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McNair Center Weekly Roundup

Entrepreneurship Weekly Roundup: 10/28/2016

 Weekly Roundup is a McNair Center series compiling and summarizing the week’s most important Innovation and Entrepreneurship news.

Here is what you need to know about entrepreneurship this week:

Big Problems for Small Practices

Catherine Kirby, Research Assistant, McNair Center for Entrepreneurship and Innovation

Kirby examines the effects of the Affordable Care Act on entrepreneurship within health care. U.S. health care regulations currently hinder entrepreneurship among healthcare professionals, particularly for doctors seeking to establish private practices.
Kirby recommends that the U.S. implement policy changes that would better foster entrepreneurship among physicians. Measures like restructuring reimbursement rates and improving quality of care requirements would reduce the burdens that many private practices face and enable physicians to start small medical practices.

U.S. early stage investment holds up, late stage plunges

Joanna Glasner and Gené Teare, Contributors, CrunchBase

Venture capital investment slowed in the third quarter. Glasner and Teare write that estimates relying on end-of-quarter data may overstate declines in early stage investment.
Crunchbase compares its own projected funding totals with reported round count totals for the third quarter. Quarterly projected funds show bullish early stage investment. When factoring in projections, Crunchbase’s report for the third quarter finds that U.S. startups continue to enjoy high levels of strategic, seed and venture capital investment during seed and early stage rounds. However, there is a steep decline in late stage investment, with fewer companies raising late stage rounds and investors pouring less money into Series C and later rounds.

Startups get bought not sold

Ken Elefant, managing director at Intel Capital, PE Hub

Many entrepreneurs focus, sometimes shortsightedly, on the dream of reaching an IPO. As a result, start-ups often fail to develop important relationships with corporate investors. According to data from Dealogic, only five U.S.-based tech companies went public in the first eight months of 2016. To avoid going out of business or selling at a fire-sale price, Elefant recommends that entrepreneurs develop strong relationships with corporate investors early on so that a later search for an acquisition offer does not turn into a last-ditch attempt to save a sinking ship.
Corporate investors invest in companies for three reasons: to gain access to a technology, to break into other markets and to acquire. For start-ups, relationships with corporate investors offer viability and credibility. Additionally, these relationships provide development, support,  feedback and access to corporate engagement and funds. For companies that might not be on track for an IPO, strong relationships with corporate investors can lay the groundwork for an acquisition.

‘Shark Tank for Students’ Re-Defines Entrepreneurship

Christopher Putvinski, SAPVoice, Forbes

Putvinski focuses on a new television series, The Social Innovation Series. This “Shark Tank or a Y Combinator for students” asks aspiring entrepreneurs to address problems in health or wellness in their own communities.
The show grants $1,000 to students with promising and innovative ideas and a grand prize of $10,000 and the title of “SAP Teen Innovator” to the student with the winning idea.

How Blind Hiring Can Make Your Company More Inclusive

Frida Polli, Mattermark


In an editorial for Mattermark, Polli writes on how diverse companies outperform their non-diverse counterparts. Increasing diversity among employees not only promotes a more fair and equitable workplace environment but also offers a high return on investment for companies. See the McKinsey & Company Report on how diversity improves company performance. Polli suggests that “blind auditioning” is a possible solution for the lack of diversity in companies’ workforces. Using advanced analytics and assessment technologies, companies can ensure predictability and eliminate bias in their pre-hiring assessments of applicants. According to Polli, “improving diversity isn’t just the right thing to do, it’s the smart thing to do.”

And in startup news…

Google buys eye-tracking VR firm Eyelock

Grant Gross, Senior Editor for IDG News Service

Eyefluence is a California-based startup focused on eye-interaction technologies in Virtual Reality (VR) and Augmented Reality (AR) headsets. Serial entrepreneurs Jim Marggraff and David Stiehr founded Eyefluence in 2013.
Google acquired the startup on Tuesday. The acquisition reflects Google’s growing interest in VR and AR technology. The deal further shows the growing potential of VR and AR for entrepreneurs interested in building successful tech startups.

Wavefront gathers $52 mil Series B

Iris Dorbian, Author, PE Hub

Another California-based tech-based startup, Wavefront, recently reported raising $52 billion in Series B funding. Investors include big names such as Sequoia Capital, Sutter Hill Ventures and Tenaya Capital.
Wavefront develops metrics monitoring services for cloud and modern application environments. Wavefront offers invaluable services to leaders in the software industry that rely on Cloud technology, such as Workday, Box, Lyft, Microsoft, Intuit and Groupon.

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McNair Center

A Conversation with Bob McNair

Bob McNair addresses the crowd with the Director of the McNair Center, Dr. Edward J. Egan.

On August 29, 2016, the McNair Center for Entrepreneurship and Innovation hosted an evening with Bob McNair.  As the founder of Cogen Technologies and the founder, chairman, and CEO of the Houston Texans, McNair drew on his vast experience in business and philanthropy to offer advice to Rice University students and young professionals.

In 1960, McNair arrived in Houston with $700 and a goal to break into the trucking industry. However, after he established his trucking company, the industry became deregulated, forcing him into millions of dollars of debt. Despite this failure, McNair used his new knowledge of deregulation to find opportunity in three industries: intermodal transport, telecommunications, and cogeneration. Cogeneration, or the concurrent production of electricity and heat, became McNair’s most successful investment, and in 1999, he sold his company Cogen Technologies for $1.5 billion.

When asked for career advice, McNair emphasized to students and young professionals the importance of adding value to their environments. “The most important thing is putting yourself in a position where you can add the most value, and when you add the most value, the compensation will come to you,” he stated.

This idea of adding value was behind the $8 million endowment from the Robert and Janice McNair Foundation that launched the McNair Center for Entrepreneurship and Innovation at Rice University, one of six across the country. McNair said, “this is an opportunity for us to make a real contribution to society and to help create an environment that empowers ingenuity and creativity, unleashes the productivity of private enterprise and builds sustainable economic growth.”

Read more in the Baker Institute’s newsletter and the Rice Thresher’s article on the event.

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McNair Center

Welcome to the McNair Center

The McNair Center for Entrepreneurship and Innovation at Rice University’s Baker Institute for Public Policy was founded in 2015 with an $8 million gift from the Robert and Janice McNair Foundation. Dr. Edward J. Egan was chosen as the founding director. He designed the center to provide policymakers, scholars, and the general public with comprehensive analyses of the issues that affect entrepreneurship and innovation at three levels: federal and state policy, municipal ecosystems, and academic entrepreneurship and innovation.

The Center’s foci were naturally on the U.S., Texas, Houston, and Rice University, but it also drew and shared insights from the best practices and policies worldwide. Its philosophy was to combine grounded theory and data-driven causal design to produce peer-reviewed research that stands up to scrutiny. To this end, the center collected and disseminated data, provided open access to informational resources, collaborated with leading academic experts, built understanding, and recommended policy to harness the incredible power of entrepreneurship and innovation.

By 2018, the McNair Center had provided more than 70 undergraduate and graduate students with internships to develop policy research, had a staff of four, and was the largest social science research laboratory on the Rice University Campus. It received offers of an additional $6.2m in funding to hire three more fellows and two more staff members and to roll out its nationwide research affiliate program.