Innovation Entrepreneurship CleanTech in San Jose, Capital of Silicon Valley 1 Contents 1. CleanTech: Key Messages 3 2. San Jose At A Glance 5 3. San Jose‘s Integrated Model 6 4. San Jose‘s CleanTech Sector 7 5. Key Sub-Sectors for FDI 8 6. Examples of CleanTech Companies 9 7. R&D Capabilities 10 8. CleanTech Industry Support 11 9. Industry Support From Government 12 10. Benchmarking 13 11. FDI Opportunities 21 12. Success Story 22 13. Data Sources 23 22 2 CleanTech: Key Messages Take Advantage of Silicon Valley’s Unique Environment for Innovation # 1 U.S. city for number of patents per million residents: 810 per million residents (WKCI 2008) #1 region for venture capital—more than 500 venture capital and private equity firms Among top ten world metropolitan areas for per capita business expenditure on R&D globally (WKCI 2008) World class research institutions, including Electric Power Research Institute, Stanford University, NASA Access Specialized Human Resources, Cost Effectively #1 city in the world for the Centre for International Competitiveness‗ Knowledge Competitive Index (WKCI 2008) #2 city in the world for Labor Productivity (WKCI 2008)—top city in U.S. Sophisticated engineering, technical, manufacturing workforce—San Jose has 250,000+ technology jobs More than 40% of San Jose residents were born outside of the United States; 40% have college degrees (compared with 25% U.S. average) Real estate prices now at 1999 levels 33 3 CleanTech: Key Messages Do Business with CleanTech Companies and Partners in San Jose Named ―Best City in U.S. for Clean Tech‖ (Business Week, May 2009) Green establishments growing at an annual rate of 33%; Green employment growing at an annual rate of 41% (NETSD, 2000 – 2006) City is home to more than 3,200 core CleanTech innovation jobs, and 60 companies - one third of Silicon Valley total (2009 Index of Silicon Valley & San Jose Business Tax Database) Venture capitalists invested $1.8 billion in local CleanTech companies in 2008 (CleanTech Group) Highly Supportive City Government, Committed to CleanTech San Jose‘s ―Green Vision‖: become World Center of Clean Technology Innovation Developed the nation's first incubator for start-up environmental companies and the nation's only incubator for foreign-owned businesses City is early adopter: CleanTech Demonstration Program, Environmentally Preferable Procurement Program, 1st Green City Hall in America (LEED Platinum) Aggressive advocate for regional, state, and national policy Sustainable City with Comfortable, Cosmopolitan Life Style Consistently ranked among top 3 safest big cities in America (FBI statistics) San Jose recycles more waste than any large city in nations, recycling more waste than goes to landfills #1 US City for Gross Monthly Earnings and Median Household Income (WKCI, 2008) San Jose averages over 300 sunny days a year, Mediterranean climate 44 4 San Jose At A Glance 10th largest city in U.S. The City Center of Silicon Valley Largest City in Bay Area Population: City 1 million, Metro area 1.8 million Employment: City 370,000, Metro area 890,000 Key Sectors: IT/Electronics, Life Sciences, Clean Tech Per Capita GDP: $60,000, 35% above nation (Moody‘s Economy.com 2007) 55 5 San Jose’s Integrated Model for CleanTech Prototyping/ Testing/ Market Research Incubation Production Demonstration Certification Adoption University of Environmental Electronic Underwriters Real Estate Green Vision California Business Cluster Transportation Laboratory Solar facilitation Goals Development Testing/Certificati Stanford San Jose CleanTech City Procurement Center on Center University BioCenter Incentives Fund One-Stop City of SJ SolarTech Center San Jose US Market Workforce Permitting Demonstration of Excellence State University Access Center Development Innovative Program NASA Venture Capital Grants Finance Las Plumas California Dept of Energy CleanTech Open EcoPark Federal, State Enterprise Zone Labs, Livermore, Policy Advocacy “Solar City” Sandia Showcase California Energy Commission National Science Foundation Workforce development 66 6 San Jose’s CleanTech Sector Thriving, diverse CleanTech Cluster-- Named ―Best City in U.S. for Clean Tech‖ (Business Week, May 2009) San Jose is home to > 3,200 core Clean tech jobs, 60 companies; employment doubled last 18 months Silicon Valley region has > 10,000 jobs, 150 Green Establishments 30% of US CleanTech VC is invested in areas companies – $1.8 billion in 2008, double 2007 level City CleanTech Strategy: achieve 25,000 Clean Tech jobs by 2022 San Jose City Hall 77 7 CleanTech: Key Sub-Sectors for FDI Renewable Energy Solar (PV, CIGS, CSP, CPV) Fuel Cell Storage/distribution Green Building/Energy efficiency Control & monitoring systems LED lighting Materials Clean Transportation Alternative fuels & vehicles Public transit Smart infrastructure 88 8 Examples of San Jose’s Innovative CleanTech Companies SunPower is the global leader for developing high-efficiency solar solutions for homes, businesses, commercial buildings and utilities. Philips Lumileds Lighting Company is the world's leading manufacturer of high- power LEDs and a pioneer in the use of solid-state lighting solutions for everyday purposes including automotive lighting, computer displays, LCD televisions, signage and signaling and general lighting Echelon is a global leader whose technology enables ―smart‖ energy solutions across a wide range of markets, including commercial buildings, industrial plants, schools, streetlights, warehouses, electric vehicle charging stations, and smart metering infrastructure. Nanosolar is a global leader in solar power innovation, leveraging recent science in nonstructured materials to profoundly change the cost efficiency and production scalability of solar electricity cells and panels. Viridis Earth Technologies, winner of the Clean Tech Open ‖Energy Efficiency Award‖ for innovation that reduces energy consumption of air conditioners. Electra Drive, winner of the ―Transportation Award‖ at the Clean Tech Open, is commercializing an invention to enable the mass conversion of existing cars and light trucks to electric drive Stion Corporation is a solar photovoltaics company developing high-efficiency thin- film modules. 