EUROPE and the BAY AREA: Investing in Each Other

EUROPE AND THE BAY AREA: Investing in Each Other

Economic Connections between the Bay Area and Europe A Bay Area Council Economic Institute Report 2014

Sean Randolph President & CEO Bay Area Council Economic Institute Tracey Grose Vice President Bay Area Council Economic Institute acknowledgements Sean Randolph (President & CEO) and Tracey Grose (Vice President) co-authored this report. Alex Foard (Research Associate) and Saori Hamidi (Research Associate) provided extensive research support. A number of interns at the Institute also provided valuable research support: Brad Zukerman, Debbie Yu, Nick Magnuson and Ben Bartlett.

The Bay Area Council Economic Institute would like to thank the European Commission for providing the research grant that enabled this report, and the other sponsors whose generous support made its production possible: Bank of the West, DLA Piper, San Francisco International Airport, Barbro Osher Pro Suecia Foundation, the Consulate General of Sweden, HSBC, United Airlines, Lufthansa, Wells Fargo and Europort.

The Economic Institute also wishes to thank the many businesses, consulates, and civic organizations that gave their time for interviews and provided supporting information. We particularly thank John Zysman (UC Berkeley), Olaf Groth (Emergent Frontiers), Stephen Goodman (Continuum Innovation LLC), and Burton Lee (Stanford University) who served as reviewers. (See Appendix A for a full list of interview partners and reviewers.) the bay area council economic institute Bay Area Council Economic Institute is a partnership of business with labor, government, higher education, and philanthropy that works to support the economic vitality and competitiveness of the Bay Area and California. Its work builds on the twenty-year record of fact-based economic analysis and policy leadership of the Bay Area Economic Forum, which merged with the Bay Area Council in January 2008.

The Association of Bay Area Governments (ABAG) is a founder and key institutional partner. The Economic Institute also supports and manages the Bay Area Science and Innovation Consortium (BASIC), a partnership of Northern California’s leading scientific research universities and federal and private research laboratories.

Through its economic and policy research and its many partnerships, the Economic Institute addresses key issues impacting the competitiveness, economic development, and quality of life of the region and the state, including infrastructure, globalization, science and innovation, energy, and governance. A public-private Board of Trustees oversees the development of its products and initiatives. table of contents

Executive Summary 4 Introduction 7

1. The European Landscape 8 The Evolution of the European Union 8 Crisis, Debt and Growth 10 2. Striking Gold: Europeans in the Bay Area 13 The Gold Rush: When the World Poured In 13 European Immigrants Today 14 1 3. A Rich Tapestry of European Institutions 16 Cultural and Community Organizations 16 Government Representation 19 Trade and Investment Offices 19 Bi-National Business Organizations 21 4. European Talent Driving Bay Area Innovation 22 Contributions by STEM Occupation 24 5. European Trade 26 Air Connections 26 California and the Bay Area 26 6. Business Presence: Foreign Direct Investment 29 European Companies with a Presence in the Bay Area 30 Cleantech, Green Cities 34 Bay Area Companies Enter European Markets 34 7. Cross-Border Innovation 39 Cross-Border Collaboration 40 8. Investment Trends in Private Equity and Venture Capital 43 Investment with Europe 43 European Corporate Venture Capital 43 9. Entrepreneurs and Outposts 45 Growing Innovation Ecosystems in Europe 45 Technology Windows 45 An Entrepreneurial Nexus 48 Entrepreneur Profiles 53 10. Growing Future Connections 56 The Trans-Atlantic Trade and Investment Partnership 56 US Immigration Policy 58 California Regulatory Issues 58 Entrepreneurial Links: An Emerging Bi-National Model 59

Appendix A: Interviews and Informational Support 60 Appendix B: References 61 Appendix C: Business Development and Support Organizations 62 Appendix D: Methodology 62 Footnotes 64 europe and the bay area investing in each other

billion billion $ the innovation economies 3.3bay area investing in europe private equity & of europe and the bay area venture capital $ 56% of Bay Area investment investment 4.europe05 investing in the bay area are becoming increasingly abroad goes to Europe integrated and spurring 49% of global investment in the Bay Area comes from Europe new business growth in both regions of the world. collaborative invention Europe’s economic ties to the Bay Area europe accounts39% for date back to California’s Gold Rush. Today, the Bay Area is a global epicenter of all Bay Area patents registered with foreign partners since 1999 of technology and innovation, and Europe + continues to be an essential partner in business technology 1000european business affiliates shaping the region’s economic future. design The region’s business and economic ties + presence r&d 1/3 of all foreign business affiliates bay area3200 business affiliates are in europe retail with Europe are diverse, and led by are from Europe technology. Cross investment with Europe is larger than with any other global region. billion $ trade 9.2bay area exports to europe 18% of total Goods exports 35% of total Services exports

Innovation Ecosystems Bi-national 35,000 airline growing cross-border Venture Capital in Europe startups seats per week Angel Investors entrepreneurial network Corporate Incubators a post-national Technology Accelerators innovation system Outposts Soft Landings

formal european Bi-National institutional presence Diplomatic Business Sister 30 Offices 14+ Organizations 12+ Cities

Public-private Trade & 11+ Business Incubators/ 12+ Investment highly skilled Accelerators Offices talent

European-born with Advanced of All Foreign Born STEM 170,000 Residents 26% Degrees 9% Workers in the Bay Area europe and the bay area investing in each other billion billion $ the innovation economies 3.3bay area investing in europe private equity & of europe and the bay area venture capital $ 56% of Bay Area investment investment 4.europe05 investing in the bay area are becoming increasingly abroad goes to Europe integrated and spurring 49% of global investment in the Bay Area comes from Europe new business growth in both regions of the world. collaborative invention Europe’s economic ties to the Bay Area europe accounts39% for date back to California’s Gold Rush. Today, the Bay Area is a global epicenter of all Bay Area patents registered with foreign partners since 1999 of technology and innovation, and Europe + continues to be an essential partner in business technology 1000european business affiliates shaping the region’s economic future. design The region’s business and economic ties + presence r&d 1/3 of all foreign business affiliates bay area3200 business affiliates are in europe retail with Europe are diverse, and led by are from Europe technology. Cross investment with Europe is larger than with any other global region. billion $ trade 9.2bay area exports to europe 18% of total Goods exports 35% of total Services exports

formal european Bi-National institutional presence Diplomatic Business Sister 30 Offices 14+ Organizations 12+ Cities

Public-private Trade & 11+ Business Incubators/ 12+ Investment highly skilled Accelerators Offices talent

European-born with Advanced of All Foreign Born STEM 170,000 Residents 26% Degrees 9% Workers in the Bay Area executive summary

Europe’s economic ties to the Bay Area run extraordinarily deep. Current ties date back to California’s Gold Rush and the founding 4 of San Francisco through the present day development of the region as a global epicenter of technology and innovation. The Bay Area’s European ties have evolved throughout this period, and despite the attention that Asia naturally receives as a dynamic and growing region, Europe continues to be an essential partner. Trade is strong, and despite the recent global recession and Europe’s slow recovery, it is also growing.

The larger story, however, concerns two-way investment, As connections between Europe and the Bay Area continue to where cross investment with Europe is greater than with any increase, and with them, professional and creative networks, new other global region. The region’s relationship with Europe is points of innovation are appearing. The result is the emergence remarkable, in fact, for its balance. While the Bay Area’s very of a post-national innovation system, where the frame of substantial trade with Europe is less than with Asia, it is in reference is not bounded by national or even regional borders overall balance. And its value is understated since Bay Area but by the diversity and geographic reach of a company or an companies manufacture extensively in Europe, reducing the individual’s network. need to export. This cross investment, which includes R&D, reflects deep integration between the Bay Area and Europe as Institutional ties reflect a deep history of engagement. Pioneers advanced knowledge economies. include Levi Strauss, the builders of San Francisco’s Hetch Hetchy water system and the planners of its streets, and the founders of major technology companies. This rich tapestry is reflected in a Trade with Europe is supported by robust air links, with nine wide range of European cultural and community organizations carriers providing more than 35,000 seats per week on direct that continue to provide a strong foundation for personal, flights through SFO with Europe. Passenger traffic between business and economic interaction. the Bay Area and Europe through SFO grew 8.3 percent from 2012 to 2013. Europe’s presence is reflected in the region’s diplomatic community, where 30 European countries are represented, International air cargo with Europe increased 4.3 percent in the largest European diplomatic presence in the United 2013, but with all other global regions fell. States after Washington, DC and New York. Europe is by far the largest global investor in the Bay Area. It is also reflected in a diverse set of trade and investment European firms, with more than 1,000 affiliates, account for one- offices sponsored by national governments as well as by third of all foreign companies operating in the region. The UK, European cities, states and provinces. Germany, Switzerland and France reflect the strongest presence. An even larger number of Bay Area companies—3,200—have At the private sector level, 14 bi-national business affiliates in Europe. 5 organizations support commerce between the Bay Area and European countries. Cross investment is diverse but led by technology. European companies from a range of sectors are setting up research and European-born residents are an important part the Bay Area’s development (R&D) operations in the Bay Area in order to tap innovation economy. Throughout its history, the region has into research facilities and the region’s world-class talent base. drawn residents from around the world and now counts nearly 170,000 residents born in Europe, with the largest number For example, many European auto manufacturers have coming from the UK and Germany, followed by France and Italy. R&D centers in Silicon Valley, looking to tap into IT trends that will shape the future of automobiles. European-born residents have significantly higher levels of education than residents as a whole, with 26 percent having Besides IT, other significant areas of focus include attained a master’s degree or higher. Many play leadership biotech, retail (design and fashion), engineering, roles in the region’s major companies. financial services, and wine.

Europe accounts for nine percent of all foreign-born talent in Europe is the Bay Area’s most significant global innovation science, technology, engineering and mathematics (STEM) in partner. Both are global leaders in research and technology, and the region, with a total of 18,300 STEM workers. The UK and they collaborate intensely. Germany together account for 43 percent of European STEM workers, followed by France. Registered patents with partners outside the country represents a growing share of total Bay Area patents, and Europe remains an important trade partner. With 500 million collaboration with Europeans has grown at a much faster rate consumers, Europe accounts for 20 percent of the world’s than the number of total patent registrations, particularly in exports and imports. information and communications technology.

Europe accounts for 18 percent of Bay Area exports, making Patents co-registered by Bay Area and European inventors it the region’s third largest trading partner. Asia accounts total nearly 12,800 and account for 39 percent of all Bay Area for 42 percent and NAFTA (Canada and Mexico) 24 percent. patents registered with foreign partners since 1999. Since 2010, trade with NAFTA countries has overtaken trade with Europe. The UK and Germany account for the largest number, but growth rates are strongest with Ireland, Belgium, Denmark, Exports to Europe from the Bay Area have been relatively Austria and Switzerland. stable since 2005, totaling $9.2 billion in 2012. During the recent economic crisis, exports to Europe fell just 3 percent While patent activity has been increasing at a faster rate with while exports to Asia dropped 33 percent. China, India and Brazil, activity with Europe has increased by an annual average rate of 10 percent since 1990. Because of its accessibility, scale and legal transparency, Europe is often the first overseas market that US companies export to. Europe and the Bay Area actively invest in each other. Initiatives in several policy areas can strengthen the Private equity investment with Europe is strong, building on relationship further: market opportunity, shared business practices, and a mutual commitment to transparency and the rule of law. negotiation and passage of the Trans-Atlantic Trade and Investment Partnership (TTIP); In 2012 Bay Area private equity (including some venture capital) investment to Europe reached $3.3 billion, exceeding immigration reform that enables European and other total investment in the rest of the world. entrepreneurs from overseas to more easily start companies and stay in the US; As a percentage of total foreign flows into the region, investment from Europe has increased steadily since 2009, regulatory streamlining to help entrepreneurs and investors expanding from 19 percent to 49 percent in 2012. In 2012, the from overseas more easily navigate California’s complex Bay Area attracted $4.05 billion in investment from Europe regulatory environment; and $4.17 billion from the rest of the world. 6 better support for bi-national start-ups through deeper While the Bay Area’s investment in China since 2000 has been support in Europe and new US-European models for comparable to its investment in Europe, European investment start-up finance. to the region currently overshadows that from China by a large margin. China’s investment accounted for three percent of total global investment in the Bay Area in 2012.

Technology-based European companies are seeking new opportunities to engage, while European entrepreneurs are increasingly active in the region’s innovation economy. As a global center for technology and innovation, the Bay Area attracts large numbers of entrepreneurs and technology-based companies from around the world. This is particularly the case with Europe.

In addition to R&D centers, many large European companies have technology listening posts in the region to connect with cutting edge technology and other emerging trends.

An array of European-sponsored incubators and accelerators support entrepreneurs coming to the region to learn about Silicon Valley and make business connections.

Whether through incubators and accelerators or independently, large numbers of European start-ups are establishing Bay Area roots. Those who succeed become bi-national companies, with Bay Area headquarters and a European subsidiary, or vice versa. Entrepreneurs come to find venture or angel investment, tap into the region’s unique talent pool, access the US market, and scale their companies globally. Most create jobs in both the Bay Area and at home.

Europe is usually the first market outside the US that new US startups expand to, especially in information and communications technology. introduction

The San Francisco Bay Area was born cosmopolitan. California’s earliest European settlers— the Spanish who built missions from San Diego in the south to Sonoma in the north, and the Russians who established fur-trapping camps and forts around Fort Ross (Sonoma County)— imposed a thin layer of settlement on a vast land. It was the gold rush that first lured large numbers of ambitious people from around the world, and particularly from Europe, to America’s western frontier. Today, more that 150 years later, California continues to attract ambitious 7 and creative people and companies to what is still the world’s frontier of imagination and opportunity. As it was in 1849, the San Francisco Bay Area remains central to that dream.

While much attention in recent years has been appropriately focused on rapid economic growth in Asia, the Bay Area’s ties with Europe remain deep and strong. The region’s business and economic ties with Europe are highly diverse but led by technology. Trade is strong, and despite the recent global recession and Europe’s slow recovery, it is also growing. The larger story, however, concerns two-way investment, where cross investment with Europe is larger than with any other global region. The innovation economies of Europe and the Bay Area are becoming increasingly integrated and spurring new value creation from which both are benefitting.

As connections between Europe and the Bay Area continue to increase, and with them, professional and creative networks, new points of innovation are appearing. The result is the emergence of a post-national innovation system, where the frame of reference is not bounded by national or even regional borders but by the diversity and geographic reach of a company or an individual’s network. Evidence is emerging across multiple areas. Start-ups are launching as global companies with team members of different nationalities located across Europe and the Bay Area. Patents are increasingly registered by teams of inventors from multiple countries. Companies are setting up R&D centers in multiple countries to tap into specialized talent pools and facilities. All these activities support the movement of individuals and the exchange of ideas and best practices.

This report documents the breadth and nature of the ties linking Europe and the Bay Area, assessing their historical context and formal and informal relationships in both the public and private sectors. It analyzes linkages of trade, investment, research and talent, through business, government and institutional connections and diverse cross-border business relationships. It also identifies opportunities to strengthen the relationship further through new collaborative ties.

Section 1 begins with a brief introduction to Europe and its economic structures. Section 2 highlights the historical roots of Europeans and their presence today in the Bay Area. Section 3 lays out the rich landscape of formal, cultural, community and business associations that provide important context for the relationship between the Bay Area and Europe. Section 4 looks at the flows of skilled talent to the Bay Area originating from Europe. Section 5 examines trade between Europe and the region. Section 6 documents Europe’s business presence in the region by industry. Section 7 tracks the process of cross-invention. Section 8 analyzes cross-investment patterns in private equity and venture capital. Section 9 explores the evolving linkages between the entrepreneurial communities of Europe and the Bay Area. Section 10 closes with a discussion of potential areas for collaboration, in both business and public policy. 1 the european landscape

8 Understanding Europe’s economic Most importantly, the establishment of the european union today connections to the Bay Area and the EEC created a Common Market to Today, the EU consists of 28 member California requires a familiarity not just ensure “the free movement of persons, countries, the most recent to join being with its individual countries, but also services, goods and capital”. It also laid Croatia in July 2013. The EU motto is with the economic structures that were the groundwork for a closer political “united in diversity,” signifying how the created in the wake of World War II with union of members. Referred to as the union has coalesced, while recognizing the purpose of binding the continent “inner six,” its founding members were the region’s diversity of cultures, together. Since 1945, Europe has created France, West Germany, Italy, Belgium, the languages, and national interests. a path toward closer union among its Netherlands and Luxembourg. countries, with the aim of raising living The EU consists of three governing standards and maintaining peace. These The Merger Treaty, enacted in 1967, bodies: efforts began with, and remain based on, created the EEC Commission and EEC economic collaboration. Council to govern the ECSC, the EEC and The European Council is composed Euratom, replacing their three separate of the heads of state of each of the the evolution of the executive committees, and producing the member countries. It sets overall european union European Community (EC), the precursor political direction and decides key In 1950, French foreign minister Robert of today’s European Union. policy issues. Schuman proposed integrating the production of coal and steel in Europe Growing pains led to the first major The European Parliament consists of through the European Coal and Steal revisions to the Treaty of Rome in the 766 members directly elected by the Community (ECSC), stating that this form of the Single European Act (SEA) of 500 million citizens of the EU. Along union should “make war not only 1986. SEA strengthened the powers of with the Council, it has legislative and unthinkable but materially impossible.”1 the European Parliament and momentum budgetary power. The founding members of the ECSC were toward a single market. Belgium, France, Italy, Luxembourg, The European Commission is the Netherlands and West Germany.2 The Maastricht Treaty of 1993 formally the main executive body. It can The long, deliberative and painstaking established the European Union (EU), propose legislation to the Council process is summarized briefly below.3 consisting of three components: the and Parliament. The Commission, European Community, Common Foreign based in Brussels, is responsible for The ECSC’s success as Europe’s first and Security Policy (CFSP), and police and the implementation of shared laws supranational community led to judicial cooperation in criminal matters and regulations across the member the Treaty of Rome in 1957 and the (JHA). It also introduced the European countries. creation of two additional institutions: Monetary Union (EMU), which laid the the European Economic Community groundwork for the introduction of a European law covers a wide range of (EEC) and the European Atomic Energy shared European currency, the euro, in topics from agriculture to transportation. Community (Euratom). 1999. With this step, European unification The EU may only enact legislation in ventured beyond economic integration matters where it is more effective to act Originally, Euratom was tasked with toward a closer political association. centrally than at the national or local coordinating the research efforts of level, and EU legislation can extend only member countries around the peaceful to objectives agreed upon by the Council use of nuclear energy. Today, Euratom and Parliament. provides both a sharing of knowledge and a centralized monitoring system for nuclear energy supply.4 european union

ICELAND

SWEDEN 9

FINLAND

NORWAY

ESTONIA

DENMARK LATVIA IRELAND NETHERLANDS LITHUANIA UNITED KINGDOM

POLAND BELGIU M GERMANY LUXEMBOURG CZECH REPUBLIC SLOVAKIA FRANCE SWITZERLAND AUSTRI A HUNGARY ROMANIA ITALY CROATIA

PORTUGAL SPAIN SLOVENI A BULGARIA

GREECE TURKEY

MACEDONIA

MALTA CYPRUS

eu member states Data Source: The Nations Online Project www.nationsonline.org: Copyright 1998-2011 eu new members since 2004 eu new member 2013 efta member states eu candidates The EU motto is “united in diversity,” signifying how the union has coalesced, while recognizing the region’s diversity of cultures, language, and national interests.

10 Other economic agreements since the the eurozone crisis, debt and growth war have helped to expand trade across As of January 2014, with the joining The Stability and Growth Pact is a set Europe. by Latvia, 18 members of the EU share of rules for coordinating national fiscal a single currency, the euro. Nine EU policies in the European Union. It was The European Free Trade Association members do not currently use the euro: formed with the understanding that (EFTA) was created by the Stockholm Bulgaria, the Czech Republic, Denmark, the economic policies of individual Convention in 1960 to facilitate free Croatia, Lithuania, Hungary, Poland, member states can impact all members. trade within Europe. Originally, seven Romania and the United Kingdom. All The agreement sets an annual limit countries were included in EFTA: countries wishing to adopt the euro are of 3 percent of GDP on the national Austria, Denmark, Norway, Portugal, required to become members of the EU; budgetary deficits of eurozone members, Sweden, Switzerland and the United EU members, however, are not required with penalties for states that do not Kingdom (creating what was known to adopt the euro. Under the Maastricht comply. While members have at times as the “outer seven”). It did not Treaty of 1999 which created the euro, exceeded that limit, no penalties have agree to merge with the European the United Kingdom and Denmark are been assessed. Economic Community (EEC), however, exempted. Through other mechanisms, and therefore did not become part of Sweden has also opted out. The global financial crisis of 2008 the European Union at its creation. precipitated deep fiscal crises in many Today, only non-EU members remain Monetary policy for the eurozone European counties (starting with Greece, in EFTA: Norway, Switzerland, Iceland is handled by the European Central Portugal, Spain and Ireland), exposing and Liechtenstein. It largely deals Bank (ECB), which is governed by a fiscal deficits and spending patterns with trade in services and foreign president and a board composed of that proved unsustainable. The depth direct investment; 80 percent of the the participating members’ national of those crises became fully apparent in EFTA’s merchandise trade is covered central banks. Since 2008 and the 2010. In response, the European Central by preferential trade agreements with global financial crisis, the ECB has Bank lowered interest rates to facilitate the EU.5 played an important role in facilitating money flows between struggling and backstopping the resolution of European banks. The European The European Economic Area (EEA), member countries’ sovereign debt Financial Stability Facility (EFSF) and the established in 1994, includes the issues by providing emergency loans in European Financial Stability Mechanism EU member states and three EFTA return for economic reforms. Although (EFSM) were also created in 2010 to states (excepting Switzerland). the eurozone’s finance ministers (the provide backstop funds for indebted There are currently 31 EEA members. Eurogroup) coordinate, the EU does not members, parallel to those provided Its governing agreement allows share a common fiscal policy. The lack of by the International Monetary Fund EFTA States other than Switzerland such a policy structure has emerged as a (IMF), to ensure monetary stability and to participate in the Single Market significant weakness in the EU system, as support fiscal reforms in the affected created by the EU. It also promotes gaps between EU monetary strategy and countries. As the crisis persisted, the basic tenets of unification, such as fiscal policies at the national level have eurozone’s response capacity was free movement of goods, capital, made systemic approaches to European strengthened further with the European services and persons. To further debt and growth difficult. Stability Mechanism (ESM), a permanent support a uniform system of laws mechanism with expanded resources relating to the Single Market, all and authority. EU trade legislation must be fully integrated into EEA policy.6 gdp annual growth rate United States and the European Union

