November 30, 2021

ITU Report Suggests 'COVID Connectivity Boost' – but World's Poorest Being Left Far Behind

Writing the Forward for a report produced by the International Telecommunication Union (ITU), the United Nations specialized agency for information and communication technologies (ICTs), Doreen Bogdan-Martin, director of the ITU Telecommunication Development Bureau, says "An estimated 4.9 billion people are using the Internet in 2021, according to latest estimates in this 2021 edition of Measuring Digital Development: Facts and figures. That means that roughly 63 percent of the world's population is now online – an increase of 17 percent – with almost 800 million people estimated to have come online since 2019. Internet penetration increased more than 20 percent on average in Africa, in Asia and the Pacific, and in the UN-designated Least Developed Countries (LDCs)."

Moreover, according to Ms. Bogdan-Martin, "It is clear that ICTs and the Internet have been vital in helping maintain continuity in business activity, employment, education, provision of basic citizens' services, entertainment, and socializing. Digital platforms and services have enabled countless innovations that helped mitigate the health, social and economic costs of the tragedy, and build resilience against future crises."

Key findings of the 2021 edition of Facts and Figures, ITU's annual overview of the state of digital connectivity worldwide, include:

The digital gender divide is narrowing globally, but large gaps remain in poorer countries.
  • Globally, an average of 62 percent of men use the Internet compared with 57 percent of women.
  • Although the digital gender divide has been narrowing in all world regions and has been virtually eliminated in the developed world (89 percent of men and 88 percent of women online) wide gaps remain in Least Developed Countries (31 percent of men compared to just 19 percent of women) and in Landlocked Developing Countries (38 percent of men compared to 27 percent of women).
  • The gender divide remains particularly pronounced in Africa (35 percent of men compared to 24 percent of women) and the Arab States (68 percent of men compared to 56 percent of women).
The urban-rural gap, though less severe in developed countries, remains a major challenge for digital connectivity in the rest of the world.
  • Globally, people in urban areas are twice as likely to use the Internet than those in rural areas (76 percent urban compared to 39 percent rural).
  • In developed economies, the urban-rural gap appears negligible in terms of Internet usage (with 89 percent of people in urban areas having used the Internet in the last three months, compared to 85 percent in rural areas), whereas in developing countries, people in urban areas are twice as likely to use the Internet as those in rural areas (72 percent urban compared to 34 percent rural).
  • In the LDCs, urban dwellers are almost four times as likely to use the Internet as people living in rural areas (47 percent urban compared to 13 percent rural).
A generational gap is evident across all world regions.
  • On average, 71 percent of the world's population aged 15-24 is using the Internet, compared with 57 percent of all other age groups.
  • This generational gap is reflected across all regions. It is most pronounced in the LDCs, where 34 percent of young people are connected, compared with only 22 percent of the rest of the population.
  • Greater uptake among young people bodes well for connectivity and development. In the LDCs, for example, half of the population is less than 20 years old, suggesting that local labor markets will become progressively more connected and technology-savvy as the younger generation enters the workforce.
ITU continues monitoring the world's evolving digital divide.
  • ITU figures also point to a glaring gap between digital network availability versus actual connection. While 95 percent of people in the world could theoretically access a 3G or 4G mobile broadband network, billions of them do not connect.
  • Affordability of devices and services remains a major barrier. The widely accepted target for affordable broadband connectivity in developing countries sets the cost of an entry-level mobile broadband package at 2 percent of gross national income (GNI) per capita. Yet in some of the world's poorest nations, getting online can cost a staggering 20 percent or more of per capita GNI.
  • Lack of digital skills and an appreciation of the benefits of an online connection is another bottleneck, compounded by a lack of content in local languages, as well as by interfaces that demand literacy and numeracy skills that many people do not possess.

The digital divide, which is the gulf between those who have ready access to the Internet and those who do not, is a topic often discussed on this forum. And while it is encouraging to see entrepreneurs launch tech startups in low- and middle-income countries, the success of these new enterprises and the benefits their digital platforms and services can bring to consumers is limited if people are unable to access the Internet. As Ms. Bogdan-Martin insightfully notes in the report, "We cannot close the digital divide if we cannot measure it. And we cannot connect the unconnected if we do not know who they are, where they live, and why they remain offline – nor can we measure the success of our policies to bridge the gap.

"Through a set of unique and timely statistics, ITU’s Facts and figures sheds light on the multiple facets and evolving nature of the digital divide and takes stock of the progress towards closing it."

What do you think of the report's findings? What are your recommendations for bridging the digital divide?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 29, 2021

GSMA's 2021 Report on the Mobile Economy Presents Examples of IoT-Enabled Healthcare Solutions

"The Covid-19 pandemic has had a profound impact on the health and livelihoods of individuals and communities around the world," according to GSMA Intelligence. the research arm of the GSMA, a UK-based organization that represents the interests of mobile operators worldwide. Moreover, "In these trying times, connectivity has emerged as a lifeline for society by enabling many social and economic activities to continue amid unprecedented social and travel restrictions, supporting new ways for enterprises to operate safely and facilitating effective response measures from government and other stakeholders."

Titled The Mobile Economy 2021, the report further notes that "Mobile has been particularly instrumental during this period, keeping people connected and underpinning new services in response to the pandemic. Around the world, the exceptional scale and utility of mobile networks and services have":
  • enabled people to work and learn remotely, stay in touch with loved ones, and perform many other everyday activities online
  • supported innovative health solutions, such as remote patient monitoring and contact tracing, to control the spread of the virus
  • provided a platform for people to access digital financial services, given efforts to reduce the reliance on cash
  • facilitated the safe and efficient distribution of social welfare to vulnerable people
  • generated valuable insights on mobility patterns from anonymized and aggregated mobile big data to inform government response measures at various stages of the pandemic.

In addition to highlighting the crucial role mobile technology will play as governments look to reinvigorate their economies and build a better, more inclusive society, the report outlines a series of policy recommendations for shaping the post-pandemic digital economy, from direct stimulus funds and balancing policies for personal data to removing barriers to network deployment.

Other key findings include:
  • By the end of 2025, 5G will account for just over a fifth of total mobile connections, and more than two in five people around the world will live within reach of a 5G network.
  • Although 4G has significant headroom for growth; Globally, 4G is expected to peak at just under 60% by 2023 as 5G begins to gain traction in new markets. In leading 5G markets such as China, South Korea, and the US, 4G has peaked and, in some cases, begun to decline.