99 9 R&D Capabilities Electric Power Research Institute conducts research and development relating to the generation, delivery and use of electricity for the benefit of the public. NASA Ames Research Center is a leader in nanotechnology, biotechnology, aerospace and thermal protection systems, and human factors research. Bio-Info-Nano R&D Institute (BIN-RDI) With University of California-Santa Cruz, NASA is partner in BIN-RDI, which includes the BIN Energy Initiative, a consortium of organizations using novel processes and technologies to build realistic, sustainable alternatives to hydrocarbon fossil fuels. Department of Energy Renewable Energy Labs including Lawrence Livermore National Lab, and Sandia National Lab. San Jose is partnered with Sandia as part of DOE‘s ―SolarCity‖ initiative. Universities in San Jose or nearby include Stanford University, University of California, Carnegie Mellon University-West, San Jose State University, Santa Clara University, 5 Community College Districts Corporate R&D capability in organizations like SRI International, IBM, Applied Materials, Hewlett Packard, Cypress Semiconductor, Cisco, and Google (clean energy, energy efficiency, smart grid) 10 10 10 CleanTech Industry Support San Jose has the largest city-backed new business incubation program in the United States The Environmental Business Cluster (EBC) has assisted more than 120 cleantech start-ups in 10 years, helping more companies commercialize their products that any other incubator in the nation. Other start-up incubator facilities are focused on bioscience links to cleantech (San Jose BioCenter), green auto/alternative fuels (Club Auto Sport), and helping international companies access the U.S. Market (U.S. Market Access Center) San Jose is home to key organizations supporting CleanTech California CleanTech Open, competition awarding $100,000 prizes to nation‘s most innovative cleantech entrepreneurs to help them successfully go to market San Jose Prize for Green Vision Innovation complements CleanTech Open by connecting entrepreneurs with San Jose‘s world-class incubator programs Underwriters Laboratories Solar Testing/Certification Facility, the first and largest solar-testing facility in North America, helps speed thee time it takes for companies to bring new products to market SolarTech Center of Excellence, a business association growing the solar industry through standards, training, financing, and innovation San Jose provides access to Silicon Valley’s Venture Capital network, including cleantech funders like Kleiner, Vantage Point, Mayfield, Sequoia, DFJ, and Menlo. The region is #1 for venture capital activity, with more than 500 venture capital and private equity firms 11 11 11 Industry Support from Government City Support Services: Site Selection Assistance Expedited Permitting Assistance: Special Tenant Improvement Program, Industrial Tool Installation Program Introduction to venture capitalists, lawyers, CPA‘s, executive search firms, etc. Identify potential business partners, subcontractors City Financial Incentives: Workforce Assistance: Access grant funds for training cleantech employees through California State and Federal Recovery and Reinvestment Act Enterprise Zone: Special incentives to reduce business-operating costs in heart of Silicon Valley (hiring tax credit, sales and use tax credit, business expense deduction, income tax credit for employees) CleanTech Jobs Investment Fund: financial support to assist with capital equipment acquisition ($50,000-$500,000) 12 12 12 Benchmarking – R&D Location assessment matrix: Electronics R&D (Head Count: 50) San Jose has an excellent competitive offer for a R&D operation. It scores higher than all its national competitors on a quality side. In current economic conditions when operating costs in San Jose are predicted to fall by 20-30% Source: fDi Benchmark it has never been a better time to invest in this world-class location. 13 13 13 Benchmarking – Manufacturing Location assessment matrix: Solar panel manufacturing (Head Count: 140) San Jose has a very strong competitive offer for a solar panel manufacturing operation. It scores higher than most of its national competitors on a quality side. In current economic conditions when operating costs in San Jose are predicted to fall by 20- 30% it has never been a better time to invest in this world-class location. Source: fDi Benchmark 14 14 14 Quality Factors: Economy Invest in San Jose’s vibrant and knowledge-intensive economy With the GDP of around USD 1.8 trillion, California is 7th largest economy in the world ahead of Spain, Canada and India San Jose‘s GDP per capita of USD $60,000 is over 35% higher than the US average San Jose ranks #1 among U.S. cities in knowledge intensity index, which is an indicator of future economic potential (only American city in global Top 10) Regional Ratio of Knowledge Intensity in 2008, Top 10 Regions Index 2008 Guangdong, China 2.40 Israel 1.82 Pohjois-Suomi, Finland 