5% 4% The crisis and its response have 11 produced prolonged recession(s) in the 3% eurozone. Governments have initiated 2% deep spending cuts, and in some cases 1% tax increases, to address their deficits. 0% Lending by banks has been restricted, -1% and both consumer spending and -2% gdp growth rate gdp growth corporate investment have fallen. This -3% has led to intense debate regarding the -4% timing and severity of budget cutbacks -5% and their implications for economic growth and recovery. While the drive for 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 fiscal austerity and structural reform in the most impacted states has been led by united states Note: Data reflects January 2007 definition of the European Union with 27 countries Germany and other Northern European european union Data Source: OECD Stat Extracts countries, more recently those pressures Analysis: Bay Area Council Economic Institute have abated in the face of continued unemployment and slow growth. Nonetheless, debate will continue averages 12 percent, negatively on alternative visions for Europe’s impacting credit, consumption, business future, with Germany focusing on more revenue, investment, and government discipline and centralized supervision resources. From the second quarter of of national budgets, and France and 2012 to the second quarter of 2013, Southern Europe supporting increased government debt to GDP ratio rose from 10 burden sharing. 89.9 percent to 93.4 percent. Overall, today’s eurozone economy is 2.6 percent 11 It has been a rocky road. In the fourth smaller than it was in 2008. quarter of 2011, the eurozone entered its second recession since 2008. A modest There has been considerable variation, recovery is now underway, with a return however, between individual countries. to growth in the last three quarters of Germany’s economy has remained 2013. The financial turmoil that beset relatively stable over the crisis with the eurozone in recent years appears to growth of 0.5 percent in 2012. Nordic have passed. Gross domestic product countries have also fared relatively well (GDP) was slightly negative for all of 2013 with GDP holding steady at 0.1 percent (-0.4%), and positive growth of 1 percent in Denmark, 1.6 percent in Norway, and is expected for 2014.9 0.9 percent in Sweden. Similarly, the UK, France and Ireland have held steady Still, major problems remain, as slow without losses in GDP. growth will not quickly resolve lingering problems of debt and unemployment. Unemployment across the eurozone government debt General Gross Debt in the United States and the euro area

120%

12 On the other hand, most of Southern 100% Europe remains burdened by comparatively weak growth, still 80% rising debt-to-GDP ratios, and record 60% unemployment, particularly among

youth. For example, the debt-to-GDP share of gdp 40% ratio is 175.7 percent in Greece, 132.3 percent in Italy, and 123.6 percent in 20% Portugal. Unemployment in 2013 was 0% 27 percent in Greece, 26.9 percent in Spain, and 17.4 percent in Portugal. By 2003 2004 2005 2006 2007 2008 2009 2010 20112012 2013 comparison, unemployment in Germany was 5.6 percent. united states Note: The euro area is composed of 17 countries Data Source: IMF "World Economic Outlook Database" The crisis that seized Europe in the last euro area Analysis: Bay Area Council Economic Institute five years has had a significant impact on international trade and investments. As European markets have cooled, employment trends imports and investment have fallen, Unemployment rates in the United States and the euro area and other regions of the world have experienced faster growth. eurozone figures, however, mask important differences between individual EU 14% countries. This requires a closer, 12% country-by-country approach to Europe’s economic and business dynamics that 10% recognizes the distinct policies, assets 8% and circumstances that exist within its highly diverse environment. 6%

4% unemployment rate unemployment 2%

2003 2004 2005 2006 2007 2008 2009 2010 20112012 2013

united states Note: The euro area is composed of 17 countries euro area Data Source: IMF "World Economic Outlook Database" Analysis: Bay Area Council Economic Institute 2 striking gold: europeans in the bay area

Throughout the Bay Area’s history, While most prospectors failed, many founded the church of Notre Dame de 13 Europe has played an influential role. others succeeded. Among the most Victoires, on Bush Street near Union Europe’s permanent presence in the successful were enterprising individuals Square, which dates to the construction region began with the Spanish missions who created businesses in San of a chapel on the site in 1849. French in Carmel, San Francisco, San Rafael Francisco to meet the miners’ need for immigrants also established one of the and Sonoma (the farthest north in the equipment, clothing, food, lodging, city’s first volunteer fire departments chain of missions founded in California and entertainment. Out of this heady (critical in a city that burned frequently) starting in 1769). They were linked by El mix emerged an entrepreneurial spirit, and built the first railway in San Francisco, Camino Real, the King’s Highway. As the a thriving (if volatile) economy, and from Mission Dolores to the Bay. Spanish came up from the south, Russia a diverse multi-cultural community. arrived from the North, with a settlement European immigrants were at the Many Europeans made their fortunes in Fort Ross (Sonoma County) and fur forefront. not panning for gold, but from the trading stations along the northern booming commerce that resulted. Today, coast. Europe and the rest of the world The influx of European immigrants many of the region’s iconic companies first came to the Bay Area in large produced its share of stories and trace their histories back to European numbers, however, with the California characters, many of whom left an immigrants from the Gold Rush era. Gold Rush. Since then, the region’s indelible mark on the region. The Brewing in San Francisco began with a European partners have contributed in namesake of Sutter’s Mill, John Sutter German immigrant, whose brewery was fundamental ways to the development of (born Johann Suter) was Swiss. later renamed Anchor, after the city’s its community and its economy. Neighborhoods in San Francisco have bustling port. Today’s Anchor Brewing deep European roots. South Park, now Company is one of the nation’s leading the gold rush: when the in the heart of San Francisco’s fast- microbreweries, and Anchor Steam world poured In growing South of Market technology beer is uniquely associated with San When James Marshall discovered gold district, was developed in the 1850s by Francisco. The French culinary influence at Sutter’s Mill near Sacramento in a forty-niner from Britain named George is enjoyed today by residents and visitors January 1848, California immediately Gordon, who wanted to (and did) create a alike in the form of sourdough bread became a magnet for people from fashionable residential area modeled on from Boudin Bakery, which was founded around the world. As the port where London’s Berkeley Square, with upscale by French immigrants in 1849 and most immigrants arrived, San Francisco townhouses around a shared green.13 remains Francisco’s oldest continuously quickly grew from an obscure village running company. Other iconic San to a boomtown, with a massive influx Spurred by dreams of gold and a Francisco companies dating to the Gold of prospectors and businesses created harsh political climate after the Rush include Levi Strauss (incorporated to service them. In the four years after failed revolution of 1848, there was a in 1863) and Ghirardelli Chocolate the discovery of gold, San Francisco’s particularly large exodus from France. As (incorporated in 1852). population swelled from 800 to more many as 30,000 Frenchmen descended than 36,000.12 on San Francisco, and subsequently built the first hotel on the site of today’s Fairmont; established (in 1851) the French Hospital, the oldest continuously operating hospital in California; and The influx of European immigrants produced its share of stories and characters, many of whom left an indelible mark on the region.

14 In the years that followed, Europeans Decades later Michael O’Shaugnessy, Norwegian fisherman Peder Sather continued to shape the Bay Area: another immigrant from Ireland, came to San Francisco in 1850 to served as city engineer from 1912 to found the banking firm of Sather & Dublin-born civil engineer Jasper 1934. During his tenure, he planned Church. He also became a trustee O’Farrell was engaged in 1848 to and built the Hetch Hetchy water of the College of California, which revise and extend the street plan of system that brings water through a later was to become the University the original Mexican settlement at complex series of tunnels, pipes and of California at Berkeley. Following Yerba Buena Cove. His plan shaped pumping stations from the Sierra his death, Sather’s wife donated the design of Victorian San Francisco Nevada mountains 160 miles to San the funds to build Sather Tower (the and the modern city, including Market Francisco. The Hetch Hetchy system Berkeley Carillon) and the campus’ Street and the street grid that was today serves nearly six million Bay main entrance, Sather Gate. The Peder overlaid on the city’s hills. O’Farrell’s Area residents, from San Francisco to Sather Symposium, a biennial forum plan led to the public stairways and Silicon Valley.14 on political, economic and cultural streetscape that now gives the city its issues sponsored by UC Berkeley unique ascents and vistas. and the governments of Norway and Sweden, continues his commitment to education and international cooperation.

levi strauss european immigrants today Reflecting the region’s history as a Born in Germany, Levi Strauss was eighteen when he immigrated to New York with place that has drawn immigrants from his family. After working in his older brothers’ wholesale dry goods business for six around the world, foreign-born residents years, he headed to the West Coast via the Isthmus of Panama. When he arrived in make up 31 percent of the Bay Area’s 1853, San Francisco’s swelling population was desperate for imported dry goods population. In 2011, nearly 170,000 Bay such as clothing, underwear, umbrellas, handkerchiefs and bolts of fabric.15 Area residents were born in Europe, accounting for 2.4 percent of the region’s Noticing the need for a pair of pants that could withstand the toils of mining, Strauss total population. The largest numbers began to make trousers out of canvas, but switched to denim because it was easier come from the UK and Germany. to sew. This sturdy blue fabric came from the French city of Nîmes, and “de Nîmes” became a staple of the gold rush and American culture. With strong demand for Within the region, European-born his denim jeans, Strauss was able to open his own store, Levi Strauss & Company, residents report higher levels of in 1856. In 1872 copper rivets were added to reinforce the pockets, and the name educational attainment than the rest of “Levi’s” was copyrighted. By 1874 the company had opened two jeans factories in the population: 26 percent of European- San Francisco to keep up with demand. born residents have attained a graduate degree. In contrast, 16 percent of other Today Levi Strauss & Co. is a Fortune 500 company with net revenues of $4.6 billion. foreign-born and 17 percent of US-born In May 2013 the National Football League’s San Francisco 49ers team announced residents have achieved educational that the company had purchased naming rights for the new football stadium in levels beyond a bachelor’s degree. Santa Clara. Company headquarters remain in downtown San Francisco.16 european-born bay area residents

45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 15 0 united germany france italy ireland portugal poland spain romania sweden greece switzerland kingdom netherlands 2007 2011

population by country of birth country by population 5,000 4,000 3,000 2,000 1,000 0 denmark austria hungary croatia norway belgium latvia lithuania estonia finland iceland czech rep. & slovakia bulgaria

Note: Europe refers to the EU member countries and Data Source: U.S. Census Bureau, American Community Survey European Free Trade Agreement (EFTA) countries Analysis: Bay Area Council Economic Institute educational attainment 25 years or older (2011)

bay area united states

6% 4% 3% 2% 2% 4% 100% 3% 3% 2% 2% 1% 2% doctorate degree 7% 7% 11% 11% 11% professional degree 16% 16% 18% master’s degree 22% 18% 27% bachelor’s degree 23% 19% 31% some college 19% 26% high school or less 24% 32%

55% percent of population 43% 39% 41% 27% 24%

Note: Europe refers to the EU member countries and European Free Trade Agreement (EFTA) countries european- rest of us- 0% european- rest of us- Data Source: U.S. Census Bureau (2009-2011), born foreign- born born foreign- born American Community Survey born born Analysis: Bay Area Council Economic Institute 3 a rich tapestry of european institutions

16 European immigrants have woven a (Albany), the Goethe-Institut San Bay Area universities are leading sources rich tapestry of cultural and community Francisco, the Italian Cultural Institute of economic research on contemporary organizations that continue to provide a of San Francisco, the Italian American Europe, through entities such as the strong foundation for personal, business Museum of San Francisco, the United European Center of Excellence at UC and economic ties between the Bay Irish Cultural Center of San Francisco, Berkeley, and the Wallenberg Research Area and Europe. As a global center of Austrian Scientists and Scholars in North Link (WRL) at Stanford. WRL aims to technology and innovation with leading America (Silicon Valley), the IDESST support Sweden’s development as research universities and the world’s Sausalito Portuguese Hall, the Dutch a knowledge society and establish fourth largest number of Fortune Global School Silicon Valley, SF Dutch, the research collaborations with the 1000 companies after New York, Tokyo Netherland-America Foundation, the university. Funded by a gift of the and London, the Bay Area has also Polish Club Inc. of San Francisco, and Knut and Alice Wallenberg Foundation attracted a large European diplomatic the Croatian American Cultural Center. to Stanford, WRL facilitates visits to presence and an array of business and Many organizations date back to the Stanford by individuals, scholars and technology-focused organizations. late 1800s and early 1900s and reflect government leaders from Sweden the long history of their communities and identifies research projects at cultural and community in the region. Most organize nationally- Stanford and in Sweden that are organizations focused social events and cultural and candidates for collaboration. Also Today a rich array of cultural and educational programs. based at Stanford, through the Stanford community organizations provides active School of Engineering, is the European connections among immigrants from The region’s cultural and community Entrepreneurship and Innovation European countries and between them ties are also evident in its diverse Thought Leaders Program, an initiative and the larger Bay Area community. sister-city relationships. Sister-city now in its sixth year that features These organizations provide depth and relationships can be more or less speakers from the European start-up, color to Europe’s presence, and serve as active but typically involve student and venture capital, corporate and university important context for Bay Area-European cultural exchanges, mayoral visits, and sectors. Weekly forums, organized during business ties. often business delegations. The Bay the winter term, are open to the public Area’s sister-city relationships include: but are also offered as a credit course. Examples include the Swedish Club of San Francisco-Assisi, Italy (1969), San Topics focus on entrepreneurship and San Francisco Bay Area, the Swedish Francisco-Thessaloniki, Greece (1990), technology innovation as practiced in Society of San Francisco, the Alliance San Francisco-Paris, France (1996), Europe, with presentations by many Française (San Francisco, San Jose, San Francisco-Cork, Ireland (1984), of Europe’s leading entrepreneurs and Berkeley), the French American Mountain View-Hasselt, Belgium investors. The Business Exchange and Cultural Society, the French-American (1988), San Francisco-Krakow, Poland Student Training (BEST) scholarship International School, the Lycée Français, (2009), San Francisco-Barcelona, Spain program, sponsored by the US Embassy the United German-American Societies (2010), San Jose-Dublin, Ireland (1986), in Italy, the Fulbright Commission in of San Francisco, the German School (in Santa Clara-Coimbra, Portugal (1986), Italy, and Invitalia, aims to stimulate Palo Alto, Mountain View, Menlo Park, Berkeley-Jena, Germany (1989), Walnut high-tech entrepreneurship in the Italian San Francisco), the German International Creek-Noceta, Italy (1986), Walnut Creek- economy by transferring US business School of Silicon Valley (in Mountain Suffolk, Hungary (1991), and Los Altos- culture and best practices through the View, Berkeley, San Francisco), the Rustington, UK (2000). exchange of young Italian managers, German American International School economists, engineers and researchers. (Menlo Park), the Bay Area Kinderstube Hosted by Santa Clara University, the program involves a two-month classroom 17 The de Young Museum designed by Swiss firm Herzog & de Meuron, image by Henrik Kam session at the university, a hands-on matching of the participants with Silicon Valley startups in the same business field, networking with successful entrepreneurs and businesspeople, and six months of support by a qualified mentor to advance the launch of the start-up after returning to Italy. Candidates are screened and selected by the Fulbright Commission in Rome. The BEST Steering Committee includes Italian leaders and the US Ambassador to Italy.

Another important collaboration is Silicon Valley Comes to UK, managed Photo Credit: California Academy of Sciences by the Saïd Business School at Oxford. It connects the region with Oxford, Cambridge, Imperial and other universities. Each year the program brings Silicon Valley professionals to the UK to work with faculty, students, alumni The de Young Museum designed by Swiss firm Herzog & de Meuron, image by Henrik Kam and guests on issues facing high-growth companies. The program celebrated its 13th year in 2013.

Europe’s cultural presence is also physical, as seen in iconic Bay Area San Francisco Museum of Modern Art, conceptual rendering of structures. The California Academy of expansion designed by Norwegian architectural firm Snøhetta Sciences in Golden Gate Park, with its living roof suggestive of San Francisco’s In commercial structures, acclaimed Noted Dutch Architect Rem Koolhaas seven hills, was designed by famed Danish architect Bjarke Ingels’ BIG Group (Office for Metropolitan Architecture) Italian architect Renzo Piano. The de was recently selected to design a major has been chosen to design a 550 foot Young Museum, also in Golden Gate mixed-use project in the heart of San residential tower in the fast-growing Park, was designed by the noted Swiss Francisco’s rapidly emerging Mid-Market South of Market area, and the UK firmHerzog & de Meuron. The San area, incorporating a 75,000 square architect Norman Foster, whose firm Francisco Museum of Modern Art was foot arts complex with retail, hotel and Foster+Partners is designing the Apple originally designed by Italian architect residential space. The project is Ingels’ Store on Union Square, has also been Mario Botta, and its extension now first on the West Coast. selected to design a 2 million square foot under construction is designed by the mixed use project incorporating 60 and Norwegian architectural firmSnøhetta .17 85 story towers, adjacent to South of Market’s new Transbay Transit Center. The Bay Area hosts the largest European diplomatic presence in the United States outside Washington, DC and New York.

the italian cultural institute of san francisco Housed in a historic building in Jackson Square, the Italian Cultural Institute of San Francisco promotes Italian language and culture in Northern California, Oregon, Washington, Idaho, Utah, Montana, Alaska and Hawaii. It operates under Italy’s Ministry of Foreign Affairs, through the Italian Consulate General in San Francisco, and also connects to Italy’s Ministries of Culture and Education. Core activities focus on Italian language instruction, cultural exchanges, and initiatives that support intercultural dialogue. Public programs, numbering 40–50 per year, include art exhibits, film screenings, concerts, and lectures. In the future, the Institute plans to expand its focus beyond cultural themes to include programs focusing on science and technology.

Major programs in 2013 included an Italian design exhibit, Making in Italy/Making in USA: Artisanship, Technology and Design – Innovating with Beauty. The event featured displays by artists and designers from Triennale Design Museum of Milan and a forum on design and manufacturing. Also in 2013, in recognition of the Year of Italian Culture in the United States as well as the bicentennial of the birth of composer Giuseppi Verdi, the orchestras and choruses of the San Francisco Opera and the Teatro di San Carlo in Naples combined to present Verdi’s Requiem Mass. Nicola Luisotti, music director of both companies, directed the sold-out performance at San Francisco’s War Memorial Opera House. government representation connects potential investors with Invest The Bay Area hosts the largest European Catalonia, which promotes Catalonia as european government diplomatic presence in the United a strategic destination for investment in representation in the States outside Washington, DC and Spain and Europe, providing information bay area New York. Consulates provide official and introductions to potential partners. consulates and representation and visa services and Assistance is also provided in developing *honorary consuls support for nationals living abroad. In the opportunities for research funding in Bay Area, however, there is a difference. Europe and in identifying potential R&D Austria Many consulates and government partners. To date, Accio has helped 40 offices also support staffs that focus on Spanish/Catalonian companies establish Belgium* business development and, in particular, themselves in California. Cyprus* on developing ties with the region’s 19 technology and innovation networks. The Bavarian U.S. Office for Economic Czech Republic* Development assists US businesses Denmark* Consulates can be staffed by full-time in establishing a presence in Bavaria. diplomatic personnel (consulates The Bavarian US Office for Economic Estonia* general) or by distinguished local Development—West Coast is located in Finland* residents who are appointed to serve downtown San Francisco. on a part-time basis (honorary consuls). France With their support, large numbers of CzechInvest, a national entity focused on Germany European business and government technology-oriented small and medium officials regularly visit the region for sized enterprises, cooperates with Czech Greece exchanges on business and technology, Accelerator to host programs in Silicon Hungary* often with a focus on Silicon Valley and Valley for businesses focused on IT, life the model for innovation-led growth that science and nanotechnology. Iceland* the region has pioneered. Enterprise Estonia assists entrepreneurs, Ireland trade and investment research institutions, the public sector Italy offices and nonprofits by providing financial Latvia* Trade and investment development assistance, counseling, collaboration offices sponsored by national, provincial opportunities and training. Its nine Lithuania* or local governments provide further overseas locations include a Silicon Malta* connections to Europe’s economies. Valley office located in Sunnyvale. These offices, often with assistance Monaco* from private sector partners, support With a presence in over 40 countries, Luxembourg two-way business ties. Most often Germany Trade and Invest provides this activity is focused on investment foreign trade information and location Netherlands attraction and export promotion for the services to Germany-based companies Norway home country, province, state or city. Like and to global companies interested in their consular counterparts, many also entering the German market. It also Poland* work to support the competitiveness supports the German overseas Chambers Portugal of their local industries by developing of Commerce (AHK) with data and links to technology and innovation consultancy services. Its Bay Area office Romania* networks. This is particularly the case is located in San Francisco. Slovak Republic* in the Bay Area, where potentially game-changing technologies are being Ireland’s inward investment promotion Slovenia generated and global networks converge. agency, IDA Ireland (Industrial Spain Some examples of European trade and Development Agency) is responsible investment offices follow. for the attraction and development of Sweden* foreign investment in Ireland. There are six Switzerland Accio Silicon Valley, located in San regional offices in North America, with two Jose, represents the Spanish region of in California, in Mountain View and Irvine. United Kingdom Catalonia and its capital Barcelona in the Western United States. The office Enterprise Ireland is the Irish government’s trade and development swissnex organization, tasked with growing Irish swissnex is an example of the commitment that European governments are making headquartered companies and helping to the Bay Area, and to developing business and technology connections that can them compete in world markets. There help advance innovation-led growth at home. Housed in upscale facilities on the are five offices in North America, with the edge of San Francisco’s financial district, swissnex is an initiative launched by the California office located in Mountain View. Swiss government’s State Secretariat for Education, Research and Innovation (SERI) and is managed in cooperation with the Swiss Department of Foreign Affairs and Invest Northern Ireland represents the Consulate General of Switzerland in San Francisco. Private sponsors and donors Belfast and the UK region of Northern also support its operations. Similar centers exist in Bangalore, Boston, Rio de Ireland and promotes inbound Janeiro, Shanghai and Singapore. investment and entrepreneurial 20 development. Its San Francisco office swissnex focuses on science, education, art and technology, with a pervading focus works with fast-growing companies to on trends and innovation. It does this though an active program of public events, promote investment in Northern Ireland deep dives, scouting mandates, networking opportunities, shared workspace and and helps Northern Ireland companies interdisciplinary initiatives designed to foster collaboration. In the education field it with connections in the US. partners with, among others: London & Partners, with 12 offices CTI Startup, an initiative of the Swiss Commission for Technology and around the world, connects West Coast Innovation (CTI), to make long-term workspace available for entrepreneurs- businesses with opportunities in London in-residence, and for CTI-sponsored start-ups seeking to enter the US market, through its San Francisco office. Its through the three-month work-stay program CTI Start-up US Market; activity focuses primarily on helping companies establish or expand a presence Entry Camp; in London with location services.

