred a seemingly never-ending stream of programs and applications — and, more recently, apps for smart phones and other mobile devices — that have penetrated the lives of billions of people. No domain, country, continent, or generation has remained untouched by this revolutionary acceleration of technological hardware and software applications, and Silicon Valley was and is a key disruptive game changer.

This path-dependence framework (Lebret 2007; Nelson & Winter 1982; Stangler 2013) implies that high-tech innovation regions such as Silicon Valley cannot be copied for the simple reason that its history cannot be replicated. It also entails that creating European innovation hubs will only work when based on a proved innovation infrastructure and network of high-tech companies, or, as I argue in the next chapter, an advanced ecosystem. Excellence in innovation is not something that can be attained from thin air; it takes a technological environment and innovation setting that have some degree of sophistication and maturity. Regions and cities that dream of having their own Silicon Valley but lack a supportive ecosystem will not see their dreams become reality.

The second constraint isthe role of culture. The Silicon Valley innovation and startup model is rooted in a culture that cherishes an entrepreneurial mindset and big ideas but also openness, sharing, drive, achievement, and commitment. The model is based on a culture that prizes risk-taking and accepts failing; one that calls for pro-active networking and fearless self-presentation; one that favors thinking big, encourages disruption, promotes diversity, and takes persistence and hard work for granted. It is the combination of these cultural characteristics that is at the core of the Silicon Valley model. The European willingness to learn from Silicon Valley will only pay offifwe take these cultural prerequisites seriously. Changing the prevalent culture in European countries with respect to an innovation mindset, entrepreneurship, and work attitudes takes time, in some cases even generations. Cultural change cannot be decreed from above but rather is a long-term process in which education plays a key role.

Fortunately, European leaders realize that Europe needs to address its entrepreneurial deficit and revolutionize its culture of entrepreneurship. In the revealing words of the European Commission: “there is (...) a widespread culture that does not recognize or reward entrepreneurial endeavors enough and does not celebrate successful entrepreneurs, as role models who create jobs and income. To make entrepreneurship the growth engine of our economy Europe needs a thorough, far-reaching cultural change.” The European Startup Manifesto (2013) underlines this need for Europe to effect a change in culture: “To create more businesses and more startups requires more than a change in policy. It requires a change in mentality.”