With respect to the mobile industry's efforts to tackle climate issues, the report notes that "In April 2021, the mobile sector was credited by the United Nations (UN) for achieving a critical breakthrough towards its mission of combatting climate change. Being the first major sector to achieve the rigorous criteria set by the UN's Race to Zero campaign demonstrates the commitment and leadership of mobile operators in the push to meet the goals of the Paris Agreement." Importantly, "This comes at a time when political and economic leaders are giving renewed impetus to delivering a zero-carbon world. Today, 50% of operators by connections and 65% by revenue have committed to science-based targets (SBTs) on the reduction of carbon emissions."

As indicated in a previous post on this blog, while it will several years to build a global 5G network and associated services, I am optimistic about the potential benefits of 5G including hyperfast connections, improved reliability, high capacity and low latency. Telecoms operations will offer hi-tech solutions to businesses through 5G, businesses can use these technologies to transform their operations and optimize efficiency, and governments can create a robust 5G infrastructure to attract investment, create jobs and drive economic growth. GSMA Intelligence, however, points out the need to "develop compelling 5G use cases that leverage the technology's unique capabilities and to support the realization of Industry 4.0 objectives. Commercializing 5G across the consumer and enterprise segments will require the right blend of partnerships, with a combination of capabilities being key to creating value."

To help build use cases, GSMA Intelligence explains that "operators and equipment vendors have invested in 5G labs dedicated to co-creating solutions with partners to address specific needs. These labs, which often include startups, academia, cloud providers and systems integrators, and large enterprises, demonstrate how mobile operators and other ecosystem players can come together to facilitate 5G-enabled digital transformation for society."

Below are a few examples of 5G labs and focus areas by region:

Asia Pacific
  • China Unicom, China Mobile and China Telecom, along with other members of the 5G Slicing Association, including Huawei, China Sports Media and TD Tech, have established a 5G lab on network slicing for enterprises.
  • NTT Docomo leads a consortium to develop 5G solutions for industry verticals such as manufacturing and construction. Founding members of the 5G Global Enterprise Solution Consortium include AIS, Fujitsu and NEC.
  • Vodafone New Zealand is collaborating with several organizations to explore the development of a variety of 5G use cases, including a 5G drone service for the New Zealand Police and an AI solution for retail stores.
  • Europe Orange has established nine 5G labs across France, Romania and Belgium to support the development of new consumer and enterprise applications.
  • Verizon has opened a 5G lab and production studio in London to support its international business and media customers. The lab allows startups, academics and enterprises to explore use cases for immersive education, AR/VR gaming, autonomous vehicles, smart cities and IoT.
  • STC is collaborating with Saudi Aramco and Huawei to develop 5G use cases for the oil and gas sector and to explore use cases around MEC, 5G slicing and industrial-scale IoT.
  • AT&T is working with universities and vendors to develop 5G applications across a variety of areas, including manufacturing and autonomous car applications.
  • Verizon is pursuing initiatives with the NFL, Emory Healthcare, Responder Corp., and the US Department of Energy. Focus areas include use cases for healthcare, first responders, autonomous mobility, smart cities, education and retail.
  • T-Mobile is a founding partner of the 5G Open Innovation Lab, alongside global tech players, including NASA, Intel and Microsoft, and academic institutions.

Lastly, in explaining how Covid-19 cast a spotlight on IoT applications in healthcare, the report says: "In the wake of the pandemic, healthcare service providers have relied on technologies to enhance service delivery and improve efficiency in the delivery of medical supplies, amid increased demand and social-distancing requirements. IoT underpins many innovative digital health products and solutions for consumers and enterprises, as well as new ways of treating patients remotely. For example, wearable IoT devices, such as smartwatches, are increasingly being used for remote and contactless vital signs monitoring.

The report presents the following examples of IoT-enabled healthcare solutions utilized to support patients during the pandemic:
  • Remote patient monitoring: Healthcare professionals use IoT devices to track heart rate, blood pressure and blood glucose levels of patients remotely, particularly the elderly and other vulnerable patients that have had to shield during the pandemic.
  • Contact tracing: A number of contract tracing systems implemented around the world rely on IoT-based solutions to track the movement of patients and enforce social distancing in public areas.
  • Vaccine cold chain monitoring: IoT platforms have been used to develop cold chain monitoring systems that track the temperature and location of vaccine carriers. For example, the Electronic Vaccine Intelligence Network, developed by the United Nations Development Program (UNDP) and the Indian government, has reduced vaccine stock-outs by 80%.
  • Hospital sanitization: Non-surgical robots connected to IoT systems have been used to clean patient rooms and to disinfect and sterilize surfaces from Covid-19 contamination with a special UV light and chemicals.
  • Automated temperature screening: IoT-enabled thermal imaging systems have been used to identify people with elevated body temperatures before they enter buildings, such as airports, office spaces, schools, shopping centers and hospitals, for further screening.
  • Facilities and PPE stock management: IoT system have been used to provide supply-chain planners and policymakers with actionable information on the availability of hospital beds and personal protective equipment (PPE) for medical staff for the efficient allocation of resources.
  • Healthcare delivery drones: IoT-enabled drones have been utilized to deliver test kits and results, PPE, medicines and other vital medical supplies, especially in developing regions with poor logistics infrastructure. For example, in Ghana, connected-drone company Zipline is supporting the delivery of vaccines to remote parts of the country.

What IoT-enabled solutions are you seeing or developing?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 24, 2021

Is Jihadism a Risk Factor for Investing in Africa?

A startup's board of advisors?
(Image credit:
Investing in Africa has been a regular topic of discussion among my friends and colleagues over the past year. I published a post on this forum about a report that says African tech startups raised $1.4 billion in 2020 with the fintech sector receiving 25 percent or $354 million of the total amount. And I am confident this amount will be significant higher for 2021. While there are many reasons to remain optimistic about the future of Africa's digital economy, particularly in the fintech, agritech enterprise, and health tech sectors, investors should be mindful of the risks that exist which may negatively impact a company's operations and financial performance. One such risk is the growing security instability on the continent.

I often hear people from Africa express their frustration that many people residing outside the continent view their homeland as a place ravaged by war and disease. They say the global media perform a disservice by focusing on the negatives while neglecting to report on advancements made in key areas including economic development, education, and rule of law. I agree with their feelings of frustration as I have witnessed the exponential economic growth since the time I made my first investment in Africa in 1995. However, armed conflicts on the continent exist in many areas. There are concerns that these conflicts will spread to cities that have experienced significant economic growth over the past two decades.