Pro Helvetia, the Swiss Arts Council, to develop a stronger profile on the West Paris Region International Mission Coast for Swiss artists and projects fusing art, science and technology; Enterprise (PRIME) fosters business and technology partnerships between the École polytechnique fédérale de Lausanne (EPFL) on branding and Paris Region research centers and US international press outreach in North America; companies and organizations. It does this by matching American companies ETH Zürich, the Swiss federal institute of technology, to extend the university’s and their needs with the appropriate reach in California; Parisian research institution. Services offered to Parisian research institutions the Universities of Geneva and Zürich to support connections and partnerships consist of drafting proposals, detailing with relevant institutions in Western North America; the available funding, and negotiating contracts. PRIME is located in downtown the Canton of Vaud to develop connections, joint summer-schools and degrees San Francisco. with local colleges and universities. Scottish Development International swissnex initiatives include: (SDI) assists Scottish companies seeking to expand in global markets with the Digital Campus, a program to help Swiss higher education leverage emerging overseas trade support. It also helps social media technologies and practices; foreign companies hoping to locate in Scotland with information, investor competitions such as the Urban Data Challenge, in which participants are asked support services, training, grants and to explore mobility sets from various cities—currently San Francisco, Geneva and funding. SDI’s Silicon Valley Center, one Zurich—and to compare urban data through visualization. of six offices in the United States, is located in San Jose. Recent conferences and programs covered the future of the book in the digital age, genetic privacy, green architecture, and doing business in California for start-ups. Wales Cymru, working from the British Consulate General in San Francisco, represents the UK region of Wales. European companies and their Bay Area partners are supported by a rich network of bi-national business organizations that provide programs, information and networking opportunities for both members and non-members.

bi-national business The government-sponsored German- 21 organizations American Chamber of Commerce european business European companies and their Bay cooperates with German companies organizations in the Area partners are also supported located in the US to organize an annual bay area by a rich network of bi-national economic outlook conference that also draws high-level participation. The business organizations that provide BelCham Bay Area programs, information and networking German American Business Association opportunities for both members and non- (GABA), a private body, also supports British-American Business Council business and trade between Germany members. Some are small, but others are Business Association Italy America and the US. The French-American large and long established. (BAIA) Chamber of Commerce provides The British-American Business Council, information, networking and services California-Spain Chamber for example, has been active since 1954 to the French-American business of Commerce community. and engages more than 200 global UK Danish American Chamber of companies with operations in the Bay Commerce of Northern California Area and 350 Bay Area-headquartered companies with subsidiaries in the UK. French-American Chamber Activities include business networking Other Bay Area organizations with global of Commerce interests organize major European- events, young professionals happy German-American Business focused business events. For example, hours, business conferences, an annual Association (GABA) economic luncheon, and an annual Portugal Ventures, a European venture Christmas Luncheon that draws nearly and private equity firm, partnered with German-American Chamber 1,000 guests. Blumberg Capital to sponsor Portugal of Commerce Ventures in the Bay in Redwood City in Hungarian American Chamber November 2013. BayBio, the region’s Most bi-lateral organizations organize of Commerce business conferences that engage biotech and life sciences association, both large and small companies and supports BioPartnering Europe, an Irish Network San Francisco innovation and networking forum last senior government leaders, usually Irish Technology Leadership Group held in Brussels in 2012. The event with a focus on bilateral business (ITLG) development, entrepreneurial aims to connect US and European development or both. BAIA (Business pharmaceutical and life sciences Latvian-American Business Association Italy America) organizes companies. Association in California public forums and networking events Swiss-American Chamber connecting entrepreneurs, managers and of Commerce professionals operating between Italy and the United States. The California- Swedish-American Chamber Spain Chamber of Commerce, launched of Commerce in 2010, organizes a twice-yearly Spain U.S.-Polish Trade Council Tech Week to promote innovation and technology from Spain with investor breakfasts, professional meetings and entrepreneur pitch sessions. 4 european talent driving bay area innovation

22 The Bay Area is a magnet for talented Since 2007, STEM talent flows from India European talent is significant in STEM people from around the world. Large and China have led other parts of the fields, as executives, technologists, numbers of European scientists, world. India represents 22 percent of researchers and entrepreneurs from engineers and executives contribute total foreign-born STEM workers in the Europe occupy prominent positions valuably to Bay Area companies. region, up from 19 percent in 2007. China across the region’s leading companies. European immigrants, such as Andy represents 13 percent and increased from Accounting for 9 percent of all foreign- Bechtolsheim at Sun Microsystems and 12 percent in the same period. born STEM workers, Europe is the fourth Aart de Geus at Synopsys, have played largest source of STEM talent in the key roles in founding iconic Bay Area Bay Area. However, the total number of companies. European-born STEM workers in the Bay Area dropped from 24,000 in 2007 to just Foreign-born workers account for 37 over 18,000 in 2011. percent of the Bay Area’s employed workforce, compared to 17 percent of workers nationwide. In science, technology, engineering and math (STEM) occupational shares of foreign-born talent (2007 and 2011) fields, foreign-born talent is growing at a faster rate in the region than nationwide.

Foreign-born workers account for 46 50% percent of the region’s STEM workers, 45% 46% increasing 3 percent between 2007 40% 43% and 2011. By comparison, people born 35% 36% 37% outside the US account for only 19 30% percent of STEM workers nationally and 25% increased by only 1 percent over the 20% same period. 19% 15% 18% 16% 17% 10% 5% 0% bay area united states bay area united states

percentage of employed talent who are foreign born talent of employed percentage STEM occupations all occupations

2007 Data Source: U.S. Census, 2000 Decentenial Census, ACS Survey 2009-2011 3 year estimate 2011 Analysis: Bay Area Council Economic Institute foreign-born STEM talent in the bay area

25%

20%

15%

10%

5% 23 0% STEM talent in the bay area in the bay STEM talent percent of total foreign-born of total percent

2007 - 2011 foreign-born STEM talent in the bay area

Note: Europe refers to the EU member countries and Data Source: U.S. Census Bureau: 2000 Decennial Census, Analysis: Bay Area Council Economic Institute European Free Trade Agreement (EFTA) countries American Community Survey 2009-2011 3 year estimate

european-born STEM talent in the bay area

30% 25% 20% 15% 10% 5% 0%

STEM talent in the bay area in the bay STEM talent . percent of total european-born european-born of total percent

2007 - 2011 european-born STEM talent in the bay area

100% 10% 7% doctorate degree 18% 6% 9% professional degree

8% master’s degree 19% 32% bachelor’s degree

31% some college

high school or less 39% 38%

24 30%

percent of total STEM workers 22% 10% 11% 3% 3% 4% Note: European residents include residents born in one of the 32 countries of the European Free Trade 0% european other us-born Agreement STEM foreign-born STEM Data Source: U.S. Census Bureau, 2009-2011 American talent STEM Community Survey 3-year estimate Analysis: Bay Area Council Economic Institute

The United Kingdom and Germany contributions by STEM Furthermore, in six of the top 15 STEM account for the largest share of occupation occupations with large employment of European-born STEM talent in the region, Europeans are strongly represented in European-born workers, the presence of together making up 43 percent. Although the region’s top 15 STEM occupations. European-born workers is growing. The numbers for most European countries Although they account for just 2.4 strongest growth between 2007 and 2011 have declined since 2007, some percent of the region’s total population, was in Computer & Information System countries, such as Romania and Sweden, Europeans make up 6 percent of Managers (+33%), Computer Support have expanded their presence. Computer & Information Systems Specialists (+46%), and Medical & Health Managers, 8 percent of Physical Services Managers (+137%). These workers contribute to the Scientists, and 11 percent of Medical & Bay Area’s high level of educational Life Scientists. Relative to regional distributions (in attainment. Fifty-eight percent of which a normal distribution is equal to European-born STEM workers in the 1), European-born workers are highly region have at least a master’s degree, concentrated in Medical & Life Sciences compared to 48 percent of other foreign- (2.5), Drafters (2), Physical Scientists born STEM workers and 35 percent for (1.9), Architects (1.7), Computer & US-born workers. Again outpacing other Information Systems Managers (1.5), and geographies, 18 percent of European-born Miscellaneous Engineers (1.5). STEM workers have a Ph.D., compared to 10 percent of other foreign-born and 7 percent of US-born STEM workers. bay area STEM workers Top Fifteen Occupations

architects, except naval 7% architectural & engineering managers 4% civil engineers 3% medical & health services managers 7% physical scientists, all other 8% engineering technicians, except drafters 1% computer support specialists 3% electrical & electronics engineers 4% computer programmers 3% 25 physicians & surgeons 5% computer & information systems managers 6% miscellaneous engineers, including nuclear engineers 6% computer scientists & systems analysts 2%

registered nurses 3% software developers, applications & systems software 5%

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

europeans as percentage 2007 Data Source: 2005-2007 American Community Survey (ACS) of total bay area workers Census, 2009-2011 ACS Census in occupation, 2011 2011 Analysis: Bay Area Council Economic Institute

european-born STEM workers Top Fifteen Occupations

drafters 8% miscellaneous life, physical, & social science technicians, including social science research assistants 1% computer support specialists 3%

electrical & electronics engineers 4%

computer programmers 3%

architects, except naval 7%

medical scientists, & life scientists, all other 11%

computer scientists & systems analysts 2%

medical & health services managers 7%

physical scientists, all other 8%

physicians & surgeons 8%

registered nurses 3%

computer & information systems managers 6%

miscellaneous engineers, including nuclear engineers 6% software developers, applications & systems software 5%

0 1,000 2,000 3,000 4,000 5,000 6,000

26 Trade is a cornerstone of the Bay Area- Passenger and cargo trends can vary california and the bay area Europe relationship, and even as the considerably year-to-year, with the International trade is a major factor in Bay Area’s trade with Asia has grown changing availability of service and the California economy. Europe absorbs dramatically, Europe remains a major trends in the global economy. In recent 18 percent of California’s goods exports. partner. With 500 million consumers, years, passenger traffic with Europe has This is a lower figure than generally Europe is the world’s largest economy seen steady growth, while air cargo has prevails for states in the East, South and and accounts for almost 20 percent of held up well despite an overall trend of Midwest, but is higher than for most the world’s exports and imports. declining international air cargo through Western states. Thirty-five percent of San Francisco International Airport SFO. California’s service exports go to Europe, air connections one of the highest rates in the nation. Air connections enable tourism, business According to San Francisco International travel, and the export and import of Airport’s air traffic statistics data sets19, high-value goods in wide-bodied or 2013 passenger traffic between the dedicated cargo aircraft. The efficiency Bay Area and Europe (enplanements of those links—the number of flights and and deplanements) through SFO grew whether they are direct or indirect—is 8.3 percent, expanding from 2.5 to 2.7 important to both manufactured and million passengers out of a total service trade. Despite its distance from 9.7 million international passengers Europe, the Bay Area benefits from transiting the airport. The number of particularly strong connections. passengers traveling to and from Europe was the second largest for any worldwide Nine airlines (Air France, British region, trailing only Asia and the Middle Airways, KLM, Lufthansa, SAS, Swiss, East (4.2 million), and surpassing Latin United, Virgin Atlantic, and XL Airways America (1 million), and Canada France currently provide direct flights (1.3 million). from San Francisco International Airport(SFO) to Europe through Paris, International air cargo with Europe London, Amsterdam, Frankfurt, Munich, increased 4.3 percent in 2013 by weight, Copenhagen, and Zurich, with a total while air cargo trade with other major of 35,675 passenger seats per week.18 regions declined: Canada (-16.2%), European carriers such as Lufthansa, Latin America (-3.9%), and Asia/Middle and US partners such as United, connect East (-0.6%). to extensive domestic networks within Europe. In April 2014, Aer Lingus will resume direct service to Ireland with five weekly non-stop flights to Dublin, adding an additional 1,335 seats per week. In May 2014, Norwegian Air Shuttle will also offer direct air service from Oakland International Airport to Oslo (with three weekly flights) and Stockholm (with two flights per week). individual US states services exports to the EU as a percent of total services exports (2011)

wa vt 25–27 36 30 me mt nd 30 27–29 30 33 or mn nh 29–31 36 id 32 ny 34 sd wi ma 34 33 34 wy 32 33 mi ri 31–33 31 30 32 ia pa nj 32 33–35 nv ne 31 33 ct 32 in oh 07 ut il 32 de 33 35–37 co 31 32 wv 33 ca 33 va 33 ks mo ky 31 33 md 33 37–39 35 32 31 27 31 nc dc 34 ok tn 32 az nm ar sc 31 31 33 32 31 al ga ms 32 30 32 tx la 33 33 ak 30 fl Data Source: Atlantic Council, Bertelsmann 30 Foundation, and the British Embassy in Washington, “TTIP and the Fifty States: Jobs and Growth from Coast to Coast”: September 2013 hi 27

individual US states goods exports to the EU as a percent of total goods exports (2012)

wa vt 0–5 13 13 me mt nd 12 5–10 10 07 or mn nh 10–15 11 id 17 ny 25 sd wi ma 06 21 34 wy 06 15 mi ri 15–20 10 27 08 ia pa nj 22 20–25 nv ne 12 24 ct 10 in oh 07 ut il 17 de 35 25–30 co 16 25 wv 34 ca 37 va 16 ks mo ky 34 23 md 21 30–35 16 15 13 21 nc dc 18 35–40 ok tn 17 az nm ar sc 11 40–45 17 09 15 29 al ga ms 18 11 25 tx la 11 20 ak 17 fl Data Source: Atlantic Council, Bertelsmann 09 Foundation, and the British Embassy in Washington, “TTIP and the Fifty States: Jobs and Growth from Coast to Coast”: September 2013 hi 06 Bay Area companies exported a total of The EU currently accounts for 18 percent Overall, the Bay Area enjoys a modest $50.6 billion in goods worldwide in 2012. of Bay Area exports. Asia remains the trade surplus with Europe. As with This represented a recovery from the region’s largest trading partner, taking many parts of the world, its exports to depths of 2009 and the global financial in 42 percent of the region’s exports, Europe are led by technology, followed crisis, and exceeded export values of with NAFTA (Canada and Mexico) ranking by agricultural products (including wine, $48.4 billion reported in 2005. In 2012 second largest with 24 percent. This but primarily high-value specialty crops goods exports to Europe totaled $9.2 relative ranking reflects higher growth originating in California’s Central Valley) billion. While total exports by Bay Area rates in Asia, Canada and Mexico. and refined chemicals. Because of its companies dropped 16 percent in 2009 accessibility and legal transparency, from 2005, exports to Europe dropped Europe is often the first overseas by just 3 percent during the economic destination for first-time US exporters. downturn.

28 bay area exports by world regions

$35

values in billions, US dollars for inflation) (adjusted values 0

2005 2006 2007 2008 2009 2010 2011 2012

asia south america Note: Data based on exports to select world regions; inflation adjusted to first half of 2013 using the Bureau of Labor Statistics north american free trade agreement africa Consumer Price Index european union – 27 other Data Source: U.S. Census Bureau, International Trade Administration Analysis: Bay Area Council Economic Institute

Region 2005 2009 2012 %∆ %∆ %∆ $bn % $bn % ('05-'09) $bn % ('05-'12) ('09-'12)

Asia 27.6 57% 18.5 45% -33% 21.4 42% -23% 16% EUROPEAN UNION – 27 9.2 19% 8.9 22% -3% 9.2 18% 0% 3% North American Free Trade Agreement 7.4 15% 7.6 19% 3% 12.1 24% 63% 58% South America 1.2 2% 2.2 5% 86% 3.7 7% 215% 69% Africa 0.4 1% 0.3 1% -21% 0.3 1% -23% -2% Other 2.6 5% 3.2 8% 22% 4.0 8% 53% 25% Total Exports from Bay Area 48.4 100% 40.7 100% -16% 50.6 100% 5% 24% 6 business presence: foreign direct investment

While Europe is a major trading partner global business presence for the region, Asia is the region’s largest Foreign Affiliates in the Bay Area and Bay Area Affiliates Abroad trading partner by a large margin. The reverse is true, however, when it comes to foreign direct investment (FDI), where 3,500 Europe is by far the largest investor in the region. European companies, with 3,000 an estimated 1,065 affiliates, account 2,500 for 33 percent of all foreign firms in the Bay Area. Japan accounts for the second 2,000 largest number of affiliates, with 444. 29 1,500

Of European countries, the largest 1,000 numbers of foreign affiliates in the region business affiliates 500 come from the UK (370), Germany (150), Switzerland (137) and France (135). This 0 cross investment goes in both directions. europe india canada australia singapore hong kong (PRC) As of 2013, there were 3,224 affiliates of china (PRC) japan taiwan (ROC) south korea Bay Area companies in Europe. Typically, there are more Bay Area affiliates in bay area firms with Note: Europe refers to EU member countries and affiliates in foreign countries European Free Trade Agreement (EFTA) countries each European country than there are foreign firms with Data Source: Uniworld 2013 affiliates from those countries in the Bay affiliates in the bay area Analysis: Bay Area Council Economic Institute Area. Switzerland and Iceland are the exceptions to this pattern. european business presence European Affiliates in the Bay Area and Bay Area Affiliates in Europe

1,000 bay area firms with affiliates in european countries 900 european firms with affiliates in the bay area 800 700 600 500 400 300 200 100 0 germany italy spain sweden ireland poland finland czech republic

establishments united france netherlands switzerland belgium denmark austria portugal kingdom

35 28 21 14 7 0 norway greece romania luxenbourg slovakia croatia estonia latvia cyprus malta iceland

hungary lithuania bulgaria slovenia

Note: Europe refers to the EU member countries and Data Source: Uniworld 2013 Analysis: Bay Area Council Economic Institute European Free Trade Agreement (EFTA) countries bay area and european affiliates by industry (2012)

european firms with bay area firms with affiliates in europe affiliates in the bay area

united kingdom manufacturing

germany professional, scientific & technical services switzerland information france finance, insurance & netherlands real estate sweden wholesale & retail trade

italy transportation, warehousing & utilities denmark 30 leisure & hospitality ireland construction finland

belgium administrative services

norway other services (except public admin) austria agriculture & spain natural resources health & czech republic educational services portugal undisclosed

8009001,000 700 600 500 400 300 200 100 0 0 400300200100

Note: European refers to EU member countries and European Free Trade Agreement (EFTA) countries Data Source: Uniworld 2013 Analysis: Bay Area Council Economic Institute

By industry sector, Manufacturing California. The main connection to the Spain’s Telefonica has a presence in San accounts for the largest percentage of Bay Area is through technology, building Francisco, and Spanish company, Gowex, foreign affiliates in the region. Most on the region’s status as the leading a world leader in creating WiFi cities, affiliates do not actually manufacture in global innovation hub. A number of provides free WiFi in the city. British the region, but instead establish research examples follow. semiconductor design company ARM and development operations to tap employs 300 at its San Jose facility, 700 into the Bay Area’s rich pool of research In life sciences, Boehringer Ingelheim, in North America and more than 3,000 facilities and talent. The Professional a German developer and manufacturer worldwide across facilities in Cambridge Services sector accounts for the largest of biopharmaceuticals, operates a (UK), Austin and Bangalore. ARM’s percentage of affiliates from the United contract manufacturing facility at a technology is licensed to partners, who in Kingdom. In terms of Bay Area companies Fremont site once owned by Amgen. 2013 shipped more that 10 billion ARM- setting up affiliates in Europe, again Biotech giant Genentech was acquired in powered chips. Its designs are used in 95 manufacturing firms comprise the largest 2009 by Swiss pharmaceutical company percent of the world’s smartphones and group. This is followed by Wholesale & Roche, which has continued to expand increasingly in other digital products. Retail Trade, Information, and Health & its investment in the company. Novo Educational Services. Nordisk, a Danish pharmaceutical Sweden’s Ericsson, the world’s third company and the world’s largest maker largest provider of telecommunications european companies with a of insulin, has a facility in Hayward infrastructure equipment, employs more presence in the bay area and recently concluded a $100 million than 1,000 in San Jose. It has broadened Cross-border investment between Bay licensing agreement with Fremont’s its Bay Area presence with the acquisition Area and European companies spans Zosano Pharma for Zosano’s ZP Patch of two companies that focus on mobile a wide range of industries. Many of system, which provides a minimally routing and internet content delivery: Europe’s most recognized companies invasive vehicle to self-administer its key Redback Networks (2007) and Microsoft’s populate the region’s business diabetes product. Media Room division (2013). Ericsson landscape. Still, compared to the executives see Silicon Valley as uniquely East Coast, European companies are In information technology, leading positioned to accelerate the world’s shift underrepresented in the Bay Area and Spanish software companies Softonic to ubiquitous mobile technology. and Panda have operations in the region. Siemens conducts R&D for its molecular bayer and microbiology business in Berkeley, which is also home to its Technology-to- Germany’s Bayer has a particularly important presence. With 110,000 employees Business Center (see Section 9). worldwide, Bayer has operated in Berkeley since 1974, when the company bought the Cutter Labs site to build its global hematology/cardiology business. “Biotech SAP Labs opened a high tech center in had started here, and great universities were nearby to give us a pipeline of diverse Palo Alto in 1996. The parent company talent,” says Joerg Heidrich, senior vice president and Berkeley site head. In in Germany saw the Bay Area as an 1992 the company made Berkeley its global center for biotech operations, and in important source of innovation with a 2011 established its US Innovation Center (USIC) and R&D hub in San Francisco’s potentially rich array of partners. Today it Mission Bay district, one of three R&D centers worldwide. A year later it opened has 3,350 employees in facilities around the CoLaborator, an incubator providing space and equipment, along with Bayer the region (Palo Alto, Dublin, South San expertise, to help early-stage life sciences companies speed the development of Francisco and Sunnyvale), including technologies and therapies. In 2014 the company will open a CoLaborator in Berlin, recent acquisitions Sybase, Ariba, and modeled on San Francisco’s, to foster a start-up community there. SuccessFactors. Enterprise applications and the cloud are major focal points, as 31 With 1,400 employees from 50 countries at its two sites (Berkeley and Mission Bay), are mobile, consumer and sustainability Bayer is the third largest biotech employer in the Bay Area, and the largest private applications. Sybase, which supports employer in Berkeley. Its treatment for Hemophilia A, which is manufactured in 98 percent of the text messages sent Berkeley, is one of the company’s top-selling drugs globally. Proximity to UCSF at in the world, is a major factor in SAP’s Mission Bay is expected to strengthen Bayer’s future drug discovery pipeline. mobile strategy. As Senior Vice President Katharina Rock observes, “We couldn’t In the last five years, Bayer has increased its investment in the region, including drive our cloud strategy without these $250 million for Berkeley operations. Asked why Bayer has made such an acquisitions in the Bay Area, and we will investment in the region, company leaders point to the Bay Area’s leadership in continue to invest.” R&D and biotech investment, its innovation ecosystem, and the benefits of having its scientists work in proximity with the world’s best and brightest people. Heidrich SAP Labs in the Bay Area is primarily notes, “The Bay Area boasts an unparalleled pool of talent, and the innovation an engineering center, and most of its system that creates. It also is an imaginative community that’s in the lead on issues employees are engineers. Resources connected to our longer-term needs.” are focused on research and on co- innovation with partners such as Adobe, Apple and Cisco, to enable products to work together. Work done in the region British defense and aerospace German electronics and electrical also connects to SAP’s other engineering company BAE Systems employs 1,400 engineering powerhouse Siemens, centers—in Germany, Bangalore, in Santa Clara. Part of United Defense headquartered in Munich and Berlin, Shanghai and Vancouver—which have Technologies (FMC) before it was employs 2,000 in Northern California complementary roles. The Bay Area is also acquired by BAE in 2005, the Santa across four sectors: healthcare, energy, home to the company’s Startup Forum Clara facility designed and developed industry, and infrastructure and and its venture arm, SAP Ventures, which the Bradley Combat System, the M113 cities. Its global ultrasound business to date has supported more than 100 Advanced Personnel Carrier and the is headquartered in Mountain View. companies in multiple countries. Amphibious Assault Vehicle, and is home Several hundred employees in Hayward to the Combat Simulation Integration help install, integrate and maintain Lab, which tests vehicle hardware and security, fire safety and building software systems, and the Power and efficiency technology for clients in the Energy System Integration Lab, which region. The company’s mobility and integrates and tests hybrid electric logistics business is headquartered components and systems. in Novato, providing intelligent traffic solutions to reduce congestion in cities The depth of the European technology across the US. In Sacramento, Siemens presence can particularly be seen in operates the only permanent light rail three global companies—Siemens manufacturing facility in the United (headquartered in Germany), SAP (also States, producing one out of every three headquartered in Germany) and Philips light rail vehicles in North America; (headquartered in the Netherlands), all of recently it has expanded beyond light which are deeply invested in the region. rail to manufacture electric streetcars and electric locomotives that will be used in Amtrak’s Northeast Corridor. Philips Lumileds is one of the world’s will never repeat in two years. Other London-based HSBC, founded in 1865 top three manufacturers of chips that go recognizable lighting installations to finance the growing trade between into LED lighting and other applications. include the entrance to San Francisco Europe, India and China, opened its first Part of Philips Lighting, Philips Lumileds International Airport, and in New York US office in California in 1875. Today ranks first in LED Flash technology (the City, the lighting on the Empire State it offers services that benefit from the flash devices in most smartphones), Building and the Times Square New company’s strong global presence. second in Automotive LED lights, and Year’s Eve Ball. International trade in and out of California third in LED street and retail lighting. The is a strategic focus, with more than 100 company began in 1999 as a joint venture banking professionals at HSBC currently between Hewlett-Packard and Philips and charged with supporting the international later became a joint venture with Agilent Smaller European technology companies expansion of Bay Area companies. when it spun off from HP. In 2006 Philips are also expanding their presence in the acquired the remaining 50 percent of the region. In a sign of the times, the space France’s BNP Paribas Group, one of the company. Today it employs 600 people in once occupied by the Carnelian Room world’s largest financial groups, has San Jose, including 400 in R&D (100 with at the top of the Bank of America tower been part of the Bay Area’s banking 32 PhDs) and 200 in manufacturing. (555 California Street) was leased in late sector since 1980 through its ownership 2013 to Supercell, a $3 billion Finnish of Bank of the West (founded in the The first step in Philips’ global LED gaming company that until recently Bay Area in 1874 and headquartered production process takes place in has operated out of San Francisco’s in San Francisco). Its $2.4 billion in San Jose where two billion LEDs are RocketSpace incubator. US revenue (2013) is derived from produced annually. The work done in retail, commercial banking and wealth San Jose is called epitaxy, the growing In consumer retail, leading retailers with management. Bank of the West has a of one material on top of another, and it a presence in the region include, among special focus on international companies is the most R&D intensive phase of the many others, design and fashion houses doing business in the US, particularly production process. From there the units H&M (Sweden), Prada (Italy), Bulgari those starting or expanding business are sent to Singapore and Malaysia for (Italy), Hermes (France), Burberry (UK), to the US from countries where BNP further processing. Zara (Spain), Swatch (Switzerland), and Paribas has a strong presence, including Ikea (Sweden). France, Belgium and Italy. Services The company currently invests $100 are coordinated with BNP Paribas’ million a year in R&D, and CEO Pierre- In financial services, Novato-based investment banking business in New Yves Lesaicherre notes that local insurance company Fireman’s Fund is York and with sister companies in Europe manufacturing is closely linked to an operating unit of Germany’s Allianz. and Asia. In addition to Bank of the West, the lab: “We work on the future of Credit Suisse provides investment BNP Paribas also supports L’Atelier, a lighting, and the key technology is banking and technology consulting technology outpost in the region (see developed and produced here.” The services in San Francisco, one of six US Section 9, Entrepreneurs and Outposts). region’s global workforce is seen as an offices that include Boston, Chicago, asset, and Lumileds hires heavily from Houston, Los Angeles and New York. top universities such as UC Berkeley and Stanford. Key disciplines include European engineering firms such as chemistry, materials science, electrical Arcadis (Netherlands) and Currie + Braun engineering, mechanical engineering and (UK) also have a presence in the region. quantum physics.