1.81 Kanagawa, Japan 1.74 West, Sweden 1.69 San Jose-Sunnyvale-Santa Clara, US 1.65 Tianjin, China 1.64 Shiga, Japan 1.62 Lansi-Suomi, Finland 1.54 Singapore 1.53 Source: World Knowledge Competitiveness Index 2008 15 15 15 Quality Factors: Human Resources Take advantage of San Jose’s international and skillful human resources With around 180,000 employees in ICT and Electronics, San Jose has one of the highest labor concentrations in USA San Jose is one of the most unique international US cities where 40% of the population are foreign-born; 50% speak language other than English 16 16 16 Quality Factors: R&D San Jose has proven capabilities in innovation and R&D San Jose is one of the leading FDI regions for R&D. This indicator measures the share of outbound and inbound FDI projects in the total number of projects in the last six years Two major universities near San Jose (Stanford, University of California) are in the top ten list for R&D expenditure. Combined, four major universities* in/near San Jose account for around 3% of total academic R&D expenditure in USA San Jose ranks #1 nationally, and #3 globally in number of patents per million inhabitants. In 2007, San Jose/Silicon Valley accounted for 20% of all green technology patents in California Academic R&D expenditure – Top Ten Universities 2006 Source: National Science Foundation * Stanford University, San Jose State University, University of California-Berkeley and University of California-Santa Cruz 17 17 17 Quality Factors: Infrastructure World-class, reliable infrastructure To be completed 2010: first major new international airport in 21st century San Jose scores the best in the ranking of ―America‘s Most Miserable Airports‖, having the least number of flights delays San Jose airport is 10 minutes from city center and high-tech company concentration Downtown San Jose planned for largest intermodal public transit hub in the Western U.S., to include high-speed rail Percentage of flight delays, 2007 Source: America‘s Most Miserabel Airports, 2007 18 18 18 Quality Factors: Quality of Life Enjoy high quality, green living environment The Mercer report ranks San Jose as a city with a very high quality of living, scoring ahead of San Diego, Boston and many other US locations. Strong environmental values: San Jose has most solar installations of any large city in Northern California; 59% increase between 2007 and 2008 Residents recycle more than any large U.S. city Extensive recreational and cultural opportunities, perfect Mediterranean climate According to the Brookings ranking of the US largest metropolitan areas by their carbon footprint, the San Jose area ranks 5th best for average tons of carbon emitted from residential use 19 19 19 Cost Factors: Operating costs San Jose has relatively high staffing costs, but very high productivity, distinctive skill sets, and flexible workforce Lease rates are lower than many other major U.S. cities, including Boston, Austin, New York, San Diego, and Phoenix. Overall operating costs are predicted to decrease by 20-30% in the next year, which will make San Jose more cost competitive and allow companies to access leading talent and research capabilities for lower operating costs. 20 20 20 FDI Opportunities in CleanTech Sector Joint project/partnership opportunities with local companies specializing in niche technologies, potential cross-sector synergy (Microelectronics, Software & Internet- related technologies, Life Sciences and Engineering ) Partnership opportunities with universities and research institutes to take advantage of R&D staff (professors, PhD students) and to minimize costs Testing operations for new technologies in a location with environmental conscious policy-making, public awareness and advanced R&D Over 3,200 industry-specific human resources and one of the largest concentrations of R&D workforce at competitive costs Major infrastructure projects create important investment opportunities: San Jose Green City Hall, Green Airport, Green Convention Center Energy-saving and climate intervention projects: ―San Jose Green Vision‖ Receive 100% of electrical power from renewables Replace 100% of streetlights with smart zero emission lighting Reduce per capita energy use by 50% Build or retrofit 50 million square feet of green buildings 21 21 21 Success Story Chief Executive Martin Roscheisen said he was attracted to San Jose by its educated workforce, the City's experience working with high-tech companies and its ability to streamline the permit process. "It's clear San Jose knows how to deal with the Cisco‘s and eBay‘s. They understand the issues, the logistics, the transportation needs," said Nanosolar CEO Martin Roscheisen, who founded Nanosolar in 2001 with Brian Sager. "And we can get a permit within a matter of days. Other regions would take several months." The Mayor of San Jose, the City‘s economic development team, and utility PG&E played a key role in attracting Nanosolar to San Jose. ―We appreciate the enthusiastic support and are deeply grateful for the fantastic support provided,‖ said Roscheisen. 22 22 22 Data Sources World Knowledge Competitiveness Index 2008 US Census Bureau National Establishment Time Series Database FBI Statistics US Federal Communications Commission State of California Employment Development Department City of San Jose CleanTech Group National Venture Capital Association fDi MarketsTM (Financial Times) fDi BenchmarkTM (Financial Times) Forbes Magazine PricewaterhouseCooper Brookings Institution Moody‘s Economy.com 23 23 23
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