At the time of publishing this post, there are growing insurgencies by jihadists and separatists in the Sahel, the ecoclimatic and biogeographic realm of transition in Africa between the Sahara to the north and the Sudanian savanna to the south (see map on the right). According to an article published by The Economist on Nov. 20th, 2021, "almost 9,000 European and American troops on the front line of what is now the West's biggest offensive against jihadists, in the Sahel. It is not going well. How it will end depends in no small part on whether the West learns the right lessons from its failures in Afghanistan."

During my time working on private sector development initiatives in Afghanistan, my colleagues and I evaluated security risks based on the flow of funds and weapons to jihadists. Entrepreneurs and small business owners living in Afghan provinces that received the largest percentage of imported weapons and funds to support jihadists and violent extremists experienced more risks to their business including corruption, lack of access to essential services such as electricity and water, and restrictions on the hiring of women.

With the United States' withdrawal from Afghanistan this past summer, jihadists around the world "were elated by the fall of Kabul," In another article published on Aug. 28th, 2021, The Economist notes: "Through willpower, patience and cunning, a low-budget band of holy warriors has vanquished America and taken charge of a medium-size country. To Muslims who yearn to expel infidels and overthrow secular states, it was evidence that God approves. The ripple effects could be felt far and wide."

The article adds that "outside Afghanistan, the main ripple effects will be psychological. The Taliban's triumph will fire up jihadists in other countries, and spur recruits to join them. Some who live in rich countries will be inspired to commit acts of terrorism there. It does not take many such attacks to sow a sense of fear or roil domestic politics.

"Even worse will be the effect in poorer, weaker states, where jihadists aspire not merely to kill but to control territory, or at least prevent the government from doing so. In places like Pakistan, Yemen, Syria, Nigeria, Mali, Somalia and Mozambique, they already do. In several other parts of Asia, Africa and the Middle East, they threaten to. Many are asking: if our Afghan brothers can beat a superpower, surely we can beat our own wretched rulers?"

The Economist Intelligence Unit's latest Democracy Index, which provides "a snapshot of the state of democracy worldwide in 165 independent states and two territories," says "[t]he deterioration in the global score in 2020 was driven by a decline in the average regional score everywhere in the world, but by especially large falls in the 'authoritarian regime'-dominated regions of Sub-Saharan Africa and the Middle East and North Africa."

Moreover, The Economist, in its Aug. 28th article, asserts:
Bad government creates an opening for jihadism. When a state is unjust, its citizens may imagine that one run by jihadists might be better. Even if they do not take up arms, they may quietly support those who do. Many rural Afghans decided that Taliban justice, though harsh, was quicker and less corrupt than government courts, and that Taliban checkpoints were less plunderous. This is one reason the Taliban's final march to power met so little resistance. The other was psychological: they won because when America pulled out Afghans did not want to die fighting for a lost cause. Similar principles apply elsewhere. Jihadists in north-eastern Nigeria are hard to beat because locals detest the central government and army officers sell their own men's weapons to the guerrillas and pocket the cash.
In an email message to my colleagues and clients where I shared a link about a webinar the U.S. Department of Commerce is hosting on Nov. 30th, 2021, which will allow participants to hear real-time market conditions and learn about technology and commercial digital transformation opportunities in Ethiopia, Mozambique, Nigeria, and Kenya, I included a message saying that this event should be interesting given the first three of these countries are currently experiencing some form of conflict by jihadists or violent extremists. As for Kenya, the East Africa country is on high alert because of recent suicide bombings in neighboring Uganda.

Barring Ethiopia where the Tigray People's Liberation Front are taking towns on the way to the country's capital, Addis Ababa, most armed conflicts occur in rural areas far from capital cities or economic centers. Given the rise of authoritarian regime-dominated regions in sub-Saharan Africa, coupled with jihadists feeling emboldened by the Taliban's recapturing of Afghanistan, it may be a matter of time until we see armed conflict in cities that are experiencing a vibrant startup ecosystem.

I remain optimistic about business and investment opportunities in Africa, particularly in the continent's digital economy. But those who are launching a new firm or investing in one should perform an assessment of country-level risks including evaluating the safety of the physical environment. In determining the risk of rising jihadism, follow the money.

If you are investing in Africa, which risk factors are you paying attention to?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 22, 2021

2022 Will (Hopefully) Be a Year of Recovery and Renewal for Economies and Businesses Affected by Covid-19

"2021 was supposed to be a year of recovery for economies and businesses that had been affected by the coronavirus (Covid-19) pandemic," according to The Economist Intelligence Unit's annual report that examines the opportunities and challenges ahead for seven sectors of the global economy: automotive; consumer goods and retailing; energy; financial services; healthcare and pharmaceuticals; technology and telecoms; and tourism. "However, it has not been a straightforward rebound. Although coronavirus vaccines allowed many countries to ease lockdowns and begin a recovery, cases remained stubbornly high, albeit with an improved recovery rate. International borders remained either shut or subject to cumbersome testing requirements. One knock-on effect was supply-chain disruptions that hampered companies' ability to meet consumer demand, pushing up prices. Many of these problems will persist into 2022."

Businesses operating in these seven sectors should note that "[g]rowth prospects for all these sectors in 2022 will depend on their respective base levels. Some sectors—notably, telecoms and pharmaceuticals—thrived during the pandemic, but will need to navigate evolving consumer demands, as well as increased competition and regulation going forwards. Some sectors—notably, automotive and tourism—suffered slumps and will struggle to deal with the aftermath. For the remainder, the situation and outlook remain mixed, with companies pushing against headwinds to reach areas of opportunity."