Lumileds products are highly visible to many Bay Area residents. The Bay Lights, the kinetic display of moving lights currently installed on the Bay Bridge, is the product of Lumileds LEDs and lighting controls by Massachusetts- based Color Kinetics, another Philips company. Independently funded to celebrate the 75th anniversary of the opening of the bridge, the installation features 25,000 programmable white LED lights that play across the western span in artist-designed patterns that

Philips Illuminates The Bay Bridge, James Ewing Photography wine regions connect The Bay Area’s modern wine industry began with European immigrants who brought their traditions and expertise to California. While winegrowing in the state was rooted in the Spanish missions, commercial development began in the mid-1850s.

Jacob Gundlach, a German immigrant, founded Rhinefarm Estate just outside the town of Sonoma in 1858. Today, more than 150 years later, Gundlach Bundschu continues to make premium wine, including the Gewürztraminers and Rieslings so closely identified with Germany.

Nearby, Hungarian nobleman Agoston Haraszthy purchased land in 1856 for Buena Vista Winery, California’s oldest. Appointed by California Governor John Downey as a state commissioner to study the potential for grape growing in California, Haraszthy traveled to Europe for six months, returning with 100,000 vines representing 300 varieties and with recommendations for how to promote and develop a winemaking industry. Haraszthy built a grand villa on the property, and with the help of investors, established Buena Vista offices in Sonoma, San Francisco, New York, Paris and London. 33 “I visited various parts of France, the Netherlands, Holland, Rhenish Prussia, Bavaria, Nassau, Baden, Switzerland, Spain, Italy, and England. Various examinations confirmed my previous conviction that California is superior in all the conditions of soil, climate, and other natural advantages, to the most favored wine-producing districts of Europe…”

Agostin Haraszthy, Grape Culture, Wines and Winemaking, with Notes upon Agriculture and Horticulture, 1862.

Other German immigrants pioneered Napa Valley’s wine industry, most notably Charles Krug, an immigrant from Prussia who founded Charles Krug Winery in 1861, and Jacob Beringer, an immigrant from Mainz who came to work as cellar foreman at Charles Krug in 1869 after hearing that the soils and hillsides of Napa resembled those of his native Germany. Several years later, in 1875, Jacob and his brother Frederick founded Beringer Vineyards on 215 acres near St. Helena and built a stone winery, 1200 feet of caves and Rhine House, the iconic home now visited by thousands of visitors each year.

At about the same time, French growers settled in Santa Clara County—now the heart of Silicon Valley but then an emerging agricultural area. Pierre Pellier brought vines from the Bordeaux region in the early 1850s, and returned with more and better cuttings in 1856. Another Frenchman, Antoine Delmas of San Jose, developed the largest assemblage of varietals in the state, having imported 10,000 cuttings in 1854, and took first prize for wine at the state fair in 1859.

Other Europeans arrived in the later 1800s. Finnish sea captain Gustave Niebaum founded Inglenook Vineyard in 1879, now owned by director Francis Ford Coppola, in Rutherford (Napa Valley). Perhaps most recognizably, however, Italian immigrants put their stamp on the region’s wine industry. Guiseppe Simi left Tuscany for the California goldfields in 1849 and first produced wines under the Simi name in 1876. The winery has been in continuous production at its historic facility outside Healdsburg since 1890.

In 1881 Genoa-born Andrea Sbarboro established the village of Asti, named for the Piedmont town famous for its wines, in northern Sonoma County as part of the Italian Swiss Agricultural Colony, a cooperative created to provide work for Italian and Swiss immigrants who had flocked to San Francisco. TheItalian Swiss Colony became a full commercial-scale winery with the construction of a 300,000 gallon production facility in 1887, and subsequently went on to ship wines not only to established US wine markets such as New York, Chicago and New Orleans, but also to South America, China, Japan and much of northern Europe. By the turn of the 20th century the label was producing more than 14 million gallons annually, garnering awards from expositions around the world, and Asti was the largest source of table wine in California. Like other wineries in California, prohibition devastated the business, but the label survived and is now owned by Constellation Brands.

A stonemason from Tuscany who quarry-mined the Sonoma hills for cobblestones that were used to build the streets of San Francisco, Samuele Sebastiani founded Sebastiani Vineyards and Winery in Sonoma in 1894. In 1943, Charles Krug Winery was sold to another Italian immigrant, Cesare Mondavi. His son, Robert, later founded Robert Mondavi Winery in Rutherford in 1966, which led the emergence of Napa Valley as a premium wine-producing region in the decades that followed.

Today, the natural link between wine regions continues with several major European wineries invested in properties and wineries in both in Napa and Sonoma: Gloria Ferrer (Spain), Artesa (Spain), Marimar Estate (Spain), Domaine Carneros (France), Domain Chandon (France), and Mumm Napa (France). London-based Diageo owns four premium Bay Area wineries: Chalone Vineyard (Monterey County), Beaulieu Vineyard (Napa), Rosenblum Cellars (Alameda), and Sterling Vineyards (Napa). cleantech, green cities second quarter of 2013 to more than bay area companies enter Cleantech is an area where perspectives 1,000 cars in the third quarter. CEO Elon european markets from Europe and the Bay Area align Musk foresees European demand for While this study focuses primarily on particularly closely. European cities such 10,000 vehicles in the near future. In the European economic presence in the as Amsterdam, Barcelona, Copenhagen, September 2013, its second month in the Bay Area, several examples illustrate the London, Paris and Stockholm have market, Tesla’s Model S became the best- range of Bay Area companies’ presence stepped forward as global leaders in selling car in Norway, where it benefited in Europe. sustainable city design and planning, from Norwegian government incentives presenting a rich field for cooperation including an electric vehicle exemption Not surprisingly all of the region’s and the exchange of best practices. from the country’s 25 percent value- leading technology companies have Seventeen of the 66 members of C40 added tax. Anticipating growth in Europe, a strong presence in Europe, with Cities (Amsterdam, Athens, Barcelona, Tesla has established a warehouse and locations in multiple countries for Basel, Berlin, Copenhagen, Heidelberg, logistics facility in the Netherlands. R&D, manufacturing and sales. But London, Madrid, Milan, Oslo, Paris, non-technology companies also have a Rome, Rotterdam, Stockholm, Venice and Energy R&D is another strong connector major presence particularly in apparel, 34 Warsaw), the world’s leading network of with Europe. This can take the form of engineering and financial services. cities taking action to address climate policy dialogue but also research and change, are European. San Francisco investment. The Energy Biosciences For example, in France, Italy, Ireland participates from the Bay Area. Institute (EBI) at UC Berkeley, founded and the UK, The Gap has offices or in 2007, is supported by a 10-year, retail outlets in (among other locations) Cisco’s Connected Urban Development $500 million grant from the UK Paris, Strasbourg, Montepellier, Aix-en- initiative, a five-year program launched energy company BP. The Institute is Provence, Nancy, Lilles, Dijon, Dublin, in 2006 as part of the Clinton Global a collaboration between BP, Berkeley, Cork, Rome, Bologna, Milan, York, Initiative, has connected cities around Lawrence Berkeley National Laboratory, London, Cheshire, Leeds, Liverpool, the world that are developing urban and the University of Illinois at Edinburgh, Perth, Sheffield, Manchester, communications infrastructure Urbana-Champaign that focuses on Cheltenham, Colchester, Doncaster, to help reduce carbon emissions. interdisciplinary research on biofuels. Tunbridge Wells, Guildford, Cambridge, Founding partners included the cities Uniquely, the program connects BP Nottingham, Bournemouth, Cardiff, Bath, of San Francisco, Amsterdam, Seoul, scientists and engineers with academic Windsor, Coventry, Belfast and Oxford. Birmingham, Hamburg, Lisbon and researchers to explore commercially Levi Strauss has 192 offices or sales Madrid. Today Cisco remains active in viable pathways to biofuels production, outlets in 19 European countries. the urban sustainability field through its with cellulosic fuels (derived from non- Smart Connected Communities Initiative food plants) and fossil fuel microbiology In the engineering sector, San Francisco- and in ongoing exchanges between making up the primary fields of inquiry. based engineering company URS had Amsterdam and San Francisco. Since 2007 more than 1,000 researchers been in the UK, Germany, France, Italy, have been engaged in EBI investigations. the Benelux countries and Spain for Another point of connection, at the Intellectual property produced through years, but its presence was small. In commercial level, is Orange Goes Green EBI is the property of the University of 2010, however, the company invested (OGG), a San Francisco-based public- California and can be licensed to BP or $330 million to acquire Scott Wilson, private partnership of the government of to other external partners. EBI’s first a UK company with 8,200 employees the Netherlands with Dutch companies patent was awarded in June 2013, with in Europe, India, China and the Middle and universities. OGG works to engage approximately 50 additional patents East. With help from the French US counterparts on projects where pending. Consulate in San Francisco, they were sustainability is a focus and Dutch also introduced to Oxytech, a French experience and technology can be brought In the cleantech space, French energy engineering company based in Le Havre. to bear. It is pursuing projects in the Bay company Total purchased 60 percent The two companies agreed to pursue Area that focus on district energy, digitally of Silicon Valley solar panel maker joint projects in France and Belgium, connected eBikes, zero emission ferries SunPower in 2011, providing critical under which URS will be introduced and rainwater management, with similar capital that allowed it to compete in the to Oxytech clients, providing state- projects being pursued in Los Angeles, face of low-cost Chinese competition. of-the-art sustainability planning and Portland, British Columbia and Hawaii. Total joined French nuclear power environmental, waste and air quality company Areva, which in 2010 acquired management services. And Oxytech’s Europe also presents market Silicon Valley solar thermal company technology will be introduced to URS opportunities for Bay Area companies. Ausra (now Areva Solar), as a renewable clients. Even as US demand is increasing, energy investor in the region. Tesla sees growing markets in Europe. URS was attracted by the size of Deliveries grew from a zero base in the Europe’s infrastructure and engineering market—$14 trillion—as well as Europe’s rule of law and transparent business culture. With $10 billion in US bay area companies with revenue, their goal is to replicate that figure in Europe, which has a similar more than 10 affiliates in europe GDP. The company is serving multiple Global Revenue clients in Italy and Spain in the fields of Bay Area Companies Affiliates in uropeE European Countries (millions, US$) environmental management, energy and Levi Strauss 195 18 $4,674 sustainability. URS also sees Germany, The Gap 182 4 $15,700 HP 102 28 $120,400 with its large industrial base, as a strong Oracle 85 29 $37,121 prospect, as well as the UK, Poland, The North Face 77 16 * Sweden and Norway, all of which have Apple 67 6 $156,510 ample engineering talent and large Robert Half 63 10 $3,780 infrastructure budgets. URS 61 14 $11,000 Cisco 58 30 $46,100 Intel 48 19 $53,300 A number of Bay Area companies at Hitachi Data Systems 39 14 $333 the forefront of innovation are entering Net App 37 19 $6,332 European markets and sometimes with 35 Tectura 35 19 $43 disruptive effects. San Francisco-based Sybase 31 23 $1,170 Symantec 30 18 $6,700 Uber is gaining traction in cities such as Google 25 18 $52,200 Paris, where (as in the US) traditional Synopsys 25 14 $1,540 taxi companies are being challenged. Autodesk 25 13 $2,312 YELP, with European headquarters in Vmware 22 21 $3,767 Dublin and sales and engineering teams Epicor Software 22 15 $845 Tibco Software 21 11 $1,025 in London and Hamburg, is expanding Juniper Networks 20 17 $4,450 across Europe. Airbnb is also growing. McAfee 20 17 $2,065 Netflix, which is currently available Maxim Integrated Products 20 7 $2,400 in the UK, Ireland, the Netherlands Brocade 18 13 $2,147 and Scandinavia, will soon launch in BioRad 17 17 $1,930 Applied Biosystems 17 16 $2,090 Germany and France. Since launching Franklin Templeton 17 14 $7,101 in Sweden in 2012, the company has Lifescan 16 16 $178 become the largest video-streaming Adobe 16 15 $4,220 provider in the country. Germany and Informatica 16 13 $650 France are the fourth and sixth largest Varian 16 11 $2,597 Gilead Science 15 14 $9,700 broadband markets in the world, Agilent 15 13 $6,900 and Western Europe has 134 million Riverbed Technology 14 12 $837 broadband-connected homes, compared Silicon Graphics 14 10 $630 to 88 million in the US, making Europe Synrac 14 9 $99 a compelling market. Large continental Trimble Navigation 14 7 $1,640 Wind River 14 7 $148 media companies are gearing up for Digital Realty Trust 14 4 $1,063 competition.20 Copart 14 1 $872 Polycom 13 13 $1,496 In the area of financial services, Silicon Salesforce 13 12 $2,266 Valley Bank and Wells Fargo are two Bay Extreme Networks 13 12 $322 Fortinet 13 11 $433 Area banks expanding into Europe in Nvidia 13 7 $4,000 response to the movement of their clients Lam Research 13 7 $3,240 into European markets. JDS Uniphase 12 10 $1,680 Dialogic 12 10 $200 Silicon Valley Bank (SVB) was granted Dionex 12 9 $419 Cadence Design Systems 12 8 $935 a commercial banking license in the UK Tesla 12 8 $204 in 2012 and offers full corporate banking KLA-Tencor 12 7 $3,175 services through its 65-person London Netgear 11 11 $1,181 office. SVB Managing Director Andy Genesys Telecommunication Laboratories 11 11 $162 Tsao notes that the UK is the top global Ariba 11 10 $361 Grass Valley USA 11 9 * destination for commercial banking Autonomy 11 8 $13 clients, even ahead of China. Clients Yahoo! 11 7 $4,987 typically are expanding to Europe and ask McKesson 11 3 $122,700 to open UK accounts: “It’s where clients *Revenues not reported by data source. want to go.” In this regard, the London

Note: Bay Area Companies with More Than 10 Affiliates in Europe Data Source: Uniworld 2013 Analysis: Bay Area Council Economic Institute office also serves as a jumping-off point While business through SVB’s new to serve the rest of Europe. Among the China branch is growing rapidly, activity reasons are language, a transparent legal through London is growing 50–100 system, and a business culture similar percent per year and is currently larger. to the US. UK Branch President Phil Cox adds that having an office in both Wells Fargo has 1,000 employees at California and the UK allows clients with its major European base in London and a presence in Europe and California to supporting presences in Dublin (200 fluidly move their funds. employees) and Frankfurt (80). Ireland offers multiple advantages through its The bank’s services parallel those it membership in the eurozone (the UK is provides in the US and China, focusing on not a member). Banks licensed in one technology companies and the innovation EU country can provide services in all economy. Clients range from early stage member countries, which enables the to growth and mid-sized companies, as London office to serve as its European 36 well as larger companies served through base. Not all services are covered, collaborations with private equity. While however, so eventually the bank plans the bank is commonly identified with branches in France, the Netherlands, technology start-ups, not all companies Spain, Italy and Scandinavia. will succeed or grow, and some will remain local. For that reason, SVB also European companies entering US markets targets high-quality mid-sized companies through the acquisition of US companies in the technology sector. is a growth area, but the bank’s main focus is on serving US clients going to Recently a satellite office was Europe. Notwithstanding a slow recovery established in Dublin, as well as a fund in most of Europe, Wells Fargo foresees financed by the Irish government and growth in its business, because “it’s managed by SVB, to provide debt finance where our customers want to be.” The to early stage companies (“venture reasons: more transparency, clearer debt”). The bank also provides funding laws and market rules and a shared to companies in Scandinavia, Germany business culture. Wells Fargo Executive and the Benelux countries and plans Vice President Sanjiv Sanghvi feels that further expansion in Europe, where it with those advantages, more of the sees technology pockets and a growing bank’s customers (which are primarily number of exciting companies. The mid-market companies) are likely to be French market comes with challenges in successful in Europe than elsewhere. As the form of difficult banking, insolvency a result, the bank expects to invest more and labor regulations which can increase in servicing their clients in Europe than risk and uncertainty for clients (and the in Asia in the next five years. Currently bank). Germany, with its large number it serves more than 1,000 US companies of mid-sized companies that mirror in with activity in the UK alone. New scale many of its domestic clients, offers initiatives include the establishment of particular opportunities. a merchant bank to focus on real estate, formation of a team focused on lending Tsao also notes new interest by US for North Sea energy exploration, and venture capital firms in Europe. Venture acquisition of Burndale, a UK company funding in Europe is fraction of that in the involved in asset-based lending. US, and it has been slower to recover from the global recession. Europe’s venture industry has yet to build a track record among potential investors, and the big rush of venture funds to China, India and emerging markets such as Brazil that began a decade ago has slowed. As venture firms reconsider risk in emerging markets, many are turning back to Europe, where business risks are lower and the venture market is underserved. the irish connection The Bay Area benefits from a particularly strong Irish presence, reflected in a cluster of business and economic development organizations. In addition to the Consulate General of Ireland in San Francisco the Irish government has two trade development and investment organizations located in Mountain View. Enterprise Ireland helps Irish companies do business internationally. In the Bay Area, its activities are focused on technology. IDA Ireland works with US companies that are expanding their European operations to invest in Ireland.

The Irish economy was one of the first in Europe to enter the last recession and one of the first to come out. In contrast to other European economies, it quickly embraced austerity to address growing debt and is now in its third year of growth. While the rate and scale of inbound investment has slowed from past years, Ireland has benefitted from the need by multinationals to consolidate their European operations in a period of relative austerity. The recession also served to lower costs for both housing and labor, which had been rising.

Ireland is a major European center for multinational activity, especially tech companies. Its advantages include a large pool of 37 technical and multilingual talent, access to European Union markets, membership in the eurozone, cultural affinity, an English- speaking business environment, and advantageous tax policies. The corporate tax rate in Ireland is a relatively low 12.5 percent.21

Approximately 80 percent of Irish exports are now accounted for by multinational companies; and roughly 40 percent of inward investment into Ireland is from the US West Coast, predominantly from the Bay Area. A total of 190 West Coast companies have multi-jurisdictional offices in Ireland employing 36,000 people.

On the technology side, Intel employs approximately 5,000 people in Ireland, including operations at a new wafer fabrication facility, and at Intel Labs Europe outside Dublin. Other Bay Area companies that have established their European headquarters or have a significant presence are Google, LinkedIn, Apple, Twitter, Ebay, McAfee, Airbnb, Facebook, Dropbox, Zendesk, FireEye, VMware, Electronic Arts, Hewlett-Packard, Oracle, Yahoo!, Yelp, Symantec, Electronic Arts, Cisco, Adobe, Wells Fargo, and Salesforce. Ireland also serves as a major European base for US and Bay Area pharmaceutical, medical devices and life sciences companies including Gilead, Biomarin and Jazz Pharmaceuticals. Life sciences companies generally do both R&D and manufacturing in Ireland with the largest clusters in Dublin, Galway and Cork.

The Bay Area is important to both Irish start-up and established companies. Enterprise Ireland (EI) works with over 800 companies who export close to $2 billion in software, manufactured goods and services to the US every year. It is also one of the most active seed funding organizations in Europe, with the Irish government investing over $30 million per year in matched funding equity positions in more than 160 companies. There are over 50 Irish companies with operations in the Bay Area, mostly sales and marketing offices. Preparing Irish start-ups for the challenges of the Silicon Valley environment is critical, and EI has partnered with the Bay Area accelerators and New Frontiers Programme to prepare start-ups and accelerate their entry to the US market. Enterprise Ireland also works closely with Stanford Graduate School of Business to run CEO and CFO programs to broaden the vision and ambitions of more established Irish companies.

In 2014, Enterprise Ireland will help more than 100 Irish companies visit the Bay Area on structured programs for start-ups, such as Dreamforce, the Game Developers Conference, the RSA Conference, Oracle Open World and other trade events. Many of these trade events are attended by members of the Irish government to emphasise how important the US is to Ireland.

Irish companies established in the region include Creganna, a large Irish medical devices company which recently acquired Bay Area medical devices company Tactx Medical, Inc., and PM Group, a technology-focused engineering firm in Ireland that in 2010 acquired San Jose-based Greene Engineers which, like PM, also focuses on high-tech facilities. A recent phenomenon has been the emergence of Irish tech start-ups establishing headquarters in Silicon Valley, with engineering teams in Ireland. Examples include Altocloud, Mcor, Trustev and Viddyad.

