Highlights | Silicon Valley Innovation During and After the Pandemic (Week 8: University of California Incubators and Accelerators)
It is an understatement to say that Covid-19 has had a sizable impact on global society and economy. As such, SVTC is using its platform to host virtual events. Through conversations with thought leaders from different industries, we hope to present to Chinese audiences how Silicon Valley is innovating during the pandemic and the future direction of innovation in the post-pandemic era. These talks take place on Saturdays at 9:30-10:30 am CST (Fridays, 6:30-7:30pm PDT).
Highlights from Week 8
This is the eighth and final session of our virtual webinar. Judy, General Manager of Silicon Valley Technology Council (SVTC), moderated the conversation with our guest speaker and her longtime friend, Victoria Slivkoff, Global Head of Innovation & Entrepreneurship at the University of California Office of the President. Victoria primarily works to increase collaboration with the industry through strategies, infrastructures, resources, policies, and partnerships she develops, in order to commercialize research innovations and scale up startups in the University of California (UC) system.
During this webinar, they discussed business strategy in the post-pandemic era, how the 60 technology incubators and accelerators in the UC innovation ecosystem help young entrepreneurs weather the pandemic, and finally industry trends in the post-pandemic era. Their insightful remarks also form a comprehensive summary of the whole program, providing key insights to attendees and prompting many thoughtful questions in return. We will provide a recap of the highlights from this webinar for those who were unable to attend.
UC incubators promote collaboration among startups, industries, and investors to work towards bringing those startups to market. With over 60 incubators and accelerators, the UC innovation ecosystem has helped many startups promote economic development. The UC innovation ecosystem has hatched a total of 800 startups, with more than 500 currently active startups, a total revenue of $21.2 billion USD, and more than 18,000 jobs created in California. UC incubators have 249 active startups in the medical field, with a total revenue of $17.3 billion USD and over 14,000 job opportunities created.
How to Improve Business Resilience During a Pandemic
1 Industry Winners after the Pandemic?
Victoria believes that the pandemic has led to a record high unemployment rate in the United States, and that different countries and regions have different timelines for the spread of their Covid-19 outbreaks, which means they will also have different timelines for economic recovery. It has been found that a portion of people who recover from Covid-19 suffer permanent physical damage due to the illness. Even with an effective vaccine, it will still take time before it becomes universal, and priority for the vaccine has to be given to the young and elderly. At the same time, the vaccine supply chain has also been impacted by the pandemic. Thus, the Covid-19 outbreak will persist for a long time, and is testing the resilience of many businesses. Business leaders will need to think about how to make fundamental changes; in fact, many trends, such as digitalization, existed before the pandemic, but the pandemic has served to accelerate them.
Before the start of this session, we did an online poll asking the audience about industry trends after the pandemic. The survey results show that most audiences believe e-commerce and telemedicine will become major trends. With those answers in mind, Judy asked Victoria for advice on how entrepreneurs can successfully pivot.
Victoria agrees with the questionnaire results, and believes that business leaders should make four changes. We have summarized the key points of her explanation below:
(1) The pandemic has led to the digital transformation of all industries, and this trend will continue even after the pandemic ends and as consumption habits change. Companies need to turn crisis into opportunities through digitalization, challenging the limits of their capabilities. Consumers of all ages are now shopping online. Target had an e-commerce business before the Covid-19 outbreak, but devoted less attention to developing it; now, it is more focused on its e-commerce operations. Wal-Mart also recently increased its investment and development in the e-commerce business to compete with Amazon. Amazon is not the only company that can do e-commerce, so we will see more and more competitors increase their investment in that sector in the future. Because the pandemic has restricted movement, Uber recently acquired a food delivery company to augment its takeout business. Companies need to shift their focuses in businesses with more opportunities.
Judy added that Target's digital sales has reached 20%; though it provided e-commerce before the pandemic, its digital sales were not as high before. The pandemic has indeed led many enterprises such as Target to pay more attention to their online shopping business.
(2) Changes in work habits: Californians have been working from home for 3 months now, and many employers have found that remote working is very feasible. Many large Silicon Valley companies, such as Google and Facebook, will allow employees to continue working from home for the rest of the year. Teleworking will blur the boundaries between people's personal and professional lives, thus allowing for greater work flexibility. It is also an opportunity to gain global contacts and talents, while having a 24-hour different time zone is cheaper because there is no need to pay Silicon Valley wages. Telecommuting may also promote the development of small and medium-sized cities. Because people no longer need to live in populous urban areas if they are working from home, it allows more people to move to smaller cities, which are more cost effective and have a better environment.
Based on Victoria's explanation, Judy asked her how to improve a startup’s competitiveness in online co-working space?
Victoria said that a recent startup of an UC incubator aims to help people better express their ideas during remote working and better understand how to communicate with others. There is a VR/AR company simulating the real office environment in virtual. Companies like this are still competitive and can obtain funding even when it is difficult to do so.
(3) Globalization and regional development: globalization has led to manufacturing being offshored to countries with lower costs, so many companies have fragile supply chains. Companies therefore need to establish supply chains that are closer to consumers to bring procurement and manufacturing closer to the market.
Judy agrees with this point, citing Amazon's Mini Hubs as an example of bringing procurement and manufacturing closer to the market.
(4) Uncertainty in regulation: Changes in policies and laws challenge business leaders’ ability to adapt, and they must adjust corporate strategies and operation methods in accordance with new regulatory policies.
Judy believes Victoria's last point is crucial, as business leaders need to make constant adjustments based on a comprehensive analysis of the situation during the pandemic in order to turn a crisis into opportunities.
How can UC Incubators Help Entrepreneurs Turn "Risk" into “Opportunity"?