The report presents the following key forecasts:
  • Supply-chain disruption will make it harder for manufacturers and retailers to meet recovering demand, dampening sales forecasts for both consumer goods and automotive.
  • High prices will push up interest rates, which could raise bad debt levels and dampen demand. However, some consumer companies and banks will turn higher prices to their advantage.
  • New technologies - both digital and non-digital - will offer new opportunities, but will also attract more attention from regulators keen to ensure a level playing field. Health apps will be among those affected.
  • Companies will need to prepare for changes in tax regulation, following a global deal to set a minimum corporate tax rate. Although this legislation may be derailed, efforts to collect taxes are increasing.
  • Amid efforts to combat climate change, companies will come under more pressure to cut emissions and meet more standardized reporting requirements. This will affect their investment strategies, particularly in the oil and coal sectors.
In addition, below are the key forecasts as they relate to each of the aforementioned seven sectors of the global economy:

Automotive in 2022: back to near-normal
  • Global sales of new vehicles will rise by 7.5% in 2022, taking them back past 2019 levels. The recovery will be led by Asia and North America.
  • Many vehicle makers will still struggle to meet recovering demand amid continuing supply-chain disruptions.
  • Global sales of new electric vehicles (EVs) will continue to soar, rising by 51%. New emissions rules will force carmakers to make far-reaching decisions about their fossil-fuel models.
Consumer goods in 2022: knots in the supply chain
  • Global retail sales will recover to 2019 levels in volume terms, but coronavirus (Covid-19) cases, inflationary pressures and slow job growth will pose challenges.
  • Online shopping will grow at a slower pace in 2022 as lockdowns lift, but will still account for 17% of global retail sales.
  • Higher supply-chain costs will motivate businesses to wean consumers off discount schemes and focus on higher-margin premium products.
Energy in 2022: transition time
  • Global energy consumption will rise by 2.2% as economies recover from the impact of the pandemic. All types of energy, apart from nuclear power, will benefit.
  • Energy prices will stay firmer than in recent years, as demand recovers and supply bottlenecks continue to disrupt power generation.
  • Many energy companies will need to undertake an urgent review of their strategies in 2022, as governments and investors ramp up pressure to cut emissions.
Finance in 2022: gusty tailwinds
  • Economic recovery and rising interest rates will boost prospects for many financial firms in 2022, provided bad loans remain at manageable levels.
  • Developing markets will take longer to regain their appeal than developed ones. Regulatory uncertainties in China will throw up challenges in the world’s fastest-growing market for financial services.
  • Green finance will move towards center stage, as companies and investors try to live up to pledges made at the COP26 climate summit.
Healthcare in 2022: the aftermath of coronavirus
  • Global healthcare spending growth will slow to 4.1%, despite rising costs, as governments start to assess the economic damage wreaked by the pandemic.
  • Vaccinating the world against Covid-19 (coronavirus) will remain a core priority. However, healthcare systems will also need to start tackling a backlog of non-coronavirus care.
  • Healthcare is not exempt from supply-chain problems, and governments will push ahead with regulation designed to increase resilience and lower costs.
Technology and telecoms in 2022: geopolitical tensions
  • Of 60 major telecoms markets, 16 will launch 5G services in 2022 (see map below), but challenges in spectrum availability and pricing will cause delays.
  • Technology and politics will continue to be interlinked. The semiconductor shortage will persist, making onshoring of chip production a strategic priority for countries.
  • Governments will tighten regulations to boost cyber security, which will be the main short-term risk to digitalization progress, but discrepancies between countries will often dilute the impact.

Tourism in 2022: a shaky recovery
  • International arrivals will recover some ground but fail to return to 2019 levels, with business travel likely to remain depressed.
  • Differing levels of border control and variations in vaccine passports will continue to make international travel difficult in 2022, although domestic tourism will fill some gaps.
  • Compliance with climate-change regulations, as well as higher fuel prices and wages, will increase air-travel costs in 2022. This will eventually lead to airline mergers, airport closures and higher ticket prices.
Lastly, with respect to its macroeconomic forecast, The EIU asserts that "the global economic recovery will continue in 2022, with real GDP expanding by 4.1% at market exchange rates, after rebounding by an estimated 5.4% in 2021. Of the G20 countries, China and Turkey were the only two not to shrink in 2020 and will continue to post firm growth. Eight more, led by the US, have already regained their 2019 GDP levels in real terms, following a strong rebound. The remaining ten, including EU countries and Japan, will regain pre-pandemic levels in 2022, having lost two years of growth."

The report, however, points out that the "recovery could still be derailed if the pandemic flares up again. Persistent supply-chain disruptions could keep commodity prices elevated. This will benefit commodity-dependent countries, but will fuel inflation. That, in turn, will lead to tightening monetary policy, with impacts on stock markets, banks, companies and governments. Geopolitics will remain fraught too: the EIU sees an escalation in US-China tensions as the biggest global risk."

Twelve months ago as my colleagues and prepared to close-out 2020, we anticipated 2021 would be a year of recovery and renewal. While some sectors such as technology and pharmaceuticals have seen a healthy rebound, the automotive and tourism sectors struggled during the past year. And the consumer goods, energy, finance, and healthcare sectors had a mixed year as they seek out new areas of opportunity. In the coming year, we will be watching the global vaccination rate, the rise of any potential variants of covid-19, and how governments respond to new outbreaks. We will also monitor how governments and central banks continue their efforts to stimulate economic growth while curtailing inflationary pressure.

What will you be watching in 2022?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 18, 2021

Israeli Startups Seek Investors and Partners in Silicon Valley

With a population of approximately 9.2 million inhabitants, Israel possesses one of the world's most robust startup ecosystems. And some of the startups have gone to grow into large successful ventures including (Nasdaq: WIX), a software company that provides cloud-based web development services, and Waze, a provider of satellite navigation software that Google purchased for $966 million in 2013. The country is now producing innovative startups in medicine, media, Internet, cybersecurity, water technology, agritech, fintech, telecom, IoT and robotics. As this website explains, "Israeli startups are an attractive proposition for stakeholders – bringing life-saving and quality-enhancing advances to the world, and may generate significant return for their investors."

Startups worldwide continued to raise capital from investors despite travel restrictions caused by the coronavirus (Covid-19) pandemic. In fact, according to this TechCrunch article, "Israel's startup ecosystem raised record amounts of funding and produced 19 IPOs in 2020, despite the pandemic." However, there is no substitute for delivering an in-person presentation to a group of investors. Similar to an event I attended in Sunnyvale, Calif. on Sept. 28th, 2021, which featured a group of startups from Austria, I had the pleasure of attending an event in nearby Mountain View on Nov. 17th where the following six Israeli startups made a presentation to a room full of investors and potential partners:

1. AnyLog virtualizes edge data and resources (sensors, gateways and servers) allowing users and applications to interact, manage and monitor distributed data and resources from a single node, replacing the need to interact with hundreds, thousands and more edge nodes. Outlining the problem AnyLog is solving, Moshe Shadmon, the company's Founder and Chief Executive Officer (CEO), explained, "The diversity of the data and the distribution of the data at the edge limit the functionality that can be delivered by applications running on the edge." He added: "The edge does not include the wealth of services that are available at the data center, or in the cloud, to transform the data to meaningful insight." The AnyLog network is operational with customers using the network in the following areas: Smart City (decentralized energy grid to allow energy share among neighbors), Oil & Gas (real-time edge AI application to control production processes), and Industrial (real-time monitoring and predictive maintenance of machinery).