The work of Ireland’s government agencies is supported by a well developed business network, including the Irish Technology Leadership Group (ITLG), which is composed of senior executives of Silicon Valley companies who are Irish or Irish-American and assist in the development of technological linkages with Ireland. Former Intel chairman Craig Barrett serves as chair. Its objectives include the scaling up of Irish tech companies with capital, mentorship, and connections provided by prominent leaders in the U.S. diaspora and to provide space and supportive services for Irish companies seeking to connect with or establish a presence in the region. A number of Irish startups in the Bay Area are backed by the ITLG network and venture fund SVG Partners.

In 2013 the ITLG partnered with the Cork-San Francisco Sister City Committee to organize the “Silicon Valley Comes to Ireland” conference in 2013. This annual event takes Silicon Valley companies and investors to Ireland to showcase Irish entrepreneurs. The main connection to the Bay Area is through technology, building on the region’s status as the leading global innovation hub.

38 the luxembourg hub Luxembourg, with only 500,000 residents of which 45 percent are foreign citizens, serves as an important hub for satellite television distribution, a major international financial services center, and a European distribution hub for the online media industry.

More than 110 satellites are operated by Luxembourg-based Intelsat and SES (Société Européenne des Satellites), which purchase spacecraft from Bay Area companies such as Palo Alto based SSL. SES also partners with Google to support the OB3 project, which aims to bring Internet services via satellite to the 3 billion people in countries without terrestrial access to the Internet.

As an online media distribution and e-commerce hub, Luxembourg hosts the European operations of Bay Area companies like iTunes, eBay, PayPal, StubHub and Netflix. Luxembourg-headquartered Skype (which also has roots in Sweden and Estonia) has a significant technology development presence in Silicon Valley.

Bay Area tech companies such as Zynga, Kabam and Symantec along with other international digital service and entertainment leaders use Luxembourg for such functions as localization, customer service, international revenue collection, risk management and treasury. Such location decisions are supported by Luxembourg’s legal and regulatory environment, high-end hosting facilities and ultra-high-speed connectivity to Europe’s markets, as well as Europe’s lowest Value Added Tax (VAT) rate.

These operations are also enabled by Luxembourg’s historic role as an international financial services center. In this capacity, it serves as the world’s largest center for cross-border investment fund distribution outside the US, with more than $3.5 trillion under management. Bay Area companies with significant deposit, administration and distribution operations include BlackRock and Franklin Templeton Investments. 7 cross-border invention

patent registrations As a global innovation hub, the Bay Area 39 Bay Area and US is a leader in the generation of new ideas and the registration of patents across a wide range of technology sectors. The

5.0% 5.1% 5.5% 5.9% 6.2% 7.0% 7.7% 8.4% 9.7% 10.3% 11.3% 11.9% 12.3% 12.7% 13.3% 14.0% 14.7% 14.7% 15.1% 15.5% 15.4% 15.6% 15.4% region represents 15 percent of total 20,000 20% US patent registrations, up from just 5 16,000 16% percent in 1990. The Bay Area leads all other US regions (notably New York, 12,000 12% Los Angeles, Seattle, Austin, San Diego, Minneapolis and Boston) 8,000 8% by a wide margin in the total number of

in the bay area patents generated as well as in patents 4,000 4% generated per million inhabitants. Sixty percent of those patents are registered in

0 0% US patents total of percentage number of patent registrations information technology fields. 90 92 94 96 98 00 02 04 06 08 10 12 Increasingly, the new ideas codified bay area patent registrations Note: Counts refer to all utility patents whose first named inventor is from the Bay Area and protected in a patent stem from a bay area patents as a percent Data Source: U.S. Patent and Trademark Office of total US patents collaborative process among multiple Analysis: Bay Area Council Economic Institute individuals from around the world. Patents are typically reported by the location of the first named inventor on the patent registration. However, examining the locations of all the inventors named on a patent sheds light on the scope of global collaboration. cross-border collaboration global collaboration Bay Area inventors are increasingly Patents with Bay Area and Foreign Co-Inventors collaborating with inventors outside the country. Patent registrations that

include a Bay Area inventor and at least 5.7% 6.6% 6.3% 6.9% 6.9% 7.2% 8.2% 9.0% 9.9% 9.6% 10.6% 10.5% 11.3% one foreign co-inventor increased 307 3,000 12% percent between 2000 and 2012. In total, 2,500 10% the number has grown from 643 to 2,612. 2,000 8% This foreign co-patenting represents a growing share of Bay Area patents, 1,500 6% expanding from 5.7 percent in 2000 to 1,000 4% 11.3 percent in 2012.

patent registrations registrations patent 500 2%

Measured by collaborative patenting, 0 0% patents total of percentage Europe is by far the Bay Area’s most

40 significant innovation partner. The 00 01 02 03 04 05 06 07 08 0910 11 12 co-inventors foreign with bay area and 12,789 patents registered with a Bay patents with bay area and Note: Counts refer to all utility patents with an Area and a European co-inventor since foreign co-inventors inventor from the Bay Area regardless of the inventor 1999 represent 39 percent of the total sequence number and at least one inventor located bay area patents with a foreign outside of the United States. 33,133 patents registered with all foreign co-inventor as a percent Data Source: U.S. Patent and Trademark Office co-inventors over the same period. of total bay area patents Analysis: Bay Area Council Economic Institute Building from a solid base, co-patenting with Europe has increased at an average annual rate of 12.6 percent since 1999. european collaboration From 2000 to 2012, European co- Patents with Bay Area and European Co-Inventors patents increased in total number by 292 percent. As a share of all Bay Area

patents, registrations with European 2.3% 2.6% 2.7% 3.2% 3.0% 3.1% 3.5% 3.5% 3.9% 4.1% 4.0% 4.1% 4.4% partners increased from 2 percent in 1,200 6% 2000 to 4 percent in 2012. 1,000 5%

For non-European collaborators, co- 800 4% patenting has increased 13.7 percent 600 3% annually over this period, but for the 400 2% vast majority of countries, this activity is 200 1% building from a much smaller base. Japan patent registrations follows Europe in terms of total number 0 0% of co-patents, but growth has been percentage of total bay area patents strongest in China, India, and Brazil. 00 01 02 03 04 05 06 07 08 0910 11 12

Note: Counts refer to all utility patents with an Europe’s strong position is attributable patents with bay area and european co-inventors inventor from the Bay Area regardless of the in part to its historically high investment inventor sequence number and at least one inventor bay area patents with a european located in Europe. "Europe" refers to all European in higher education and R&D. In co-inventor as a percent of Union and European Free Trade Agreement countries. the 2013 Global Innovation Index total bay area patents Data Source: U.S. Patent and Trademark Office produced by Cornell University, INSEAD Analysis: Bay Area Council Economic Institute and the World Intellectual Property Organization (WIPO), seven of the top- ranked countries in the world for their investment in higher education and R&D are European: Switzerland, Sweden, the United Kingdom, Netherlands, Finland, Denmark and Ireland.22 patterns of global collaboration Patents with Bay Area and Foreign Co-Inventors by Country or Continent

3,500 1999-2000 2001-2002 3,000 2003-2004 2005-2006 2,500 2007-2008 2,000 2009-2010 2011-2012 1,500

1,000 foreign co-inventors foreign co-inventors 500

0 41 japan taiwan india singapore australia malaysia philippines europe canada china israel russian korea new zealand brazil federation

Note: Counts refer to all utility patents with an inventor from the Bay Data Source: U.S. Patent and Trademark Office Area regardless of the inventor sequence number and at least one Analysis: Bay Area Council Economic Institute inventor located outside of the United States. Geographic areas are oredered by total number of patents registered patent registrations by technology area Patents with Bay Area and European Co-Inventors

2,000 teaching & amusement devices

1,800 manufacturing, assembling, & treating

1,600 food, plant & animal husbandry

1,400 other

1,200 chemical processing technologies

1,000 electricity & heating/cooling

800 measuring, testing & precision instruments

number of patent registraitons number of patent 600 health

400 chemical & organic compounds/materials

200 communications

0 computers, data processing & information storage

Note: Counts refer to all utility patents with an inventor from the Bay Area, regardless of inventor Data Source: U.S. Patent and Trademark Office sequence number, and at least one inventor located in Europe. Other refers to Ammunition & Weapons, Analysis: Bay Area Council Economic Institute Nuclear, Apparel, Textiles & Body Adornment, Transportation/Vehicles, Construction & Building Materials, Furniture & Receptacles, & Dispensing & Material Handling technology areas."Europe" refers to all countries included in the European Union and European Free Trade Agreement European co-patent registrations Among European collaborators, Germany have grown significantly faster than and the UK account for the greatest share total Bay Area patent registrations, of co-patenting activity. Both account for especially in top performing sectors. For more than 3,000 co-patent registrations instance, registrations in Computers, and a 12 and 15 percent annualized rate Data Processing & Information Storage of growth respectively. Co-patenting with have grown by more than a factor of both Switzerland and Austria has grown 6 since 1999. This category includes by over 38 percent per year, and with computer hardware as well as code and Belgium and Denmark by just over 50 methodology for data processing percent. By far, however, the strongest and storage. increase in collaboration among European countries over this period is Patent registrations in Communications with Ireland, which has nearly doubled have increased by more than a factor of every year since 1999. 10 since 1999, with 24 percent average 42 annual growth. Other sectors, including Health and Measuring, Testing & Precision Instruments, have experience nearly four-fold expansion. Teaching & Amusement Devices increased by a factor of 6. (This recent growth is likely associated with new tools enabled by tablet computers and other devices.)

patterns of global collaboration Patents with Bay Area and European Co-Inventors by Country

900 1999-2000 800 2001-2002 2003-2004 700 2005-2006 600 2007-2008 2009-2010 500 2011-2012 400

300

european co-inventors co-inventors european 200

100

Note: Counts refer to all utility patents with an inventor from the Bay Area, regardless Data Source: U.S. Patent and Trademark Office of the inventor sequence number, and at least one inventor located in Europe. Analysis: Bay Area Council Economic Institute "Europe" refers to all European Union and European Free Trade Agreement countries. Geographic areas are ordered by total number of patents registered since 1999. 8 investment trends in private equity and venture capital

The Bay Area is a top recipient of global investment with europe The Bay Area is also a strong investor 43 capital and a top investor around the Investment in the form of private equity in Europe. In 2012 Bay Area investment world. Even during the recent recession, and venture capital between Europe and abroad totaled $6.0 billion, with 56 global investment in the Bay Area grew the Bay Area has been robust over the percent directed to companies in Europe. in 2008 and 2009. Since 2006, the past decade. Corporate (non-venture) Flows to Europe reached $3.3 billion, region has attracted over $5 billion of investment dominates. Investment flows exceeding total investment in the rest foreign private equity (and some venture) from Europe represent a large share of the world. Since 1995, Europe has investment each year. In 2012, 422 of global investment in the region. In accounted for at least one third of the foreign investment deals were made in the addition to the long-term character of the region’s total overseas investment in all Bay Area with a total value of $8.2 billion. region’s linkages with Europe, Europe’s but three years (2001, 2008, 2010). This represented an increase of $1 billion highly developed financial services over 2009 and $2.5 billion over 2010. sector is a supporting factor.

This activity has dimensions that extend well beyond the dollars invested. Particularly with venture capital, it also global investment in the bay area represents the exchange of business expertise across geographies and

business cultures as well as access to 17% 18% 16% 16% 19% 34% 30% 26% 35% 39% 44% 36% 36% 48% 19% 25% 32% 49% both technology and talent. $ 25 60%

50% 20

40% 15

30%

10 20%

5 10% percent of investment from europe

0 0% values in billions, US dollars for inflation) (adjusted values 95 96 97 98 99 00 01 02 03 04 05 06 07 08 0910 11 12

Note: Investment includes private equity and rest of world investment in the bay area venture capital deals; Europe refers to EU member countries and European Free Trade european investment in the bay area Agreement (EFTA) countries Data Source: Thompson Reuters, Investment percent of investment from europe Database Analysis: Bay Area Council Economic Institute China provides an interesting point of comparison. Since 2000, the Bay Area has been investing heavily in China, at bay area investment abroad levels similar to investment in Europe. While investment in China has grown strongly, investment in Europe has been comparable or greater. 1% 11% 22% 45% 37% 54% 22% 51% 36% 52% 38% 36% 30% 29% 60% 19% 33% 56% $ 8 60%

Europe is a committed investor in the 7 Bay Area. As a percentage of total foreign 50% inflows, investment from Europe has 6 increased steadily, growing from 19 40% 5 percent in 2009 to 49 percent in 2012. The Bay Area attracted $4.05 billion 4 30% in investment from Europe and $4.17 billion from the rest of the world in 2012. 3 44 20% That year marks the highest levels of investment between the Bay Area and 2

Europe since the all-time peak of 2000. 10% in europe of investment percent 1

Again, investment from China provides 0 0%

an interesting contrast. In 2011 China in billions, US dollars for inflation) (adjusted values accounted for 7 percent of global private 95 96 97 98 99 00 01 02 03 04 05 06 07 08 0910 11 12

equity and venture capital investment in Note: Investment includes private equity and bay area investment in the rest of world the region, or $500 million. In 2012, $222 venture capital deals; Europe refers to EU member countries and European Free Trade million invested from China accounted bay area investment in europe Agreement (EFTA) countries for 3 percent of global investment in the Data Source: Thompson Reuters, Investment percent of investment in europe Database region. Financial investment from China Analysis: Bay Area Council Economic Institute is likely to accelerate in future years, but remains small at present compared to investment from Europe and other global sources. investment flow between bay area and europe

european corporate venture capital $ 9 European technology companies are 8 joining their American counterparts in establishing corporate venture capital 7 arms to identify and support emerging companies and technologies that can 6 directly or indirectly support their global 5 business models and produce new strategies. SAP’s Bay Area-based venture 4 arm, SAP Ventures, raised more than $1 billion in 2013, distributed across three 3 funds. The first direct investment fund 2 of $353 million, raised in 2011, is fully committed; the second fund has $405 1 million and invests indirectly; the third 0 fund of $650 million was announced in values in billions, US dollars for inflation) (adjusted values November 2013. Other Bay Area-based 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 1110 12 funds have been established by Siemens Note: Investment includes private equity and (Siemens Corporate Ventures), Bosch european investment in the bay area venture capital deals; Europe refers to EU (Bosch Corporate Ventures), DSM (DSM member countries and European Free Trade bay area investment in europe Agreement (EFTA) countries Corporate Ventures), Spanish bank Data Source: Thompson Reuters, Investment BBA (BBA Ventures), Spanish energy Database company Repsol (Repsol Ventures), and Analysis: Bay Area Council Economic Institute Spanish telecommunications company Telefonica (Telefonica Ventures). 9 entrepreneurs and outposts

For many years, entrepreneurs from services include marketing and branding an easy path for the U.S. company to around the world have been coming but also the specialized financial and expand into European markets. More to the Bay Area to access venture legal services that facilitate technology often, European start-ups develop ideas capital and tap into local talent and commercialization through licensing, for European markets that may also have global networks. Many have innovative intellectual property management, global applications, which eventually technology but seek Silicon Valley’s venture investment and initial public leads them to the Bay Area. And large unique capacity to turn a new technology offerings. European technology companies work 45 into a viable new product. This trend the system in both Europe and the Bay has continued with the establishment of Europe is home to a vast pool of Area to identify partners that can support formal “bridge” institutions to support technical and creative talent as well as their business models. foreign entrepreneurs in the region and world-class companies and research the growth of multi-national start-ups centers. Although key elements of an technology windows with close ties to the Bay Area. innovation ecosystem are in place, In recent years, the Bay Area has open interaction between them is still attracted a growing number of The exchange of people and capital developing—for example, between technology outposts, established by between Europe and the Bay Area universities and industry. Risk capital European companies and governments is growing. With this, business and and specialized business services are to engage with the region’s innovation investment opportunities as well as also less developed in Europe, making system. Some also provide landing professional and creative networks are the transition from a new technology to a pads for entrepreneurs from home also expanding. This growing interaction viable product more difficult. needing an introduction to the region generates new economic value. It is and its economy. A number of these are producing a post-national innovation As European start-ups and established described here. system—a system in which the frame companies come to the Bay Area to of reference is not bounded by national tap into the region’s unique business Siemens Technology-to-Business or even regional borders but by the environment, they also take business Center (TTB), founded in 1999 in diversity and geographic reach of a practices and expectations back home. Berkeley, was the first of its kind for company or an individual’s network. Similarly, the Bay Area benefits from the Siemens, a German engineering and Evidence is emerging across multiple technical and design know-how European technology company with 360,000 areas. Start-ups are launching as global partners bring to the region. This cross- employees in more than 200 countries. companies, with team members of pollination is supporting the continued TTB scouts emerging, disruptive different nationalities located across development of innovation ecosystems technologies that could impact Europe and the Bay Area. Patents are in Europe and the Bay Area. In response, Siemens’ position in the market, with increasingly registered by teams of Bay Area companies are actively university partnerships and start-ups inventors from multiple countries. investing in Europe, in both traditional as the medium. Eighty percent of its Companies are setting up R&D centers in and emerging sectors. (See section on projects involve start-ups (roughly multiple countries to tap into specialized London and Berlin, next page) one-third located in the Bay Area and talent pools. All these activities support two-thirds elsewhere in the US), and the movement of individuals and the Some European entrepreneurs have 20 percent involve universities. Its exchange of ideas. found success in emulating Bay Area technology focus includes industry startups in their own countries. For automation drive technologies, energy growing innovation example, Rocket is a Berlin-based (generation, renewable and efficiency), ecosystems in europe company that repeatedly copycats Bay infrastructure, smart grid, building Silicon Valley’s innovation ecosystem is Area start-ups and then sells them technology and healthcare. an open environment that enables the to the original company. In Spain, exchange of ideas and people across key Italy, and France, there are numerous Over the years, Siemens’ model for elements including research universities, copycat mobile apps, which have working with start-ups has evolved. national and private labs and research subsequently been acquired by the It began by incubating companies centers, specialized technology original US company. This practice is at its facility but is now oriented companies, investors, and highly controversial but sometimes offers toward virtual incubation. TTB looks specialized business services. These at roughly 500 companies each year, 1 percent of which are chosen for incubation or acceleration. The london and berlin: companies selected receive non- emerging entrepreneurial centers dilutive seed funding investment but, equally important, are supported A number of European cities are developing as entrepreneurial centers with nascent by “TTB venture technologists” who start-up and venture capital activity. champion their case and help them grow. This engagement can lead to London is ranked by Cushman & Wakefield as the top business city in Europe. different outcomes: a commercial Its IT sector, the largest in Europe, is concentrated in Tech City, a swath that partnership with a Siemens business spans from Shoreditch, near the historic City of London, to Olympic Park in East unit, an equity investment, or London. The core centers on the Old Street Roundabout, popularly known as becoming Siemens customers. To “Silicon Roundabout.” The extended Tech City hosts a high concentration of the date, more than 20 local and US UK’s venture capital community as well as five incubators that offer facilities for companies have been engaged start-ups similar to those in the Bay Area. It also has a significant angel investor through the process. community and benefits from access to London’s financial center, universities, and 46 a diverse global workforce—a benefit for start-ups with global ambitions. A number With Silicon Valley’s strong record of high-growth London startups were acquired in 2013, including Summly, which in commercializing technology, TTB was purchased by Yahoo!. Together these factors make London Europe’s leading Center General Manager Chenyang center for start-up activity. Xu sees unique synergies in the relationship. Still, the end-to- Leading Bay Area technology companies with a presence in London include Cisco, end process can be challenging, Intel, Yammer, Facebook, LinkedIn, Airbnb and Google. Google’s facilities host particularly when it comes to extensive co-working space for start-ups and a range of entrepreneur-focused technology transfer and forming events. Research and technology development in greater London also benefit from partnerships between the very proximity to Oxford and Cambridge, two university cities with a strong research different cultures of a Silicon Valley base that also support entrepreneurial programs. entity and a large European company (as Xu describes it, the “transfer On the Continent, Berlin is emerging as the top entrepreneurial hub, though smaller beast”). This may call for new in scale than London. Its venture investors, incubators (including Axel Springer’s approaches, such as testing the new Plug and Play—an extension of the Bay Area’s operation), low costs and dynamic product more extensively in the US, urban environment are attracting both younger workers and larger tech companies. or developing the local company to Following Plug and Play, 500 Startups plans to open in Berlin in 2014. Other the point where it reaches a higher European cities with active entrepreneurial communities include Paris, Amsterdam, level of maturity before taking it to Stockholm, Helsinki, and Barcelona. Europe. The need clearly outweighs the challenges, however: large companies (European and American) L‘Atelier CEO Sergi Herrero says “Our or new developments like Bitcoin). have big R&D budgets but often find it job is to scout, understand the trend, The program reaches an audience difficult to innovate internally. Finding and explain to BNP how it will impact of 3.5 million listeners. L’Atelier and engaging smaller, more nimble the group. Then, we decide whether also organizes monthly events and companies can offer an alternative to address it in-house (if the trend presentations by start-ups. path to innovation. isn’t mature enough to have start- ups working on it). Or, if the trend is mature enough, we’ll look for start- ups or other partners, such as PayPal Orange Silicon Valley offers a L’Atelier, located in a former or Google, to go to market.” different example of a technology industrial space in Dogpatch, is one outpost sponsored by a major of three global technology outposts L’Atelier first brought PayPal to European company. Launched in 1997 for France’s BNP Paribas Bank and Europe, by connecting it to the as an office for Global One, a joint focuses on how innovation coming bank’s personal finance unit. It also venture of AT&T, Deutsche Telecom from the region will impact the bank’s works like a consulting group for and Orange, it evolved to become business model. (L’Atelier’s other two approximately 40 key European France Telecom R&D in 1998, and offices are in Spain and Shanghai). clients, serving as their eyes and ears was rebranded as Orange Silicon When disruptive technologies are in the Bay Area. The unit broadcasts Valley in 2010. Like L’Atelier, its identified, L’Atelier considers how a weekly radio program to France, mission is to identify and work with to approach them—either they will Spain and South America (major BNP disruptive Silicon Valley companies be developed by BNP internally, or if markets) from its Dogpatch studio, and technologies. Forty-five Orange the technology already seems to be with information and perspectives on business developers and analysts developing well, BNP will collaborate. Bay Area/Silicon Valley trends (such meet with approximately 300 as developments at Apple or Google, early-stage companies each year Plans for new programs include partnerships; 2) technology-driven in an effort to understand their Orange Insight Onsite—a program partnerships, to help the company technologies and business models that brings resident executives integrate the most advanced and how they might relate to France from companies in the Orange technology coming from Silicon Valley Telecom’s business. Structured groups ecosystem, who otherwise lack a to enhance network performance focus on network, mobile, enterprise presence here, to the Bay Area for and reduce costs; 3) interaction with and consumer technologies. six months of deep immersion in early-stage companies they might how the region’s innovation economy invest in; and 4) partnerships with In 2013 Orange Silicon Valley launched works. An additional program, Orange larger Bay Area companies such as an accelerator, Orange Fab, for post- Campus West, is an internally-facing Google, Samsung, Oracle, Symantec, seed stage, US-based companies that enrichment program structured as a Cisco, Facebook, Yahoo! and Twitter. have already-developed products. one-week boot camp for rising stars Many are already channel partners. Six are supported at any one time within the company. Most recently, With a small team of seven (which with office space for three months Orange Campus West has established is likely to double in size this year), and the opportunity to access and an office in Santa Monica to engage Deutsche Telekom’s Bay Area office leverage Orange resources and with companies reinventing the has signed 36 deals in its first two 47 networks, including those in Europe. entertainment industry, in an initiative years. It is matched by a counterpart Recent participants include Phone it calls Siliwood. at the company’s headquarters in Halo, whose technology helps users Bonn, which translates, onboards and keep track of commonly misplaced implements the relationships. items such as keys and wallets, and Fenix, which produces solar batteries Deutsche Telecom (DT) realized for mobile phones, tablets and several years ago that its massive WiFi routers. Orange Silicon Valley investment in R&D was not paying BT (British Telecom), a major global also partners with large companies off relative to the start-ups that were telecommunications and value- and open source communities on outsmarting majors in the telecom added service provider, has had an initiatives relating to open computing. and IT sector around the world. “innovation scouting” office in the Bay Orange Fab is establishing presences With in-house innovation flagging, a Area since 2000. The BT team looks in France, Japan, Korea, and soon, decision was made to reduce internal for new technologies and innovative Israel and Poland. research and instead partner more business models coming primarily with the startup community. The from the region, but from the US, Japan Another innovation outpost run from company’s Bay Area office opened and Israel as well. The Bay Area is San Francisco is Orange Institute, soon after. seen as offering an advantage for the the company’s technology think company’s global operation because tank. Started as an effort by France One strategy is to reach out to of the number of younger companies Telecom to source intellectual venture capitalists and their portfolio starting here as well as the number of property originating in Silicon Valley, investments to identify companies innovative global companies passing and structured to bring people to the with consumer applications (apps) through the region. The primary Bay Area for immersive programs, that can ride on its service base. While focus is not acquisition but instead the concept has expanded globally most of those apps are free, premium onboarding of new suppliers to the BT (with 11 programs completed in versions require more download business platform. About 70 percent three years, including three locally). capacity, providing business of the team’s time is spent talking with Senior innovation executives are opportunities for partners. The startups, 15 percent with other service recruited from multiple industries, strategy is that while US brands may providers (such as AT&T, Comcast or for sessions focused on the digital be well-known in the US, many may be Netflix), and 15 percent with vendors economy. The Institute’s head, George less well known in Europe, and DT has (such as Cisco or Intel). Once qualified Nahon, describes the program as a well-known brand and service base in the Bay Area, two sister teams in “an opportunity for visitors to gain they can plug into—saving time and the UK further analyze the potential mindshare and interact with the resources when entering European partnership and do the early-stage smartest people in the world.” The markets. With majority ownership of prototyping and proof of concept. Institute has two other global sites, global carrier T-Mobile, the company Onboarding can take one of three in Tokyo and Beijing, and a presence sees ample opportunity for leverage, forms: BT may act as a channel for in Israel. As Nahon describes it, “We connecting sales at the front end with sales of the partner’s goods or services go to creative cities, where important shared revenue at the back. to customers, it may distribute and activity is happening and you find “white label” the technology or service significant innovation.” In addition to this collaborative as a BT product, or it may acquire a model, Deutsche Telekom’s Bay license to the technology. Area office focuses on partnerships at several levels: 1) revenue-driven sources of US venture capital (2012) sources of european venture capital (2012)