1.How do startups turn "risk" into “opportunity"?
Victoria offered four aspects that innovative enterprises should consider when facing this crisis. She believes that it is difficult for anyone to predict the full scope and duration of the pandemic. Startups are considered high-risk and are therefore quite resilient, so to turn risk into opportunity, they must adapt to market changes.
(1) The most important thing is to survive, focus on the company's core functions, and remove the non-core business model.
(2) At the same time, companies must preserve their cash on hand and reduce unnecessary expenses.
(3) Even with the pandemic, there will still be companies in various fields that will receive investment, such as in the fields of healthcare and telecommuting; however, investment institutions in other fields will give priority to protecting their portfolio companies rather than investing in new companies. Therefore, companies will need to seek government support. Through collaboration with the government, UC incubators help startups obtain government subsidies, such as POC (Proof of Concept) subsidies, which will also spur economic recovery.
(4) In addition, startups should actively connect with enterprises and strategic partners to increase collaboration opportunities.
2. Changes in Investment Strategy and Cross-border Strategy during UC Innovation Incubation Period
Judy explained that UC Incubators have invested in 800 startups and currently have 500 active; she asked Victoria if capital and number of transactions decreased this year. In addition, Judy mentioned that Victoria has been to Guangzhou GrandPark. What are Victoria’s views on establishing US-China cross-border connections and platforms to help enterprises start businesses in China and the United States?
Victoria provided detailed answers, explaining that UC incubators tend to prefer earlier stage startups. The UC incubators not only depend on the return on investment, but also shoulder the task of helping early stage startups to grow. Later stage startups do not need to rely on the resources of UC incubators after Series A funding.
She also explained that UC incubators have always had a global strategy and hoped to set up a platform for global innovation. At present, the United States is facing a lot of uncertainty in its policies and markets. If startups need to expand a new market immediately but don’t have the resources to do so, then they should develop in their home country first. However, to become unicorns, they must have a global market strategy.
3. How can UC Incubators Help Startups Globalize?
Victoria explained that each of the 60 UC incubators and accelerators has its own website.Alumni from all branches of the University of California can apply. Some incubators also accept teams that are not from University of California schools. An example she gave was that a service object of a UC Irvine incubator faces the entire entrepreneurial environment of Southern California. UC incubators provide mentors and programs, as well as experts to give guidance in any field that a startup might be in.
Innovation “Dark Horse” Technology in the Post-Pandemic Industry
1. Anticipating Post-Pandemic Industry Trends
Victoria offered two trends based on the current situation:
(1) What enables people to work and collaborate at home, for example, what tools, software, etc.
(2) What can help people coexist with the Covid-19 virus, because this virus will last a long time as we will not be able to easily get rid of it.
She believes that because of the pandemic, startups must seek out business opportunities and make changes due to the lack of resources. This is a good opportunity for developing cross-functional operations, and startups should pivot their business models to improve their competitive advantages. Financial technology, biotechnology, and online offices are all promising trends. Victoria added that they are also looking forward to seeing the pandemic promote the economic development of small and medium-sized cities to reduce the population imbalance between large and small cities.
She also mentioned the results of our survey, which showed that attendees believed mobile travel and real estate technology would be losers in the situation. However, Victoria believes that not all real estate will be negatively affected. People working from home will have a certain impact on commercial real estate in big cities, such as Wework's co-working space; she looks forward to seeing how commercial real estate operators can transform successfully.
Q&A
During our final webinar, Judy and Victoria shared many insights, prompting many questions from the audience. We will summarize the more frequently asked questions below for those who were unable to attend.
Question 1: UC incubators are very interested in the medical field. Will it increase investment in this field after the pandemic is over?
Victoria: Many technologies from UC incubators focus on biotechnology, not just on biopharmaceuticals. An incubator of the University of California at San Francisco focuses on the field of medical devices, which will receive more and more attention in the future.
Question 2: Can you explain the application and selection process for UC incubators? Which ones can we apply for and when? (Please click “Read Original" at the bottom of the article for the application link)
Victoria: Some incubators require deep tech startups, while others are more open. Some only accept alumni from University of California schools, while others accept outside entrepreneurial teams. Some are aimed at relatively early-stage startups for students in school, while others are aimed at relatively mature startups. Each incubator has its own website and application periods in spring and fall, with some accepting applications once a year and others twice a year. Each application will be evaluated based on entrepreneurial experience and background by a selection team. UC incubators have hatched many successful startups, including the bike share company Lime.
Question 3: What help have UC incubators provided to startups during this pandemic?
Victoria: UC incubators help startups connect with investors and obtain government subsidies. It is not easy to receive funding now, which makes getting government subsidies even more important. UC incubators will also help connect small- and medium-sized businesses located nearby with resources and strategic partners, as it is important for them to survive the pandemic.
Judy: How do startups apply for subsidies from the US government?
Victoria: There are many applications to apply for government subsidies. The most important thing is to be quick, since there might not be any subsidies left if you apply any later. These opportunities are available online and startups should seek out many to apply to. The University of California, for example, receives $7 billion USD from the federal government every year. The government will provide many subsidies, because small and medium-sized businesses in the United States account for 99% of all businesses, and the economy will collapse if small and medium-sized businesses cannot survive.
Conclusion
For the final webinar, Judy and Victoria discussed business strategies and industry trends in the post-pandemic era, as well as how UC incubators assist young entrepreneurs in getting through this pandemic.
Thank you again to Victoria for joining us; we’ll be watching UC incubators for any future excellent startups they hatch, as many will bring improvement and convenience to our everyday lives. We’d also like to thank everyone who joined us for and participated in these webinars. We hope to see you again at future science and tech events. If you have any topics of interest, we’d love to hear from you!