2. BactoByte developed a novel technology aiming to reduce the burden of infection disease by enabling a new standard in antibiotic administration. According to Miron Krokhmal, his company's solution is a rapid, precise, and cost-effective antibiotics susceptibility analysis system that is eliminating the need for Petri dish-based testing in a clinical laboratory. "Our BactoSense solution introduces a unique mechanism of action providing the shortest total-time-to-result of 2-8 hours as an alternative to the current golden standard of 3-5 days."

3. Okibo developed a robot that is designed to autonomously traverse the rough terrain of construction sites with high precision, while maintaining human and equipment safety. As displayed in the demo video below, Okibo's robot requires minimal human intervention. Guy German, the firm's CEO, anticipates general contractors will serve as Okibo's primary customers.

4. Q-factor, which is led by Hezzy Pollyack, is a developer of intelligent software solutions for search problems. The company has developed Argus, is a centrally licensed, easy to deploy security, operations and safety tool designed to support conventional video management, operations and safety system configurations. Argus is built according to the needs of critical infrastructure companies in the oil and gas, transportation, and smart city sectors.

5. Simpaas developed an e-commerce marketplace ecosystem-as-a-service. According to the company's CEO, Gil Elias, the Simpaas all-in-one ecosystem provides a short time to market and a ready-to-use tailored-made catalog template. "While local enterprises are usually behind on the digital globalization space," Mr. Elias said "they are looking to build better and extensive offerings to their clients."

6. Tuqqi is a virtual working space tailored to an organization to help it work better, collaborate with ease, and deliver remarkable results. During his presentation, Ido Hurvits, Tuqqi's Founder and CEO highlighted how his company's platform provided value to the Association for Israel's LGBT Task Force "by dramatically decreasing inquiry response time, controlling ongoing information, taking recruitment to the next level, and staying in touch with hundreds of volunteers." A case study about this initiative may be found here.

It is encouraging to see startups from abroad resuming their efforts to visit the United States to meet with prospective investors. While video calls are a great way to make an initial introduction, in-person events and meetings are more effective for startup founders to make their pitch to a group of investors. And gatherings like the one I attended featuring startups from Israel are providing investors and potential partners the opportunity to engage in meaningful discussions to learn more about the problem the startups are solving, who is experiencing the problem, and understanding the size of the market opportunity.

What are your thoughts about the startups listed above? Are you engaged with Israeli startups that are producing innovative solutions?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 16, 2021

Report Explores How the Digital-Payment Revolution Is Transforming Business in a Post-Covid World

According to a report published by The Economist Intelligence Unit (The EIU) about the growth of digital payments, "Across the world, digital payments are now synonymous with mobile payments, with the rate of adoption directly linked to access to smartphones and telecoms networks, The furious growth in digital payments in developing countries, especially in Asia, demonstrates the impact of the coronavirus (Covid-19) pandemic in advancing online retail sales, as well as the role that governments and regulators play in facilitating the spread of new payments systems."

The EIU's "research shows how the digital-payment revolution is transforming business in different parts of the world. Governments have a crucial role to play in formulating policies that guarantee equitable access to these systems while encouraging innovation. However, regulators' responsibilities will increase further with the spread of digital currencies and super apps, which will allow for more cross-selling while also exacerbating the risks to data security, privacy and sustainable credit terms. Both payments services providers and conventional financial services companies need to be ready for regulatory shifts as they seek to take advantage of new opportunities."

Key findings from the report include:
  • Governments in countries with a low level of digitalization and unsatisfactory financial inclusion must recognize that an enabling policy framework and public investment are keys to the successful widespread adoption of digital-payment systems.
  • Payment-platform providers must create additional capacity to prepare for greater demand for digital-payment services, as well as opportunities to migrate customers to financial services that yield higher margins. They must also prepare for the rising costs and complexities of compliance with regulatory requirements.
  • Firms and service providers in adjacent areas must rapidly transform their businesses to benefit from these developments. Their strategies should include improving the interoperability of their digital platforms and deploying application programming interfaces (APIs) to allow the use of embedded-payment systems.
  • Regulators must adopt a proactive, multi-level approach to technological changes when formulating new standards, as well as closely monitoring any financial risks within payments systems.

For those who traveled to China in the past few years know that the use of hard currency in commercial transactions is virtually non-existent. As indicated in the image on the right, China leads the global mobile-payment market with over 80 percent of smartphone users adopting mobile payments through Alipay or WeChat Pay apps. "A more radical approach has upended payments in China and is increasingly doing so in other parts of Asia," the report explains. "AliPay and WeChat, whose apps link users' mobile phones to existing bank accounts, emerged with the spectacular increase in Chinese e-commerce at their parent firms, Alibaba and Tencent, in the 2000s. Originally used for online purchases and messaging, they expanded to become 'super apps'—all-in-one platforms that offer ride-hailing, food delivery, entertainment services and a full range of financial products, including credit and insurance. Singapore's Grab, Indonesia’s Gojek, South Korea's KakaoPay and India's Flipkart and PayTM are aiming to build their own super apps." Similar efforts in Africa are also taking place. 

The EIU's importantly points out that "Despite the enthusiasm around emerging modes of payment, numerous sources of apprehension remain unaddressed. These include concerns around data security, financial fraud, cybersecurity and the role of regulators, many of whom are behind the curve when it comes to technological advancement. The absence of common regulatory standards among geographically contiguous countries, potentially leading to the creation of regional monopolies, is a related concern."

The aforementioned risks notwithstanding, "The benefits of digital payment systems significantly outweigh the risks associated with them," The EIU asserts. "For governments, they provide an avenue to raise financial inclusion and further the cause of economic development. Individuals, especially those in developing countries, can more effectively participate in economic activity. Private organizations will benefit from the new opportunities created as a result."

