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Philanthropy and Business Integration

Chris Polk is a proven executive and emerging sector leader  with nearly two decades of experience in fundraising, philanthropy, marketing and corporate engagement. As counsel, he has also raised over $215 million for various client project initiatives across the United States.  His primary focus is working closely with entrepreneurs, impact investors, foundations, institutions of higher learning, independent schools, professional  associations,  arts & cultural organizations, progressive non profits and Fortune500 companies interested in strategic philanthropy, corporate partnership and community engagement.

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Private Equity & VC’s should Invest in the “Whole Package” – Not Just the Technology

3/14/2013

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If the U.S. manufacturing comeback is real, why do VCs and some Private Equity groups still move away from the sector and fear  NextGen opportunities?  And what  will be the impact on manufacturing hubs like Detroit and Chicago? 
 
That has been a question on my mind ever since  President Obama’s last State of the Union, which talked up signs of a turnaround  in hiring and productivity in the U.S. manufacturing sector.  I was also reminded of the "manufacturing comeback" at dinner while discussing aviation and manufacturing  with a good friend (Jon) from the Detroit area who is actively trying to reinvent the market in Southeastern Michigan.  He reminded me that as of late, national reporters have  concluded  that diminishing cost savings from overseas outsourcing, combined with some resurgence in homegrown innovation, was helping bring back jobs lost to China  and other emerging markets years ago. I wonder how true this is and what it  really means?

Clearly, a lot of influential people around the  country  – including GE CEO Jeffrey Immelt, who last year declared in Harvard Business Review that outsourcing is  “quickly becoming mostly outdated as a business model for GE Appliances” – are  bullish on the future of U.S. manufacturing. In technology media, there’s also plenty of enthusiasm around customization and NextGen manuafacturing
applications. Wired, for instance, had a story on an engineer using 3D printer  to build a car. However, when one looks at aggregate data, it’s clear that the venture capitalists and private equity groups have been continuing their long-term shift away from hardware and deeper into all things software. But  perhaps there is a new shift coming in 2013-2014 - especially in tough markets like Detroit.


To the extent VCs do like makers of things, it’s usually because the businesses are about 90% software driven and only at the end
assemble a box to make it easier for customers to access that software horsepower. On the other hand — except for a small group of top tier VCs — the  venture business has not generated major returns over the past decade. And no one’s ever argued that venture investors have a lock on recognizing innovation or idea creation.  Additionally, the venture industry is mostly clustered around Silicon Valley and the Northeast, with  limited representation in the Midwest (Detroit and Chicago) and the South  (Texas), which are significant hubs for manufacturing.


Personally, I’d like to see VCs put more cash into companies and ideas that make physical products and work with local entrepreneurs such as my buddy in Detroit. Seems there’s a strong business case as consumers tend to be more willing to exchange their cash for physical goods. While the value in the latest devices may be mostly software, I believe that people pay for the whole package, not just the ideas behind it! Also worth considering: The  most valuable technology companies, such as Apple, are often known for designing beautiful gadgets, and not just the software that drives them.


1 Comment
Stock Tips link
8/29/2013 06:20:57 pm

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