90.8% private independent 40% government agencies 6% family offices 4.9% financial institutions 12% corporate investors 5% pension funds 2.3% corporations 9% fund of funds 5% banks 2.1% other 8% private individuals 2% capital markets 8% insurance companies 1% endowments and foundations

Data Source: National Venture Capital Association Data Source: The European Private Equity and Venture and Venture Capital "Yearbook 2013" Association "2012 Pan-European Private Equity and Venture Capital Activity"

an entrepreneurial nexus Netherlands—are European. Particularly Despite Europe’s single market for The entrepreneurial connection provides in Nordic countries, however, the trade, its business environments a unique bridge between the Bay Area relatively small size of domestic markets remain largely national. This can and Europe. For decades the region requires many aspiring companies to inhibit the ability of start-ups to grow has attracted large numbers of young think globally. These companies are or to attract investment on a pan- companies from around the world that attracting renewed interest by Bay Area European scale. want to participate in its innovation- venture capital firms such as Benchmark, led economy. Most, though not all, are Sequoia Capital and Accel Partners, as Due to high tax rates, their treatment technology-focused and arrive with any well as Bay Area technology companies as ordinary income as opposed to of several objectives: to tap into the hunting for acquisitions (e.g., eBay’s capital gains, and their taxation when region’s pool of venture capital (which is acquisition of Sweden and Estonia’s rights accrue as opposed to when unique in its depth and scale); to locate Skype, Autodesk’s acquisition of Dutch they are exercised, stock options are at the cutting edge where technology is 3D design firm Alice Labs, and more not useful to early stage companies in being developed; to test the US market; recently, Google’s acquisition of UK much of continental Europe. or to access other talented individuals artificial intelligence company Deep Mind whose skills can help them grow. Technologies). Rigid labor laws in some countries Because the skills pool and business make it difficult for start-ups to network in the region is global, a Bay Entrepreneurs in Europe also face flexibly manage their workforce needs Area presence also enables young significant—though not insurmountable through the ups and downs of an companies from overseas to connect to —challenges, which push many toward early-stage business (a factor that can global markets and partners. the Bay Area: also impact their appeal to US venture investors). European connections are particularly Risk capital, both venture and angel, strong, as Europe’s advanced economies can be difficult to find. Access to European regulations governing generate large numbers of highly skilled angel funding is improving, but Series privacy and data protection can pose graduates. Europe claims a large pool of A and Series B funding is a particular regulatory risks for both IT start-ups tech talent and developers, with growing challenge. To build a $100 million and investors. numbers in Eastern Europe. According business, it is often necessary to be to the Global Competitiveness Report in the US. Where the US has a well-developed 2013–2014,23 five of the world’s 10 process for insourcing technology most innovative economies—Finland, through acquisition, European Switzerland, Germany, Sweden and the companies generally lack such an venture capital funds raised venture capital funds raised and invested in the US and invested in europe

$35 31.9 29.4 29.9 25.6 20.4 16.2 23.3 13.5 29.5 19.3 26.7 20.1 $35 8.2 11.1 8.6 8.4 5.2 4.9 5.0 4.4 5.0 7.0 4.3 4.8 30 30 25 25 20 20 15 15 10 10 5 5 0 0 values in billions of US dollars values in billions of US dollars values 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 The European Private US funds invested Data Source: National Venture Capital europe funds invested Data Source: 49 Association Yearbook 2013 Equity and Venture Capital Association US funds raised europe funds raised "2012 Pan-European Private Equity and Venture Capital Activity"

acquisition culture, preferring instead The World Economic Forum has As private venture funding has declined, to develop technology through in- further documented the barriers that the role of government finance has house R&D. This reduces opportunity entrepreneurs face when starting and grown from 12 percent in 2007 to more for start-ups looking for an exit scaling a business. These include; than 40 percent in 2012. The “Valley of strategy, again pushing them toward Death”—the gap between early-stage the US. geographical fragmentation (despite and growth funding when companies the EU’s Single Market, national need to scale—is also wider in Europe Europe generally lacks iconic rules and barriers limit pan-European than in the United States. technology companies with opportunities and inhibit the ability entrepreneurial roots and successful to scale); For these reasons, while Europe ranks entrepreneurs who can serve as highly for innovation broadly, it has role models or investors in the next culture (risk aversion and fear of underperformed in its ability to support generation of start-ups. failure are higher in Europe than in entrepreneur-led start-ups. A recent the US and other global regions, analysis in Italy’s financial journal Il Collaboration and communication particularly in the wake of the recent Sole 24, found that measured against between actors in the innovation global downturn); eight benchmarks—maturity of start- system is comparatively low, and ups, financing, business performance, the web of professional services popular attitudes (relatively few talent, infrastructure, entrepreneurship, that startups in the US rely on is Europeans have thought about speed in adopting new technologies, comparatively weak. starting a company; most have a and differentiation from Silicon Valley— more favorable view of traditional Europe’s top innovation ecosystem, Finally, and while there are professions and prefer working as London, ranked only 7th out of 20 global exceptions, European public employees); centers evaluated, after Silicon Valley, universities typically maintain higher Tel Aviv, Los Angeles, Seattle, New barriers between academia and investment capital (limited access to York and Boston. Paris ranked 14th and industry, do not focus extensively on and a dropping supply of risk capital). Berlin 15th.25 This innovation challenge technology transfer and, compared is increasingly recognized by European to their counterparts in the US, Despite growing activity in major governments and by many in Europe’s are late to the game of supporting innovation hubs, the supply of early- private sector. entrepreneurship. stage venture capital, which was never large, dropped by 56 percent between Given these factors, the Bay Area is 2007 and 2012 and currently stands an important destination for European at only 3.6 billion euros. This is less a entrepreneurs who lack comparable problem of capital per se, which Europe access to investment capital at home, or has in abundance, than of risk capital who need a larger US or global platform available for entrepreneurial ventures. from which to scale their companies. A recent survey conducted by San Jose residents to venture capitalists or other The Accelerator started in 2011 at Plug State University26 confirms that European investment partners. Accelerators may and Play with two resident companies per entrepreneurs see venture capital as less also invest in the companies they house, quarter, and subsequently grew to four prevalent and less accessible in Europe, usually in exchange for a share of equity. and now six companies (plus three with with funding often achieved less through an extended presence) who participate competition than through social ties. The The business strategies followed by in a three to six month acceleration same survey confirms that commercial these incubators and accelerators varies. program. The selection process is bank lending and government grants are Most bring start-ups to the region for rigorous: applicants in Germany go more important sources of funding for 3–6 month stays, introducing them to US through an initial screening, are scored entrepreneurs in Europe as compared to laws, Silicon Valley business practices and ranked, and the top 30 companies venture or angel capital, which is more and potential investors, customers and are interviewed by phone. The top 20 are accessible in the Bay Area. A related partners. Those that succeed become then invited to present in person at a two- inducement is the information exchange bi-national, with development teams at day workshop. On the night of the second and social networking effect associated home and US affiliates that tap into flows day, the top 12 successful companies are with angel and venture funding, of technology and investment to develop selected: six for the upcoming quarter and 50 compared to more traditional (bank and markets. Some, but not all, move their six for the next. government) funding models that do not headquarters to the Bay Area. offer those benefits. BootstrapLabs, a Nordic accelerator technology connectors While start-ups come to the Bay Area located in San Francisco, follows a independently, the region benefits from a different model, requiring at least one rich network of incubators, accelerators founder to relocate to the Bay Area BMW Technology Office (Germany) and soft-landing services designed to permanently. According to BootstrapLabs Bosch Research & Technology Center help companies connect to Silicon Valley CEO Nicolai Wadstrom, that hasn’t been North America (Germany) and the region. Some are government a problem, as at least half a dozen start- sponsored and others are private. Most, ups have moved their headquarters from Danish Innovation Center (Denmark) however, are partnerships between Sweden, Finland, Denmark and other L’Atelier (France) national governments and supportive Northern European counties: “Companies private companies. While their format used to come but there were less of them Medicon Valley Alliance varies, typically these centers provide and they came at a later stage when it (Sweden/Denmark) inexpensive office space, mentoring, was about selling a product that’s ready Mercedes-Benz Research & and services and events that introduce to go. It used to be about export, and Development North America now it’s about building companies. This is unique to the Bay Area.”27 Teemu Yli- Orange (France) Hollo, co-founder of Audiodraft, a Finnish Renault-Nissan Research Center incubators and startup that opened its US headquarters (France) accelerators in San Francisco’s South of Market in 2012 with help from BootstrapLabs, SAP Labs (Germany) notes: “The knowledge and ecosystem Sennheiser Technology & Innovation 500 Startups are here. People come here for the Center (Germany) opportunity, whether it’s raising funding BootstrapLabs (Sweden) or getting access to markets in the US. Siemens Technology-to-Business French Tech Hub (France) Silicon Valley is the perfect place to start Center (Germany) penetrating the market. People here are German Silicon Valley Accelerator swissnex (Switzerland) open for new technologies.”28 (Germany) SwissCom (Switzerland) Innovation Norway/Innovation House The German-Silicon Valley Accelerator Renault (France) Silicon Valley (Norway) (GSVA) provides another example for how country-focused accelerators Spain Technology Center (Spain) Mind the Bridge (Italy) work. A private organization supported Telekom Innovation Laboratories, Plug and Play Tech Center by Germany’s Federal Ministry for Deutsche Telekom (Germany) Economics and Technology and private RocketSpace sponsors and partners such as Deloitte Vinnova (Sweden) Runway and Deutsche Telekom, its mission is Vodafone Xone (UK) to establish a bridge between Germany Spain Tech Center (Spain) and Silicon Valley that facilitates trans- Volkswagen Electronics Research Y Combinator Atlantic start-ups. Laboratory (Germany) “The knowledge and ecosystem are here. People come here for the opportunity, whether it’s raising funding or getting access to markets in the US. Silicon Valley is the perfect place to start penetrating the market. People here are open for new technologies.”

[ Teemu Yli-Hollo, co-founder of Audiodraft ]

51 There is no standard profile for the come for just a month, but most of sponsored technology outposts, it sees companies that come to GSVA. The those return, realizing that more time is natural synergies where R&D remains original concept was to focus on needed to develop useful connections. primarily in Sweden with plentiful companies that had established The typical stay is three months. Those skilled developers and engineers, and themselves in Germany, but it became who succeed in attracting funding Silicon Valley provides global market clear later that early-stage companies typically set down roots. The next move access and access to finance. Vinnova’s also needed to come to the US to be for RocketSpace is to expand to Europe office is located at Stanford, next to the successful, so it is currently a mix. GSVA through a London presence. Wallenberg Research Link (WRL). works with a broad range of companies in the IT and communications space at Following a different model, the Medicon all stages of development. Vice President Valley Alliance is a Danish-Swedish Oliver Hansich points to successes, The innovation and entrepreneurial collaboration representing one of including an alumnus that recently closed links of Nordic countries to the Bay Europe’s densest life sciences clusters. Series A and B funding rounds, and Area are particularly strong. This The Alliance partners with the regional another that found its largest customer is partly explained by the fact that life sciences association, BayBio, that here. GSVA picks start-ups that have three of the top 10 countries ranked aims to strengthen business-to-business, demonstrated success in Germany and in the 2013 Global Innovation Index university-to-university, and hospital- provides a platform for them to explore produced by Cornell University, INSEAD to-hospital collaboration in order to US market opportunities. If all goes well and the World Intellectual Property stimulate and support complementary here, their US market success is also Organization (WIPO)—Sweden, Finland research programs. Based in California, likely to translate into jobs and benefits and Denmark—are Nordic.29 According Thomas Mortensen serves as the group’s at home. to Burton Lee of Stanford University official “Ambassador,” acting as a bridge and Innovarium Ventures, the Nordic in both directions. GSVA originally focused on countries have deepened their ties to communications and information the region more consistently and more Innovation House Silicon Valley is a technology companies, but recently sustainably in recent years. “Finland has virtual office for Norwegian technology extended its scope to include cleantech been most seriously engaged in retooling companies, investors, and Innovation and related IT. In May 2013, then-German their economy toward a focus on Norway. With offices in Silicon Valley Vice Chancellor Philipp Rosler announced innovation; and of all Nordic groups, the and San Francisco, Innovation Norway that GSVA would expand to include a Finns and Danes have most consistently organizes programs, hosts students of second site in San Francisco—at Runway, targeted Silicon Valley as a strategic entrepreneurship visiting from Norway, a co-working space located in the same location for the entire country,” Lee says. and will hold three technology start-up building as Twitter—to focus primarily on (Tech INCubator, or TINC) programs in consumer Internet, gaming and mobile Vinnova, the Swedish government’s the region in 2014. As an outcome of markets. Resident companies have the innovation agency, established an office TINC’s Fall 2013 program, Norwegian option to work out of either site or both. in Silicon Valley in 2012, with the goals startup Zwipe signed a global OEM In the fall of 2103, GSVA moved its Silicon of facilitating access to the region’s distribution agreement for the US market Valley offices to expanded quarters in technology ecosystem for Swedish start- and has opened an office in Palo Alto. Palo Alto. ups and adding value to companies it In September 2013, Innovation House has funded in Sweden. Its dual role of teamed with other Nordic country RocketSpace, an incubator in San benchmarking and trend spotting also representatives to organize a Nordic Francisco, houses approximately 140 enables it to determine the potential Pavilion for 10 start-ups at Tech start-ups, of which half are international policy implications of developments Crunch’s annual Disrupt conference in and 25 percent are European. Some here for Sweden. Like other government- San Francisco. “There is a center of gravity for every industry- a nucleus of talent and expertise. For software it’s in the Valley. You can start a great company anywhere in the world, but it’s like running uphill or downhill – you can expend the same amount of energy but get farther. We want to reduce friction, and Silicon Valley is a very low friction place to get a commercial venture off the ground.”

[ Emil Eifrem, Swedish entrepreneur ]

the mothership - plug and play Mountain View accelerator Plug and Play Tech Center is a pioneer in the world of international accelerators. Launched in 2006 in a building once occupied by Logitech and Google, Plug and Play began its International Pavilion and Acceleration programs in 2008, with expansions into Asia, Europe and the Middle East starting in 2010. It has met with extraordinary success, having accelerated over 1,500 start-ups and facilitated over $1.4 billion in venture funding.

The Plug and Play model is designed, like a number of other accelerators, to provide an international bridge to Silicon Valley. What is different is its scale, which boasts more than 20 international partnerships—in which Europe is prominently represented. Partners include Flanders Investment & Trade (Belgium), Innovation Center Denmark, Leadership Business Consulting (Portugal), SARIO (Ministry of the Economy, Slovakia), TUBITAK (Ministry of Science & Technology, Turkey), Enterprise Incubator Foundation (Armenia), Enterprise Estonia, Tekes, FinNode (Finland), GVA Capital, InnovaChile CORFO (Chile), int@j (Jordan), Interdisciplinary Institute for Broadband Technology (Flanders), Kickstart Ventures (Philippines), National Center for Research and Development (Poland), New Zealand Trade and Enterprise, the Barcelona Chamber of Commerce, BarcelonaActive, Czechinvest, Innovation Norway, and Advantage Austria. International partners sponsor start-ups from their country or region, that participate in three-month acceleration programs held every quarter and which include a bootcamp, coaching on fundraising and business development, and an expo with investor pitches and networking. Since 2009 over 250 international start-ups have been accelerated through the center

WeVideo, a Norwegian start-up sponsored by Innovation Norway, shows how the process works at the company level. Founded with the name Creaza in Oslo in April 2011, the company’s focus is on video editing tools for the education market. It entered the Plug and Play Accelerator in June 2011, and in September, at the end of its acceleration program, became a Plug and Play EXPO winner. Creaza decided to remain at the center, changed its name to WeVideo, and partnered with YouTube in the fall of 2011. The following spring it partnered with Disney to promote The Avengers movie. In May 2012, WeVideo raised $19.1 million in Series A funding.

Now Plug and Play is building a larger bridge to Europe through Plug & Play Accelerator Spain, launched in Valencia in 2012, and the Axel Springer Plug & Play Accelerator, launched in Berlin in 2013. In addition to office space, support services in Berlin include coaching, and seed investment of 10,000 to 50,000 euros in exchange for a 5 percent equity share in the company.

The next expansion could be in Italy through a presence in Milan and Naples, mirrored by an Italian pavilion at Plug and Play Tech Center in Silicon Valley. Supported by both public and private sector partners, the Italian initiative is expected to launch in 2014. The Enterprise Estonia office in Silicon StartupLatvia, an independent was subsequently sold to Citrix in 2012. Valley, established in 2007, is one of 10 organization, supports the development FROONT, a web design site with roots worldwide outposts sponsored by the of technology and capital connections in Latvia, has a team of six distributed Estonian government to support trade, between Latvia and Silicon Valley, across San Francisco, Finland and investment, innovation and tourism. It including an annual study tour to Silicon Latvia. Mobile payments firmFortumo focuses primarily on connecting Estonian Valley by tech and IT startups. has roots in Estonia, with teams in San start-ups and universities with Silicon Francisco, China and India. Prezi, an Valley resources, and on promoting entrepreneur profiles Internet collaboration and presentation Estonia as a place to do business. In Whether through accelerators or company founded in Hungary, is now addition to arranging study tours to meet independently, European entrepreneurs based in San Francisco and was named with Estonian companies, start-ups and and start-ups are connecting to the one of PC Magazine’s Top 100 Websites government officials, it plays virtual host region in large numbers. Though too for 2012 and Time Magazine’s 50 Best to Tallinn University of Technology, numerous (and fluid) to list, some Websites for 2012, and received the which through Enterprise Estonia has examples are indicative of their range Deloitte 50 Rising Star Award in 2011 developed connections with Stanford, UC and business models. and the European Seal of e-Excellence Berkeley and San Jose State University. Platinum Award in 2010. Vivino, a 53 Among other programs, Tallinn Tech ProxToMe, based in San Francisco Nordic startup that allows access to a sponsors two training programs for but financed from Italy, allows file and database of information on 500,000 Estonian start-ups in Silicon Valley document sharing between mobile wines by photographing labels, is each year, which include meetings devices in close proximity. Zendesk, a one of four portfolio companies in the at universities and with companies, cloud-based customer service software region supported by Swedish venture such as Facebook and Google, and the company moved to San Francisco firm Creandum. Popular music sharing opportunity to make investor pitches. from Denmark in 2009 and was one of site Spotify, which is based in Sweden, Through Enterprise Estonia or incubators the first companies to move into the opened a five-person office in San and accelerators such as 500 Start-ups city’s tech-oriented Mid-Market area. Francisco in 2011 and is continuing to and AngelPad, numerous Estonian start- Podio, a Copenhagen-based online expand. Other noteworthy European ups (ERPLY, Zerply, Import2, Pipedrive, project management platform opened startups include UStream (Hungarian), Fortumo, Marinexplore, Click & Grow, an office in San Francisco in 2011 and UXPin (Poland), and SoundCloud Guardtime) have successfully taken root (Germany). in the region.