How do you think the digital-payment revolution will transform business in a post-Covid world?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 11, 2021

Report Says North America's Mobile Sector Is Showing Climate Leadership in Helping Achieve UN's Climate-Related Sustainable Development Goals

According to its latest report on the state of the mobile economy in North America, GSMA Intelligence says that "[b]y the end of 2020, 327 million people in North America subscribed to mobile services, representing 83% of the region's population. This places North America among the world's most developed mobile markets. However, increasing market saturation also means that subscriber growth is slowing, a scenario that is also occurring in other advanced markets around the world."

GSMA Intelligence, the research arm of the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, further asserts: "By the end of 2025, 5G will account for almost two thirds of total mobile connections, which is equivalent to nearly 270 million connections. 5G will also account for 98% of mobile capex over the next five years as operators step up deployments of mid-band spectrum."

Operators in the region are looking to bring new suppliers and technologies into the network. "The GSMA Intelligence Operators in Focus survey indicates that expanding 5G coverage and open RAN deployments are the top RAN priorities in North America, while virtualization investments, security and edge computing are crucial for the core network," the report explains.

With respect to policies enabling digital advancement, the report suggests the "speed, reach and quality of 5G services depends on governments and regulators supporting timely access to the right amount and type of affordable spectrum, under the right conditions. Policy also has a role to play in the shift towards open and virtualized networks, by creating an enabling environment that will support the deployment of new RAN infrastructure."

Other key findings include:
  • Mobile operators in North America will invest $300 billion in their networks between 2020 and 2025, of which 98% will be dedicated to 5G.
  • 5G coverage and open RAN top RAN priorities, while virtualization investments and security are critical for the core network.
  • Despite growing confidence in open and virtualized RAN, there is recognition that accelerated measures are needed to ensure equipment interoperability, security, reliability, and sufficient systems integration capabilities and skills.
  • As indicated in the chart below, the urgency to deploy IoT projects is stronger in the U.S. than in other countries, with around two in five companies planning to deploy IoT within a year, and one in five targeting deployments within two years. "The pandemic has increased the urgency of enterprise digitization among many firms as they look to boost productivity and efficiency, which will escalate adoption of IoT, AI and 5G, among other technologies."
  • The UN's Race to Zero campaign declared that the mobile industry made a critical 'breakthrough' in early 2021, as more than a third of operators by revenue had committed to achieving net zero emissions by 2050 or earlier.

Regarding the mobile sector's efforts to help achieve the UN's climate-related sustainable development goals (SDGs), GSMA Intelligence says "North American operators are making strong progress on SDG 13: Climate Action, with mobile at the forefront of efforts to tackle climate change." Furthermore, "at the end of 2020, 80% of operators by revenue disclosed their climate impacts, while almost two thirds of operators by revenue had set science-based targets to cut their carbon emissions rapidly over the next decade. In North America, several operators have set a science-based target of 1.5°C, which is in line with an ICT sectoral target-setting approach recently developed through a collaboration between the Global Enabling Sustainability Initiative (GeSI), the GSMA, the International Telecommunication Union (ITU) and the Science Based Targets Initiative (SBTi). These targets support the Paris Agreement’s central aim of strengthening the global response to the threat of climate change."

Lastly, "Switching to renewable energy will play an essential role in the mobile industry reaching net-zero carbon emissions. Most emissions within the direct control of operators are from electricity and diesel consumption by power networks."

In addition to switching to renewable energy, how can North America's mobile sector help achieve climate-related SDGs including including SDG 7: Affordable and Clean Energy, SDG 11: Sustainable Cities and Communities and SDG 15: Life On Land?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 8, 2021

Recommendations on What Private Investors Should Look for and What Governments Should Do to Attract Investment in 5G

In reading the previous post, which is about a report that looks into how mobile and digital technology, including IoT, LTE and 5G, can support industry decarbonization, a client of my consultancy, Global Tactics, sent me an email asking whether or not countries are ready for 5G. While people globally have been touting the benefits of 5G for the past few years, his observation as a chief executive of a multinational IT services and hardware company is that some countries are more ready than others. I appreciate the question as I recently read The Economist Intelligence Unit's (The EIU) report entitled The 5G Readiness Guide: Deployment strategies, opportunities and challenges across the globe.

In providing background on the report, The EIU says it "collected data and information on the 5G environment in the top 60 telecoms markets worldwide, in order to score them on six key metrics: the business environment, spectrum availability, the current level of 5G deployment, 5G network speed, progress on industry trials of 5G and the robustness of 5G policy." The paper also contains a snapshot of The EIU's scores for each region.

The EIU importantly explains that its "assessment is intended to help companies planning to invest in the 5G ecosystem to understand where each country stands in the 5G race, as well as its future potential. It also allows policymakers to benchmark their 5G regulations and policies against those of other countries, and make improvements that could attract more investment into the sector."

Below are the reports key findings:
  • An early start in 5G preparation, along with better management of the coronavirus (Covid-19) pandemic in 2020, has helped many Asian countries to free up spectrum in the higher bands in order to forge ahead on 5G rollouts.
  • Gulf countries are also among the most 5G-ready globally and offer significant market opportunities for providers of next-generation technologies.
  • Despite lagging in spectrum auctions, Western European countries are at the forefront of testing and rolling out 5G-based industrial applications.
  • Inadequate spectrum policy and a lack of regulatory coordination have held back 5G development in the US, but progress is being made under the Biden administration.
  • Most countries in Africa and Latin America are likely to remain focused on expanding 4G and fiber broadband in the medium term, given a lack of funding and the low capacity to monetize 5G.
  • A 5G-specific policy that covers auctions, deployment targets and trials, coupled with government support in the form of tax incentives or low-cost loans, is the best way to support faster rollouts.
  • The US-China dispute over Huawei and other Chinese telecoms equipment manufacturers poses the biggest risk to 5G rollout across all regions, second only to disruption caused by Covid-19.

The EIU also presents the following recommendations bifurcated by what private investors should look for and what governments should do to attract investment.

What private investors should look for:
  • Countries with a national 5G policy that covers auctions, deployments and industrial trials.
  • Governments that enable collaboration between operators, vendors and industry players.
  • Countries with a high mobile-service penetration rate and a high average revenue per user, where 5G smartphone shipments are on the rise.
  • Industrial economies where businesses are keen to adopt 5G technology.
What governments should do to attract investment:
  • Ensure availability of contiguous blocks of spectrum and equitable distribution to all operators.
  • Consult industry players on spectrum base-price prior to auction, in order to avoid delays.
  • Offer single-window clearance for telecommunications licenses and a medium-term national 5G policy.
  • Offer incentives to encourage infrastructure and spectrum-sharing among operators that can reduce investment costs.
  • Partner with vendors and the industry to facilitate industrial trials.
  • Make 5G spectrum directly available to enterprise users, such as manufacturers, who want to deploy a private 5G network.
  • Explore opportunities for public-private partnerships (PPPs).

The EIU correctly notes that while the global rollout of 5G has been affected by the pandemic, "The coronavirus has, nevertheless, accelerated digitalization and opened up new opportunities for telecoms operators. Fast, reliable connections have become vital to businesses, consumers and governments as they try to cope with this global crisis."

The reports adds that "For companies, the pandemic has underlined the benefits of deploying online offerings, automation and developing the Internet of Things (IoT) to manage supply chains. For consumers, it has increased demand for online goods and services. And, for governments, it has highlighted the importance of deploying online services, including healthcare, as well as the potential benefits of advanced data analytics, artificial intelligence (AI) and robotics."

I support The EIU's assertion that "5G will be the launchpad for countless new applications, from self-driving cars and smart cities to augmented reality (AR)." What is more, "5G networks will offer benefits in the form of hyperfast connections, improved reliability, high capacity and low latency (meaning faster response times for requests). For telecoms operators, the upgrade represents an opportunity to move beyond communication services to offer hi-tech solutions to businesses. Businesses can use these technologies to transform their operations and optimize efficiency, while governments can create a robust 5G infrastructure to attract investment, create jobs and drive economic growth."

The report adds that while the "benefits of 5G are significant ... so is the investment necessary for its rollout." Moreover, "As operators and governments decide which markets will offer the best returns on 5G, there are several factors to consider. Strong and affordable infrastructure (with the right spectrum and good coverage of base stations) will be the foundation, but operators will also need to find the right 5G products and service applications to sell. Finally, the business environment will need to support significant research and development (R&D), so that 5G capabilities are developed and used in the most efficient way." As reflected in the map above, "The weighting of these factors differs markedly by region."

Do you agree with The EIU's recommendations on what private investors should look for and what governments should do to attract investment? If 5G is deployed in industrialized countries at a faster rate than emerging markets, how can governments, nongovernmental organizations, and the private sector prevent a digital divide forming which will result in a gulf between those who have access to the internet and those who do not?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 7, 2021

Report Explores How Mobile and Digital Technology Can Support Industry Decarbonization

According to a report conducted GSMA Intelligence, the research arm of the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, "The use of mobile and digital technology is a key enabler of the decarbonization transition. Telecoms operators, vendors and supporting ecosystem partners play a key role in the move to digital and low-carbon economies, particularly where it involves the enterprise segment and asset-intensive sectors using technology to lower emissions." Supported Nokia, a Finnish multinational telecommunications, information technology, and consumer electronics company, Industry pathways to net zero: mobile and digital technology in support of industry decarbonization outlines "a high-level quantification of decarbonization and associated strategies for four key industries that account for 80% of global emissions – manufacturing, power and energy, transport, and buildings." The report also outlines "a set of forward-looking implications."

Addressing how smarter use of mobile and digital technology results in carbon savings, the report explains that the "implementation of specific mobile and digital technologies could result in substantial CO2 savings for each industry. In aggregate, the savings enabled by the technologies amount to just under 40% (equivalent to 11 gigatons) of the carbon emissions savings that these industries will need to achieve over the next decade, assuming an end goal of net zero by 2050." I appreciate how GSMA Intelligence puts this in perspective at an industry level:
  • The annual global CO2 savings from smart manufacturing would equate to 28 million roundtrip flights from London to Los Angeles.
  • The potential CO2 savings from using smart meters in North American residential premises would be enough to power 25 million homes (20% of households in the US) for a year.
  • The savings from the switch to electric vehicles (EVs) worldwide would equate to removing 180 million petrol-fueled cars from roads over the next 10 years.

With respect to the specific technologies of IoT, LTE and 5G, the report imparts that "Digitization and decarbonization are enabled by a range of mobile connectivity products and network services working in sync with artificial intelligence (AI) and machine-learning algorithms in the cloud to drive productivity gains." GSMA Intelligence highlights ways "IoT sensors, LTE and 5G connectivity (including for private networks) are being deployed across the industries profiled in this analysis, along with a raft of other solutions."
  • In manufacturing, smart factories are underpinned by IoT sensors, robotics and AI that automate dynamic shifts to production capacity and the remote repair of machine faults. This reduces reliance on manual labor, increases productivity and lowers overall factory energy consumption and emissions compared to premises not fitted with these technologies.
  • In buildings, intelligent architectural design and the use of sustainable materials in the construction process are augmented by smart electricity and gas systems that optimize the use of energy based on occupancy levels and prevailing external climatic conditions. In homes, smart electricity meters are linked to smart home controls through a central interface that can offer energy savings of up to 5% and, in some cases, the ability to sell excess energy from the consumer to the grid.
  • In transport, the use of on-board cellular telematics can improve shipping fuel efficiency and enable a more optimized model for cargo arrivals and departures from ports, due to reductions in idling time and better coordination with trucks for onward distribution of goods.

Having followed the rise of IoT and 5G mobile technology over the past few years, I concur that the "ubiquity of mobile and digital technologies in these examples demonstrates their ability to deliver greater energy efficiency and productivity for industries globally. This requires a long-term and holistic investment approach."

On the benefits of digitization going beyond decarbonization, GSMA Intelligence points out that "While industry decarbonization can help mitigate the risks of global warming, there are other important socioeconomic benefits." Examples include the following:
  • Public health outcomes – Reducing CO2 in the power sector will result in lower concentrations of harmful particulate matter and gases such as nitrogen dioxide. A similar effect is expected to prevail as electric vehicles replace petrol- and diesel-fueled cars, and through a higher share of the population working at home.
  • Economic diversification – Moving to digital operating models in industries such as manufacturing and transport will create new jobs and sources of national value growth. Digital operating models can also increase access to public services and civic engagement.
  • Productivity – Digitization drives fundamental improvements in productivity, which form the basis of new business models across industries.