Holland in the Valley, supported by the Consulate General of the Netherlands and a network of Dutch professionals and business leaders, organizes networking events, live and online forums, and an the nordic connection annual four day bootcamp for Dutch entrepreneurs. Silicon Vikings began sixteen years ago as a group of Swedish technology workers who met to share experiences. Speakers were invited and eventually colleagues Support for startups and early-stage from other Nordic countries joined. In 2011 they decided to take the relationship to companies also comes from investor the next level by focusing not just on Nordic-to-Nordic connections within Silicon groups with a targeted focus on Europe. Valley, but on Silicon Valley’s connection to Nordic and Baltic countries (Sweden, SVG Partners, with links to Silicon Norway, Denmark, Iceland, Finland and most recently Estonia). Valley’s Irish Technology Leadership Group, supports Irish startups seeking The group has several focal points: 1) working groups in life sciences, mobile, social to scale up. The Silicon Valley Greek media, and cleantech; 2) communication of developments in Nordic and Baltic Seed Funding Group, supported by a countries to Silicon Valley, and of developments in the Valley to Scandinavian and network of Greek CEOs, executives, Nordic countries; and 3) collaborative projects. Silicon Vikings organizes events engineers and scientists and Greek Angel (more than 80 in 2013) and hosts visiting Nordic start-ups, working with partners Investors, provides mentoring and seed such as Innovation Denmark and Innovation Norway. funding to Greek and Greek-American entrepreneurs. A growing franchise, Silicon Vikings now has chapters on Oslo, Stockholm and Copenhagen, with 5,000 members divided equally between the Bay Area and Northern Europe. Seventy volunteers support its activities, including an annual Nordic Entrepreneur of the Year Award (in 2013 the award went to Peter Vesterbacka, creator of Angry Birds, the world’s number one paid app) and a “Nordic pitch night” held every 4–5 weeks to present visiting Nordic start-ups. The following case studies provide a Out of the incubator now, he is back in The company works in the big data deeper look at European start-ups and Italy, but traveling frequently to the Bay space, using a graph database based on their Bay Area connections. Area. Investors, he notes, say that if a how the human brain works to rapidly company wants to raise funds here, it structure information. It currently has 60 in3Dgallery needs to be here. That is not so easy, employees around the world, including Francesco Marcantoni, CEO however, considering the difficultly 25 in San Mateo. Product development of in3Dgallery, Inc., began his entrepreneurs have obtaining visas. With and engineering are done in Europe, with entrepreneurial career in Arrezzo, Italy as the company incorporated in the US, his commercial functions (customer-centric a co-founder of Esimple, which in 2008 plan is to develop partnerships in the Bay engineering, management, business became the first company to conduct Area and raise money both here and in development and marketing) handled in e-commerce in 3D. The system allows Italy, noting that the experience of having the US, unlike many European start-ups, customers to virtually see how furniture been in the Bay Area provides validation Eifrem was not involved with a Bay Area would look in their homes or apartments, that helps with fundraising at home. incubator—he just came. He notes that creates an estimate, and places orders it is easy to start a company in both the directly with the factory. As the company Reflecting on the reasons he came to Bay Area and Sweden, and that there 54 grew, it started producing custom San Francisco, Marcatoni points to are some good Swedish venture capital products for clients, including Italian fundraising but thinks more broadly. firms that can write checks for 2–5 furniture maker Natuzzi, a world leader Starting a company is much easier in million euros. What is different about in leather furniture. In stores where the the US than in Italy, he says, requiring the Bay Area is its center of gravity and system was rolled out, revenues spiked less time and money, and the market access to capital, which is hard to find in 20 percent. Rollout in the US began in has scale that is difficult to replicate Europe. While high-quality engineers in January 2013. elsewhere. Also in Europe, investment Europe are plentiful, according to Eifrem, tends to be nationally focused, not “Silicon Valley is also mind-blowing In the summer of 2012, Marcatoni pan-European, which further limits for non-engineering roles. It’s almost launched in3Dgallery, winning a opportunities. For the future, he hopes impossible to find world-class heads of competition in Italy to come to the Bay to have both a Bay Area company that marketing or business development in Area. In3Dgallery’s goal is to expand focuses on marketing and business Sweden, while there is a much higher on the model developed for Natuzzi, development, and a company in Italy density here in the Valley. The region has to build a scalable 3D application for (where talented workers are plentiful at least an order of magnitude advantage commercial presentations. More than and costs are lower) to focus on product in access to world-class talent and has 250 companies competed, of which five development. a willingness to share. When you add were selected. The winners came to Mind those factors together it’s an explosive the Bridge, a San Francisco incubator neo technology combination. You can’t find it anywhere formed in 2009 to introduce young Italian Following a different path from European else on this planet.” companies to the Bay Area. In 2013 start-ups that remain based in Europe, Mind the Bridge’s scope of support for Swedish entrepreneur Emil Eifrem moved bSafe (bipper inc.) its companies expanded, with awards the headquarters of Neo Technology bSafe started in Norway in 2006 as the of $35,000 in return for a 5 percent to the Bay Area in 2011 in the belief brainchild of Silje Vallestad, a mother share of equity. Marcantoni came to San that his company would have a greater who wanted a better mobile safety device Francisco for a three-month residence, chance of success here. In the process, for her children. The result was a cell during which he and the other awardees Neo Technology switched from being a phone-based application, which turns were familiarized with issues such as Swedish company with a US subsidiary to a smartphone into a safety device by incorporation, immigration, intellectual a US company with a Swedish subsidiary. allowing a designated personal network property, accounting requirements, and Explaining his strategy, Eifrem observes, to trace the user’s movement and fundraising. “There is a center of gravity for every respond to emergencies. After launching industry—a nucleus of talent and in Norway, it was clear to Vallestad that expertise. For software it’s in the Valley. it would be difficult to build a global You can start a great company anywhere service from a small country. Looking to in the world, but it’s like running uphill scale up, she moved to the Bay Area in or downhill—you can expend the same 2012, landing initially at the Norwegian amount of energy but get farther. We want to reduce friction, and Silicon Valley is a very low friction place to get a commercial venture off the ground.” incubator Norway House in Palo Alto, organizations take better advantage of huddle which has also provided two start-up their scale by paying their suppliers earlier Huddle, which produces business grants. Since then bSafe has grown, in exchange for discounts, enabling small collaboration software, launched in moving out of Norway House to a new company suppliers to benefit through London in 2007, with initial funding office with nine employees. Most of the improved liquidity. Since then, Taulia has from London venture capital firm Eden company’s operations are in the process received three rounds of funding from Ventures. This was followed by a second of being moved from Norway to the Bay Matrix Partners, a venture firm with offices round of funding from Matrix Partners, Area, but its workforce remains global. in Boston and the Bay Area. a US venture firm based in Boston and Most key personnel (management, the Bay Area. With encouragement from technology and product development, Of the company’s 100 employees, 70 are its investors, who believed that Huddle data analysis and marketing) are now in in the Bay Area, 20 in Park City (Utah), five had global potential, the company set the region, while most of the company’s in Austin, and five in Frankfurt, Germany. up operations in the Bay Area in 2010. It developers are largely in the Ukraine Three of its founders now live in the Bay remains headquartered in the UK, with a (Kiev). The company has raised capital in Area, and approximately half its workforce US subsidiary. Founder Andy McLoughlin Norway, but has yet to approach funders comes from Europe. Unlike most other notes that not every start-up business in the US. European start-ups in the region, Taulia needs to come to the Bay Area: “If you are 55 decided to concentrate its engineering building software for a particular industry The company remains headquartered in the US, though it expects to outsource it may not be necessary, but if you are in Norway with a US subsidiary. Asked more to Europe in the future. building broader platforms, you should be about factors influencing bSafe’s here.” Huddle’s operations are based near success, Vallestad credits the support The company’s 40 customers include a San Francisco’s Moscone Center. provided by Innovation Norway. range of Fortune 500 companies: PG&E, Turning to the Bay Area, she notes the Agilent, John Deere, Coca Cola, Tyson challenges: employee loyalty is not high Foods, Zappos, Warner Brothers and and competition for talent is fierce, so Pfizer. With its initial focus on North it is hard to keep developers. Also, as American markets, most customers are in Norway, costs in the Bay Area are in the US, but Taulia is starting to gain high. On the up-side, when it comes to European customers as well. Asked raising capital, being in the Bay Area can why the company is in the Bay Area, be critical: “Not many VCs here invest Ament says, “Finding co-founders, first in companies outside the US, at least employees, and engineering talent is not until you reach a certain size.” And unparalleled here,” adding that angel the playing field is large: “Norway is and venture capital is scarce in Europe, tech-oriented and a great place to try making it difficult for start-ups to find an idea, but is too small a place to scale investment. The Bay Area’s downside, internationally. At some point you need he says, is cost and competition: “It’s to be in a big market.” an expensive place, and competition for talent is high.” Federal caps on H-1B visas taulia is also a problem, as start-ups have to German entrepreneur Marcus Ament came compete with much larger companies to San Francisco in 1998 from Frankfurt, that take the lion’s share of the talent with the plan of returning in several inventory. It is also more difficult to years. Instead he chose to stay. In 2009 start a company than it should be—but he founded Taulia, his second start-up, a much easier than in Europe. In the end, software company that helps large buying the big difference is culture: “People in the Bay Area are more into technology, into software, into start-ups. This is a good environment for people to thrive. It inspires people.” 10 growing future connections

With this strong base of collaboration As tariffs with the EU are already The goal of the US and the EU is to and cross-investment, several policy low (around 4 percent), the biggest complete the negotiations by 2015. The options present themselves for building opportunity presented by TTIP lies in Obama Administration has also proposed deeper connections between the Bay the area of regulatory standards. Both legislation granting the executive Area and Europe. the US and Europe have well-developed branch Trade Promotion Authority regulatory systems, that in various (TPA) to enable it to negotiate trade 56 the trans-atlantic trade cases may differ in their approach. The agreements with foreign counterparts and investment partnership harmonization of standards, with mutual and submit them to Congress for Negotiations were launched in the recognition of regulatory inspections approval through an up-or-down vote summer of 2013 on the Trans-Atlantic and approvals (eliminating the need for (i.e., without amendment). TPA, which Trade and Investment Partnership duplicative product inspections in Europe has been available to US administrations (TTIP), which if successful will create and the US) would reduce friction in the in the past but has since expired, is the world’s largest free trade zone by trading system and significantly lower seen by trade advocates in Europe as reducing trade and investment barriers costs for producers and consumers on critical to the successful conclusion of between its two largest economies—the both sides of the Atlantic. such agreements, as it would preclude United States and the European Union, re-negotiation of carefully balanced which together account 45 percent of Another trade-related issue, that may agreements through the legislative world GDP. The talks are seen in Europe or may not be addressed through TTIP, process after they are submitted to as a way to jump-start a slow economy concerns content restrictions and data Congress for approval. through wealth creation and regulatory privacy concerns impacting US tech streamlining. companies and online service providers A study by the Atlantic Council, the such as Google (which currently Bertelsmann Foundation and the British The negotiations will be complex, as a handles 90 percent of European Internet Embassy in Washington finds that a successful result will require agreement searches). Privacy, particularly of successful TTIP will support more than not just between the US and the EU, personally-identifiable data, is a rapidly 740,000 new US jobs. This estimate is but within the EU’s membership. In growing practice area for law firms that based on a 100 percent reduction in trans- the process, a range of difficult issues support tech companies. In 2013 the EU Atlantic tariffs, a 35 percent reduction in will have to be addressed, including adopted a data-privacy directive modeled costs resulting from non-tariff regulatory agricultural markets and protection on Germany’s privacy law, which is to be barriers, and a 50 percent reduction in (European barriers are high); intellectual applied by EU members. In response, procurement barriers. property (e.g., pharmaceuticals and the US government has negotiated music); banking rules; culture (France a framework that will help large US According to the same study, California subsidizes its film industry and companies comply. Some in Europe have would lead the nation in the number requires that 40 percent of television proposed that Internet companies be of new TTIP-related jobs, adding programming be produced in France; required to locate data centers handling an estimated 75,000. Successful online film distribution is an emerging domestic data within national borders implementation of TTIP would increase issue); government procurement where data would be more subject to California exports to the EU by 26 (European companies would like full national government control. Recent percent. The top sectors by export access to procurement by state and local disclosures of NSA data gathering have increase would be motor vehicles governments in the US, which currently added fuel to the debate. US companies, ($3.3 billion), chemicals ($3.2 billion), lie outside federal jurisdiction); and the primarily from the Bay Area, harbor electrical machinery ($2.2 billion) and Jones Act (a US law that permits only US strong concerns that such moves could metals and metal products ($1.3 billion). vessels to carry cargo between US ports.) restrict the free flow of information, The leading sectors for job growth would balkanize the Internet by reducing net be business services (15,752), financial neutrality, and undermine its potential as services (1,543), non-electrical machinery an open global platform for innovation manufacturing (1,395) and metals and and commerce. This is also seen as a metals products manufacturing (1,187).30 potential trade barrier. estimated percentage increase in individual state exports to the EU postimplementation of an ambitious TTIP

wa vt 0–30 26 42 me mt nd 24 30–60 19 18 or mn nh 60–90 24 id 39 ny 26 sd wi ma 24 24 29 wy 20 29 mi ri 90–120 95 30 14 ia pa nj 30 120–150 nv ne 27 33 ct 15 in oh 14 ut il 32 de 23 150–180 co 31 33 wv 26 ca 64 va 20 ks mo ky 7 25 md 44 180–210 26 23 23 37 nc dc 57 29 ok tn 35 az nm ar sc 21 22 22 27 187 al ga ms 32 27 138 tx la 24 21 ak 9 fl 30

hi Data Source: Atlantic Council, Bertelsmann 10 Foundation, and the British Embassy in Washington, "TTIP and the Fifty States: Jobs and Growth from Coast to Coast": September 2013.

estimated increase in TTIP-reliant jobs by state (number)

wa vt 0k–10k 17 2 me mt nd 3 10k–20k 2 2 or mn nh 20k–30k 9 id 15 ny 4 sd wi ma 3 51 18 wy 2 14 mi ri 30k–40k 18 3 1 ia pa nj 34 40k–50k nv ne 8 22 ct 5 in oh 14 ut il 27 de 9 50k–60k co 30 14 wv 2 ca 7 va 13 ks mo ky 4 21 md 14 60k–70k 75 7 14 9 nc dc 23 70k–80k ok tn 13 az nm ar sc 9 17 5 6 10 al ga ms 25 6 9 tx la 68 10 ak 2 fl 48

hi Data Source: Atlantic Council, Bertelsmann 3 Foundation, and the British Embassy in Washington, "TTIP and the Fifty States: Jobs and Growth from Coast to Coast": September 2013. US immigration policy The better-known H-1B visa for skilled california regulatory Current visa and immigration policy and professional workers is limited by issues unnecessarily restricts business a quota, which opens for applications Regulatory cost and inefficiency burdens development and the creation of on April 1 of each year for a start date companies from overseas as well as economic value between the United the following October 1 and is normally local ones. Complexity caused by the States and Europe. Two areas of filled within days. With demand far volume as well as the overlapping and particular concern are 1) caps on visas exceeding supply, many applicants uncoordinated nature of California (as for high-skilled workers, and 2) the lack are shut out. Within the available pool well as federal and local) regulations of a visa category geared specifically to of H-1Bs, entrepreneurs and small poses particular challenges for start-ups. businesses have to compete with large companies from abroad. A range of multinational corporations that absorb labor, commercial, environmental The founder of the the Bay Area the lion’s share of visas available. Recent and other regulations come into play, incubator RocketSpace sees many proposals to increase the number of as well as Worker’s Compensation. companies from overseas leaving H-1B visas come with more onerous Complexity at the state level can be because of visa issues: “Most procedural requirements, further limiting further compounded by regulations 58 entrepreneurs in the world know this is the viability of H-1Bs for entrepreneurs authored by the region’s patchwork of the best place to start a business, and and small investors. Attorney fees, local jurisdictions. In addition to issues many more would come if it weren’t for necessitated by the complexity of the of transparency, the absence of a single the visa barriers. But 90 percent know application process, can be large and point of entry or a one-stop process it’s not worth trying.” when added to the cost of the visa itself for regulatory review and approval can can push smaller companies away to more inhibit new investment and business The Visa Waiver Program (VWP) used by welcoming jurisdictions such as Canada. creation, with negative implications for many businesses, allows for a maximum jobs and growth. State government, entry of 90 days at a time. Since it is not In addition to more H-1Bs, the US needs through the Governor’s Office of Business extendable inside the US, it requires a visa category specifically tailored for and Economic Development (GoBiz), frequent return trips to Europe to renew entrepreneurs from overseas that would could potentially address this situation. the status. allow for more extended stays and City governments can provide similar increase the likelihood of their attracting support at the local level. The B-1 Business Visitor Visa is broadly capital investment and establishing available worldwide and can support permanent roots in the US. Taxation is another issue. The average admissions for more than the 90 effective rate of taxation is higher days permitted under the Visa Waiver As suggested in recent testimony in California than in many European Program. However, like the VWP, no before the California State Legislature, countries. While the average tax productive US employment is permitted. state government could also help burden in Germany, for example, is 29.8 entrepreneurs from Europe and percent, in the US the federal average The L-1 Multinational Manager, Executive, elsewhere who need visas, by providing is 39.6 percent. California tax comes or Specialized Knowledge Worker Visa letters of support to the examining on top of that, and is not covered by a can be used by entrepreneurs, small officer reviewing the application—a double taxation treaty. Federal treaty businesses or large companies with service that could potentially be provided law prevents income from being taxed foreign affiliates. The new Office L-1 can by the Governor’s Office of Business and twice, but it does not cover states. So be used when opening a business in Economic Development (GoBiz).31 companies operating in California and the US that shares majority ownership Germany can be taxed in both places. with a foreign entity. But its one-year With that and comparatively high duration is often insufficient to get personal tax rates, the inducement grows US operations off the ground, and for companies that do not strictly need to extensions can be difficult. The E-2 Treaty be in Silicon Valley or California to locate Investor Visa can be used by investors. in lower-tax states. The minimum $100,000–200,000 required to qualify, however, may be more than entrepreneurs from oversees have available to invest or is in some cases more than they need to start the business. The time required to apply for and process the visa can also extend to several months or more, complicating business planning and potentially discouraging the investment. entrepreneurial links: an That road can lead back to the Bay Area. emerging bi-national model Arguably, if more initial entrepreneurial European start-ups, like others from training and support can be done in around the world, do not necessarily Europe, European start-ups coming to come to the Bay Area to relocate, but the Bay Area will be better prepared instead come to access capital, develop to put their new skills to work in the partnerships, identify customers, and region’s richly networked environment. scale their companies in the US market. More mature, better-prepared start-ups Many in the end become bi-national, coming to the Bay Area are more likely to with management in the region and succeed. engineering teams at home that are connected in their national markets. On the investment side, young companies in Europe and the US could The landing platforms developed in the be partnered at an early stage, enabling Bay Area by a range of European entities European startups to move to more play an important role in introducing efficiently tap into US investment, and 59 the companies they host to potential at the same time, help US startups US partners. Sometimes the mentors establish an early foothold in Europe. and connections they provide are drawn primarily from fellow nationals, which can be a limiting factor. Broader connections to the business and investor community are important.

Bay Area incubators and accelerators can also play an expanded role through European extensions. This is happening with Rocketspace, which plans to open in London in 2014, and Plug and Play Tech Center, which is operating in Valencia and Berlin and is also considering a presence in Milan and in Naples. appendix a: interviews and John Heinlein, Vice President Corporate Richard Pivnicka, Honorary Consul, informational support Marketing, ARM Czech Republic James Herlihy, Chairman, Mark Plakias, Vice President Knowledge Bernhard Abels, Deputy Consul General, San Francisco-Cork Sister City Committee Transfer, Orange Consulate General of Germany Sergio Herrero, CEO, L’Atelier and Caroline Raynaud, Executive Director, German- Julius Anderegg, Consul General, Senior Vice President BNP Paribas American Business Association (GABA) Consulate General of Switzerland Jeff Hoglind, Manager International Katharina Rock, SVP Solution Validation, Julius Anderegg, Consul General, Airport Development, SFO SAP Labs Consulate General of Switzerland Roman Horacek, Head of Mission – Sten Rosnes, Consul General, Paolo Barlera, Acting Director, West Coast, CzechInvest Consulate General of Norway Italian Cultural Institute Sanita Laivina, Latvian Economic Peter Rothen, Consul General, Mauro Battocchi, Consul General, Development Agency/Startup Latvia Consulate General of Germany Consulate General of Italy Domenico Laudonia, Italian Angels Camilla Rygaard-Hjalsted, Executive Director, Grazia Bennett, Board of Directors, for Growth (Milan) Danish Innovation Center Bay Area Italy Association (BAIA) 60 Burton Lee, Lecturer, Stanford Engineering Georges Schmidt, Consul General, Arthur Bienenstock, Wallenberg Research Link, School and Managing Director, Consulate General of Luxembourg Stanford University Innovarium Ventures Michal Sedlacek, Consul General, Tom Bishop, Executive Chairman of U.K., Karsten Lemm, Business & Technology Consulate General of the Czech Republic (LA) Europe & India, URS Corporation Correspondent, Stern Magazine Simon Segars, CEO, ARM Colin Brown, Chairman, British-American Pierre-Yves Lesaicherre, CEO, Philips Lumileds Business Council Romain Serman, Consul General, Anne Lidgard, Silicon Valley Director, Consulate General of France James Briski, SVP-Regional Commercial Swedish Government Agency Michael Shepherd, Chairman & CEO, Executive, HSBC Bank USA for Innovation Systems (VINNOVA) Bank of the West Elizabeth Cho, Siemens Duncan Logan, Founder & CEO, RocketSpace Christian Simm, CEO, Swissnex Phil Cox, President of UK Branch, Chantel Mandel, Director Public Policy & Alex Simonini, Vice President, Silicon Valley Bank Communications, Bayer Health Care Scottish Development International Adiba Cremonini, Executive Director, Francesco Marcatoni, CEO, in3Dgallery Silicon Vikings Conrad Smith, Vice President Sales – Adriano Marconetto, ProxToMe, Inc. Western Zone, Philips Lumileds Emil Eifrem, CEO, Neo Technology Betsy Masiello, Global Public Policy, Google Annika Steiber, Vice-Chair, Silicon Vikings Mohannad El-Khairy, Operations Manager, Plug and Play Tech Center Jaclyn Mason, Trade & Investment Consul, Corrado Tirassa, Italian Angels for Growth British Consulate General, San Francisco (Milan) Rocio Esteve, President, California-Spain Chamber of Commerce Andy Mcloughlin, Cofounder and Andy Tsao, Managing Director, EVP Strategy, Huddle Silicon Valley Bank Iben Falconer, Business Development Manager, Bjarke Ingels Group Lucie Merkle, Executive Director, Silje Vallestad, Founder and Chief Safety Officer, Invest in Bavaria Bipper Communication AS Kristina Garcia, Managing Director, German State of Hessen (United States) Jorge Montealegre, Consul General, Bart Van Bolhuis, Consul General, Consulate General of Spain Consulate General of Netherlands Angelika Geiger, Director, Germany Trade and Invest Thomas Mortensen, MVA Ambassador – West Rene van den Hoevel, Executive Director, Coast North America, Medicon Valley Alliance German-American Chamber of Commerce Corey Goodman, CEO, VenBio (Denmark/Sweden) Andrus Viirg, Director, Stephen Goodman, Senior Vice President, Nikolaus Mueller, Vice President, Pipeline & Enterprise Estonia Silicon Valley Continuum Innovation LLC Portfolio Management, Bayer Health Care Uwe Wagner, Principal, Tiburon Consulting Olaf Groth, CEO, Emergent Frontiers George Nahon, CEO, Orange Silicon Valley Group LLC Nils Welin, President, Fernando Napolitano, President & CEO, Swedish-American Chamber Priya Guha, Consul General, Consulate General Italian Business & Investment Initiative of the United Kingdom Sophie Woodville, Executive Director, Thomas Neubert, Vice President Business French-American Chamber of San Francisco Oliver Hanisch, Vice President & Co-Founder, Development and Training, Deutsche Telekom German Silicon Valley Accelerator Chenyang Xu, Executive Director, Robin Newman, Consulate General of the Siemens Technology-to-Business Center John Hartnett, President, United Kingdom Irish Technology Leadership Group Daniel Zimmerman, Partner, Barbro Osher, Honorary Consul, Sweden Transactional Department and Corporate, Paraic Hayes, Vice President, IDA Ireland Emerging Company and Venture Capital Jeffrey Pennington, Co-Director, European Practice Groups, WilmerHale Conor Healy, CEO, Cork Chamber (Ireland) Center of Excellence, UC Berkeley John Zysman, Co-Director, Berkeley Roundtable Joerg Heidrich, Global Head Product Corrine Pereira, Consulate General of France Supply Biotech & Berkeley Site Head, on the International Economy, Bayer Health Care Barbara Pivnicka, Honorary Consul, Slovakia University of California Berkeley appendix b: Duan, Mary. “San Jose Engineering Firm Bought Older, Jules. “Valley’s Annex Across the by Irish Giant”, Silicon Valley/San Jose Business Atlantic.” San Francisco Chronicle. references Journal, October 1, 2010. January 6, 2014.

Duan, Mary. “Incubator Offers Advice, Services Petrillo, Stephanie. “Energy Biosciences Bay Area Council Economic Institute. The Bay to Irish Eying Silicon Valley.” Silicon Valley/San Institute granted patent for biofuels.” The Daily Area: A Regional Economic Assessment. Jose Business Journal. October 1, 2010. Californian. June 9, 2013. October 2012. Embassy of Sweden. Swedish Companies Create Pinney, Thomas. A History of Wine in America. Bertelsmann Foundation, The Atlantic Council, Jobs in America: A Look at Swedish Economic Berkeley: University of California Press, 1989. and British Embassy Washington. TTIP and the and Business Ties with the United States. Fifty States. Washington DC: September 2013. Riddell, Lindsay, “Nordic Tech Invasion”, San Washington, D.C.: Embassy of Sweden, 2013. Francisco Business Times, September 28, 2012. Blackstone, Brian, Prussini, Ganbriele, and Energy Biosciences Institute, Bjork, Christopher. “Europe’s Recovery Rohrbaugh, Malcolm. Rush to Gold: The French http://energybiosciencesinstitute.org. Improves, Slightly.” Wall Street Journal, and the California Gold Rush, 1848-1854. February 15, 2014. Erikson, Fredrik. EU Policies on Yale University Press, 2013. Entrepreneurship: Conversations With U.S. Brands, H.W. The Age of Gold: The California Schubarth, Cromwell. “SAP Ventures plans to be Venture Capitalists. Occasional No. 2/2013, Gold Rush and the New American Dream. a disrupter, not disrupted, with new $650M to European centre for International New York: Doubleday, 2002. invest.” San Francisco Business Times. Political Economy, 2013. 61 October 2, 2013. California State Legislature, Hearing of the Forelle, Charles, Nina Adam and Ilan Brat, Senate Select Committee on California-European Schenchner, Sam. “Gallic War Rages for “Europe Heads Toward Recovery, but Slowly”. Trade, July 2, 2013. Startups.” Wall Street Journal. Wall Street Journal, August 8, 2013. December 10, 2013. C40 Cities Climate Leadership Group, French-American Foundation for Medical http://www.c40.0rg Smith, Joseph, Rodriguez, Rita and Valine, Research and Education. Sara. EU Entrepreneurs in the Silicon Valley: City and County of San Francisco, Office of http://ffmre.webdbs.net. Brain Drain or Brain Circulation. San Jose State Protocol. Register of Foreign Consulates Grundberg, Sven and Rolander, Niclas. University College of Business, 2012. in San Francisco, 2013-2014. “Tax Breaks Give Tesla Leg Up in Norway Startup Genome and Telefonica Digital, Cork Chamber. Corporate Partners 2013. sales”, Wall Street Journal, October 3, 2013. Startup Ecosystem Report, 2012. Cork Chamber. Economic Bulletin. Issue 14, Haraszthy, Agostin. Grape Culture, Wines, and Sun, Leo. “Why Google’s Acquisition of Deep April 2013. Wine-Making, with Notes upon Agriculture and Mind Should Scare Apple and Nuance”. Horticulture. New York: Harper and Brothers, Motley Fool. January 28, 2014. Cornell University, INSEAD, and World 1962. Intellectual Property Organization. Walker, Marcus and Charles Forelle. “Europe’s The Global Innovation Index 2013. Kamiya, Gary. “A Party in Swanky South Park Economy Starts to Grow”, Wall Street Journal, That Got Quite a Bit Too Hearty”. August 15, 2013. Dalton, Matthew. “Planned EU-U.S. Trade San Francisco Chronicle, July 18, 2013. Deal Hits Snag on Cultural Issues.” Wall Street Wilson, Robert, San Francisco’s Foreign Journal. June 13, 2013. Kennedy, John. “ITLG creates a Euro 25m Colonies: No. 5 – The French, Global Irish Pledge Fund to scale up startups.” http://wwwsfgenealogy.com. Dalton, Matthew. “Tepid Growth Ahead for www.siliconrepublic.com. July 10, 2013. Euro Zone.” Wall Street Journal. November 6, World Economic Forum. Enhancing Europe’s 2013. Krouse, Sarah. “Tech Sector Puts Dublin Back in Competitiveness: Fostering Innovation-Driven Demand.” Wall Street Journal. February 5, 2014. Dalton, Matthew. “Focus on Regulations Rather Entrepreneurship in Europe. Insight Report, Than Tariffs.” Wall Street Journal. Lee, Stephanie. “Zosano, Novo Nordisk OK January 2014. November 11, 2013. Deal for Microneedle Patch.” San Francisco Chronicle, February 6, 2014. Delahanty, Randolph and Sexton, Richard. In the Victorian Style. San Francisco: Chronicle Lynch, Shana. “Tesla’s planning a massive Books, 1991. battery factory, and 4 other takeaways from the earnings call.” San Francisco Business Times. Dineen, J.K. “Sign of the times: Finnish gaming November 6, 2013. group grabs top of BofA tower.” San Francisco Business Times. December 5, 2013. Ministry of Foreign Affairs and Cooperation, Government of Spain. Spain’s Positioning. Donato-Weinstein, Nathan. “Ericsson eyes huge July 2013. lease at Irvine Co.’s Santa Clara Speculative Project.” Silicon Valley Business Journal. O’Hear, Steve. “Designers Rejoice, Froont Wants March 4, 2014. to Keep Developers Out of the Responsive Design Process.” Tech Crunch, May 6, 2013. Dowling, Patrick. Irish Californians. San Francisco: Scottwall Associates, 1998. appendix c: business Innovation Centre Denmark http://icdk.um.dk/ appendix d: development and support en/about-us/innovationcentres/siliconvalley/ methodology organizations Innovation Norway & Innovation House geographical definitions Silicon Valley: http://innovasjonnorge.no/no/ Europe: This region is defined as all European Accio - Silicon Valley: http://accio.gencat.cat/ Kontorer-i-utlandet/usa-sanfrancisco/, http:// Union member countries as of 2013 and offices/siliconvalley/en/index.jsp innovationhousesf.wordpress.com/about/ the member countries of the European Free Trade Agreement. Specifically, this includes: Bavarian U.S. Offices for Economic Invest Northern Ireland: Austria, Belgium, Bulgaria, Croatia, Cyprus, Development, LLC (West Coast Division): http://www.investni.com/ Czech Republic, Denmark, Estonia, Finland, http://www.bavaria-westcoast.com/ Irish Technology Leadership Group (ITLG): France, Germany, Greece, Hungary, Iceland, BelCham Bay Area: http://itlg.org Ireland, Italy, Latvia, Liechtenstein, Lithuania, http://www.belcham.org/bay-area Luxembourg, Malta, Netherlands, Norway, L’Atelier: http://www.atelier.net/en/about/latelier- Poland, Portugal, Romania, Slovakia, Slovenia, Belgian Trade Commission-Wallonia Investment san-francisco Spain, Sweden, Switzerland, and the United and Trade Office in San Francisco: Latvian American Business Association in Kingdom. In some cases, due to limitations of http://www.belgiantrade.org/sanfrancisco California (LABACA): the data source, the analysis is limited to the BootstrapLabs: http://bootstraplabs.com/ http://labaca.org/index.php?lang=en-US European Union.

62 British-American Business Council: London & Partners: Bay Area: The definition of the Bay Area can http://www.babc.org/ http://www.londonandpartners.com vary based on the data source. In most cases, the region is defined as the nine counties of Alameda, Brussels Invest & Export: Medicon Valley Alliance: http://www.mva.org/ Contra Costa, Marin, Napa, San Francisco, http://www.invest-export.irisnet.be San Mateo, Santa Clara, Sonoma, and Solano. Mind the Bridge: http://mindthebridge.org/ This definition is utilized with following data Business Association Italy America: Orange Silicon Valley: sources: US Census, US Patent and Trademark http://www.baia-network.org/ http://orangefab.com/about-orange/ Office, IPEDS, and Uniworld. Trade data from California-Spain Chamber of Commerce: Thomson Reuters defines the Bay Area as US Paris Region International Mission Enterprise http://www.californiaspainchamber.org/ Area Codes 408, 925, 707, 415, 510, and 650. http://www.innovation-prime.com/ US Trade Online defines the Bay Area by the CzechInvest, www.czechinvest.org Plug and Play Tech Center: metropolitan statistical areas of San Francisco- http://www.czechinvest.org http://plugandplaytechcenter.com/ Oakland-Fremont, San Jose-Sunnyvale-Santa Enterprise Estonia, Silicon Valley: http://www. Clara, and Napa. RocketSpace: http://rocket-space.com/ investinestonia.com/en/estonian-investment- Foreign: all countries and territories outside of agency/contact-by-office-locations#california Runway: http://runway.is/ the 50 United States.

Enterprise Lithuania: Scottish Development International: http://sdi. Rest of Foreign: foreign countries excluding those http://www.enterpriselithuania.com co.uk/about-sdi/office-locations/usa-san-jose in the definition of Europe. European Entrepreneurship and Innovation Spain Tech Center—San Francisco: section 1 Thought Leader Program http://www.spaintechcenter.com/ Gross Domestic Product (GDP) Annual Growth http://www.stanfordentrepreneurs.org Startup Latvia: http://startuplatvia.eu/ Rate: Data covering annual GDP values is Europort: http://www.europort.org reported by the OECD’s StatExtracts tool. Values Swiss-American Chamber of Commerce are adjusted for inflation. The term, “European French American Chamber of Commerce: http://www.amcham.ch/chapters/p_chapter. Union,” as defined in this analysis includes 27 http://www.faccsf.com/ asp?chapter=San%20Francisco countries: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, German American Chamber of Commerce: SwissCom: http://www.swisscom.ch/en/ventures/ France, Germany, Greece, Hungary, Ireland, http://www.gaccwest.com/en/about-us/contact-us/ contact.html Italy, Latvia, Lithuania, Luxemburg, Malta, German Silicon Valley Accelerator: swissnex San Francisco: Netherlands, Poland, Portugal, Romania, Slovak http://germanaccelerator.com/ http://swissnexsanfrancisco.org/ Republic, Slovenia, Spain, Sweden and the United Kingdom. German-American Business Association The Swedish American Chamber of Commerce— (GABA): http://www.gaba-network.org/index. San Francisco/Silicon Valley (SACC-SF/SV): Unemployment: Data covering unemployment in php?option=com_content&task=view&id=27& http://sacc-sf.org/ the “euro area” (or “eurozone”) was provided Itemid=53 by the International Monetary Fund’s “World Vinnova: http://www.vinnova.se/en/EU-and- Economic Outlook Database.” The International Germany Trade & Invest: http://www.gtai. international-co-operation/International-co- Monetary Fund staff estimated data for 2013. de/GTAI/Navigation/EN/Invest/Investment- operation/ The term, “euro area”, is defined as the 17 consulting/Teams-and-offices/international- countries of Austria, Belgium, Cyprus, Estonia, offices,did=277474.html Wales Cymru: http://www.walesworldwide. org/2013/07/new-san-francisco-official-outlines- Finland, France, Germany, Greece, Ireland, Italy, Holland in the Valley, www.hollaninthevalley.org plans-to-promote-wales-in-one-of-the-worlds- Luxembourg, Malta, Netherlands, Portugal, http://www.hollaninthevalley.org most-influential-markets/ Slovak Republic, Slovenia, and Spain. Government Debt: Data covering government debt in the “euro area”(or “eurozone”) was provided by the International Monetary Fund’s “World Economic Outlook Database.” The International Monetary Fund staff estimated data for 2013. The term “euro Area” is defined as the 17 countries Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovak Republic, Slovenia, and Spain. section 2 Academic Achievement of STEM Workers: Global Collaboration: Patent data was provided European-Born Bay Area Residents: Data Data covering current location of residence, by the US Patent and Trademark Office, and covering current location of residence and occupation, educational achievement, and place consists of only utility patents. Analysis includes place of birth is from the American Community of birth is from the American Community Survey all patents with an inventor from the Bay Area, Survey three-year estimates and the 2000 U.S. three-year estimates and the 2000 US Decennial regardless of inventor number, and at least one Decennial Census. Six European nations included Census. The category “Some College” is a from a foreign country. in this report’s definition of “Europe” were not combination of the educational designations: European Collaboration: Patent data was reported in the data and were thus excluded. The “some college, but less than one year,” “1 or provided by the US Patent and Trademark Office, combined reporting of the Czech Republic and more years of college credit, no degree,” and and consists of only utility patents. Analysis Slovakia also includes survey respondents who “associate’s degree.” includes all patents with an inventor from the claimed Czechoslovakia as their place of birth. Top Fifteen STEM Occupations: Data covering Bay Area, regardless of inventor number, and at Educational Attainment Age 25 and Older: Data current location of residence, occupation, and least one from a European country. covering current location of residence, place place of birth is from the American Community Patent Registrations by Technology Area (patents of birth, and educational attainment is from Survey three-year estimates. Occupations that with Bay Area and European Co-Inventors): the American Community Survey three-year did not exist and had no comparable designation The US Patent and Trademark Office provided estimates and the 2000 US Decennial Census. in both years were eliminated from the analysis. data covering patent registration, location, Data includes all residents of the “Bay Area” and category. Registration counts include over the age of 25. The category “Some College” section 5 Bay Area Exports by World Region: The utility patents whose first named inventor is 63 is a combination of the educational designations: International Trade Association provides export from the Bay Area. The Category “Other” “some college, but less than one year,” “1 or data for predefined world regions based on the includes patents categorized as “Construction more years of college credit, no degree,” and port region of origin. The port region for this & Building Materials,” “Ammunition & “associate’s degree.” analysis was the “San Francisco Bay Area,” Weapons,” “Nuclear,” “Apparel, Textiles & section 4 defined in the geographic definitions section of Body Adornment,” “Dispensing & Material Handling,” “Transportation/Vehicles,” and Occupational Share of Foreign-Born Talent: this appendix. “European Union – 27” excludes “Furniture & Receptacles” Data covering current location of residence, the Croatia, which joined in 2013. Dollar values were adjusted for inflation to the first half of employment status, occupation, and place of Patterns of Global Collaboration (2 graphs): 2013. birth is from the American Community Survey Patent data was provided by the US Patent three-year estimates and the 2000 US Decennial Individual US state goods and services and Trademark Office, and consists of only Census. “All occupations” excludes unemployed exports to the EU as a percent of total services utility patents. Analysis includes all patents respondents and any respondents under 14 years exports (2011, 2012): The Atlantic Council, with an inventor from the Bay Area, regardless old. the Bertelsmann Foundation, and the British of inventor number, and at least one from a European country. Only the top 14 countries are Foreign-Born Talent in the Bay Area: Data Embassy in Washington provided these maps. reported in this analysis, ranked by total patent covering current location of residence, count. occupation, and place of birth is from the section 6 Global Business Presence: Affiliate location data American Community Survey three-year is provided by the Uniworld database. Business section 8 estimates and the 2000 U.S. Decennial Census. presence is measured as the number of regional Private Equity and Venture Capital Investment Six European nations included in this report’s affiliates by HQ country of origin. One European Flows: Investment data from Thomson Reuters definition of “Europe” were not reported in the nation included in this report’s definition of includes annual private equity and venture data and were thus excluded. “Europe” was not reported in the data and was capital totals originating in the Bay Area and European-Born STEM Talent in the Bay thus excluded. invested abroad as well as the totals invested in Area: Science, Technology, Engineering, and the Bay Area originating in Europe. Values have European Business Presence: Affiliate location Mathematics (STEM) professions are defined been adjusted for inflation to 2012 values using data is provided by the Uniworld database. in terms of Census occupation codes (OCCP). the Bureau of Labor Statistics Consumer Price Business presence is measured as the number of These include all occupations with the three- Index. regional affiliates by HQ country of origin. letter prefixes CMM, ENG, SCI, and MED as section 9 well as four managerial professions: Computer Global Firms with Affiliates in the Bay Area by Sources of European Venture Capital and Venture & Information Systems Managers, Architectural Country and Industry: Affiliate location and Capital Funds Raised and Invested in Europe: The & Engineering Managers (Engineering Managers primary industry data was provided by the European Private Equity and Venture Capital before 2010), Medical & Health Services Uniworld database. Industries were combined Association provided data on capital raised and Managers, and Natural Science Managers. along broad NAICS category definitions. One invested in Europe. Data on capital raised and European nation included in this report’s Data covering current location of residence, invested in the Bay Area came from the National definition of “Europe” was not reported in the occupation, and place of birth is from the Venture Capital Association’s 2013 Yearbook. data and was thus excluded. Undisclosed firms American Community Survey three-year Values are expressed in US dollars, converted did not report an industry code in the Uniworld estimates and the 2000 US Decennial Census. The from euros. The exchange rate as of February database. combined reporting of the Czech Republic and 18th, 2014 (1 euro = 1.38 US dollars) was Slovakia also includes survey respondents who section 7 applied for the calculation. claimed Czechoslovakia as their place of birth. Patent Registrations: The US Patent and section 10 Trademark Office provided data covering Estimated Percentage increase in individual patent registration, location, and category. state exports to the EU post implementation Registration counts include utility patents whose of an ambitious TTIP: The Atlantic Council, first named inventor is from the Bay Area. The the Bertelsmann Foundation, and the British category Other includes patents categorized as Embassy in Washington provided this map. Construction & Building Materials, Ammunition & Weapons, Nuclear, Apparel, Textiles & Body Estimated increase in TTIP-reliant jobs by state Adornment, Dispensing & Material Handling, (number): The Atlantic Council, the Bertelsmann Transportation/Vehicles, and Furniture & Foundation, and the British Embassy in Receptacles. Washington provided this map. footnotes

11. Calculation based on data from the 22. Cornell University, INSEAD and WIPO. The 1. Shuman Declaration. European Union website. International Monetary Union for 31 countries Global Innovation Index 2013. http://europa.eu/about-eu/basic-information/ including the EU and EFTA members. symbols/europe-day/schuman-declaration/ 23. World Economic Forum. The Global 12. SF genealogy. “San Francisco Population” Competitiveness Report 2012–2013. 2. ECSC Treaty. European Union website. http:// http://www.sfgenealogy.com/sf/history/hgpop. http://reports.weforum.org/global- europa.eu/legislation_summaries/institutional_ htm competitiveness-report-2012-2013 affairs/treaties/treaties_ecsc_en.htm 13. Kamiya, Gary “A Party in Swanky South 24. World Economic Forum. Enhancing 3. For greater detail, see the History of the Park that got Quite a Bit Too Hearty”, San Europe’s Competitiveness: Fostering Innovation- European Union: http://europa.eu/about-eu/eu- Francisco Chronicle, July 18, 2013. Driven Entrepreneurship in Europe. Insight history/index_en.htm Report, January 2014. 14. Hennessey, Beverly. Images of America 4. Euratom. European Union website. http:// Hetch Hetchy, Charleston, South Carolina: 25. Startup Genome and Telefonica Digital, ec.europa.eu/energy/nuclear/euratom/euratom_ Arcadia Publishing, 2012. Print. “Startup Ecosystem Report 2012,” cited in Il en.htm Sole 24. March 2, 2014 15. Downey, Lynn “Levi Strauss: A Short 5. The European Free Trade Association, EFTA Biography” Levi Strauss & Co. Historian 2008. 26. Joseph Smith, Rita Rodriguez and Sara website. http://www.efta.int/ 64 Web. http://www.levistrauss.com/sites/default/ Valine, EU Entrepreneurs in the Silicon Valley 6. European Economic Area. The European Free files/librarydocument/2010/4/History_Levi_ Brain Drain or Brain Circulation, San Jose State Trade Association website. http://www.efta.int/ Strauss_Biography.pdf University College of Business, 2012. sites/default/files/documents/eea/1112099_basic_ 16. Levi Strauss & Co. 2012 Annual Report. 27. Lindsay Riddell, “Nordic Tech Invasion”, features_of_the_EEA_Agreement.pdf San Francisco, CA: Levi Strauss & Co, 2012. 7 San Francisco Business Times, September 28, 7. Elliott, Larry. “Eurozone hauled out of Feb. 2013 http://levistrauss.com/files/lsco/ar2012/ 2012. 18-month recession by Germany and France.” pdfs/levistrauss_annualreport_2012.pdf 28. Ibid. The Guardian. 14 Aug. 2013. http://www. 17. Snøhetta Website. theguardian.com/business/2013/aug/14/ 29. Cornell University, INSEAD and WIPO. http://snohetta.com/project/16- eurozone-recession-germany-france-crisis Global Innovation Index 2013. sfmoma-expansion 8. European Central Bank website. Press 30. The Atlantic Council, Bertelsmann 18. This compares to 50,725 weekly seats Release. Technical Features of Outright Foundation, and the British Embassy through Los Angeles; 20,715 through Vancouver; Monetary Transactions. 6 September 2012. Washington, TTIP and the Fifty States, 14,518 through Seattle; 2,051 through Portland http://www.ecb.europa.eu/press/pr/date/2012/ September 2013. and 1,925 through San Diego. html/pr120906_1.en.html 31. Testimony of Michael Ryvin, Of Counsel, 19. San Francisco International Airport. “Air 9. International Monetary Fund Website. E&M Maycock, before the Senate Select Traffic Statistics.” http://www.flysfo.com/media/ “Central, Eastern, and Southeastern Europe Committee on California-European Trade, facts-statistics/air-traffic-statistics Regional Economic Issues” 13 Oct. 2013. http:// California State Legislature, July 2, 2013, pp. www.imf.org/external/pubs/ft/reo/2013/eur/eng/ 20. Sam Schechner and Amol Sharma. “Europe’s 51-58. pdf/ereo1013.pdf Media Giants Prep for Netflix Landing.” Wall 32. In one example cited in recent testimony Street Journal. January 29, 2014. 10. Eurostat website. “Flash estimate for before the state legislature, a Dutch consortium the second quarter of 2013” 4 September. 21. IDA Ireland. “Tax Regime.” http://www. exploring with the city and Port of San Francisco 2013. http://epp.eurostat.ec.europa.eu/cache/ idaireland.com/invest-in-ireland/tax-regime/ the introduction of electric water taxis and ITY_PUBLIC/2-04092013-BP/EN/2-04092013- charging stations, when proposing to build a test BP-EN.PDF platform for grid connection was required to seek approval from 10 federal agencies, 13 state News Release. “Second quarter of 2013 agencies, in addition to the city and the Port, and compared with first quarter of 2013” 23 to address issues raised by the Jones Act (cited October. 2013. http://epp.eurostat.ec.europa. above.) The process, if pursued to its conclusion, eu/cache/ITY_PUBLIC/2-23102013-AP/EN/2- will require an estimated 5-8 years. In other 23102013-AP-EN.PDF examples, major European companies – notably BP, BT (formerly British Telecom), and Fresh & Easy have either divested much of their assets or pulled their operations out of state due to tax and regulatory concerns. See testimony of Consul General Bart van Bolhuis, Consulate General of the Netherlands in San Francisco, before the Senate Select Committee on California-European Trade, California State Legislature, July 2, 2013, pp. 17-18, and testimony of U.K. Consul General Priya Guha, pp. 43-44.) lead partners

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