Lastly, GSMA Intelligence asserts that its "research demonstrates the clear, practical and beneficial impact of using mobile and digital technologies in the largest and most relied upon industries. These are, in the main, ready-made options." The research organization importantly adds that "While investment outlays and deployment costs are required (a particular challenge for smaller companies), these will decrease over time as scale grows. The long-term return on investment from a financial perspective (higher productivity) and sustainability angle (lower emissions) is highly significant. Market participants in the telecoms, media and technology sectors are unique in being both suppliers and consumers of the technologies. In this capacity, we hope this report and ensuing industry case studies add to the best practice driving decarbonization in the years ahead."

How do you think mobile and digital technology can support industry's path to decarbonization?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 3, 2021

Guide to Help Understand Key Terms in AI and Emerging Technologies

Over the past few months, I have engaged in numerous conversations with people about artificial intelligence (AI) and other emerging technologies such as blockchain, connected vehicles, virtual reality. In a more recent conversation, it occurred to me that some individuals are not entirely versed to the terms associated with these technologies. Helpfully, the Brooking Institution, a nonprofit public policy organization, published a glossary of key terms in AI and emerging technologies. This post focuses on a few terms I was unfamiliar prior to reading Brookings' glossary.

Metaverse is a term most people are hearing for the first time as a result of Facebook changing its corporate name to Meta. As Brookings explains, metaverse "is a science fiction concept imagined by novelist Neal Stephenson in his 1992 book, Snow Crash that envisions a virtual world which combines the internet, virtualization, augmented reality, digitization, and virtual reality. People can exist in a physical or digital world and cross seamlessly between those levels or they can create their own reality based on their particular imagination."

While quantum computing has been seen in technical publications for decades, the term is appearing more regularly in the mainstream media. According to Brookings, "Quantum computers have tremendous capacity for storing and processing information because their storage processes are not in the form of a zero or one, as is the case with traditional computers. Rather, they take advantage of superposition—the fact that electrons can be in two places at once—to create 'quantum bits' that store multiple values in each point. That capability dramatically increases storage capacity and decreases processing times, thereby improving the scope of data, textual, or image analysis."

Image Credit:
Those who have business or personal dealings in China may be familiar the term, social credit systems (This article by The Economist explains how social credit systems are being utilized in China.) In defining social credit systems, Brookings says "The ubiquity of people’s online activities enables technology that tracks behavior and rates people based on their online actions. As an illustration, some organizations have piloted systems that compile data on social media activities, personal infractions, and behaviors such as paying taxes on time. They use that data to rate people for creditworthiness, travel, school enrollment, and government positions. These systems are problematic from an ethical standpoint because they lack transparency and can be used to penalize political opponents."

Surprisingly, extended reality (XR) is a term not listed in Brooking's glossary. The Franklin Institute defines XR as "an umbrella term that includes technologies such as Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR), either to provide more information about our actual environment to enhance our senses, or else to create completely artificial experiences."

Do you find Brookings' glossary useful? Which terms would you add?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

November 1, 2021

Consider Licensing Your Technology to Generate Revenue for Your Business

In the five days prior to publishing this post, I unexpectedly received four requests from startup founders and small business owners as to whether they should license their technology to generate revenue. One such inquiry came from a woman in California who read my blog post about a presentation delivered by Adam Philipp, an attorney who specializes in intellectual property (IP) law firm, on defining IP and how you should protect it. Having co-founded a startup in 2016, the woman was inquiring as to whether she should continue in her attempts to commercialize her technology to enterprise customers, which was not producing the sales as she had projected, or license her technology to licensees. I was quite pleased to receive her question because I think too many business owners miss the opportunity to generate revenue and increase their business' value through the licensing of their technology. Whether it is in my capacity as an founder or business advisor, I have long advocated that if done correctly, technology licensing can bring significant benefits to a business.

Advantages of implementing a licensing model include:
  1. The licensor (inventor-owner) does not have to finance the commercialization process.
  2. The innovation may have a greater chance to implementing a go-to-market strategy faster because a larger, more experienced company is handling the commercialization.
  3. The innovation may reach more markets if the licensee is a large, well-funded enterprise.
  4. The licensor will not have to build and manage a commercialization team.
  5. The licensor will not have execution risk (although if the licensing agreement is based on sharing revenue from the commercialization of the technology by the licensee, execution risk exists for the licensor).
  6. The licensor should be protected from product liability issues if the licensing agreement is properly written.
  7. The licensor retains ownership of the intellectual property.
Below is some criteria to consider when selecting a licensee and drafting a licensing agreement:
  1. Will you offer an exclusive license or a non-exclusive license?
  2. Are you or your licensee responsible for defending your patent? With the high cost of litigation, it is advised that you shift this responsibility to your licensee should your patent be challenged or infringed.
  3. How will royalty payments be determined?
  4. What conditions constitute grounds for early termination of the licensing agreement?
  5. Will you allow for renegotiating the agreement after a period of time has passed?
  6. Does the agreement guarantee a minimum or maximum royalty per contract period? Does the agreement have provisions for assessing penalties for late royalty payments?
  7. What happens if the licensee goes bankrupt or is acquired? Better get that into the contract as well.
"The Pros And Cons Of Licensing Technology" by Toni Hickey, William Barrow and Charles Harris, all three of whom are attorneys, is a resource that I find useful. This paper presents viewpoints from a corporate IP owner as well as a potential licensee, the difficulty of pricing technology for licensing, and tips for companies looking to license in or license out technology such as (1) opportunity cost, (2) due diligence, (3) comprehensive valuation, (4) licensing terms, (5) monitoring of licensees, (6) litigation preparedness, and (7) enforcement terms.

In explaining how licensing can add value to a business, this website says "[l]icensing technology provides a low-risk way to capitalize on your intellectual property assets. Due to the high cost of manufacture and the comparatively small investment of a licensing program, many of the risks that a company would otherwise face in exploiting its intellectual property are transferred to the licensee. Depending upon the exclusivity of the license, there are varying degrees of risk involved for the licensee and licensor; however, an effective license strategy will minimize risk for both parties.

"Before a company considers licensing out its technology, however, it should consider whether other ways of taking advantage of its property, such as joint ventures and strategic alliances with other companies, would better compliment its economic position. Once licensing is decided upon, the nature of the company as well as the particular property it wishes to utilize should be carefully considered before deciding the architecture of the license."

Tom Kulik, a Texas-based IP attorney, authored an article for Above the Law entitled "5 Things To Think About Before Licensing Your Intellectual Property." Similar to the aforementioned paper, Mr. Kulik also recommends performing due diligence. As he explains, "This may seem like an odd point, but it is essential — you need to know your intellectual property assets as much as the potential licensee with which you are dealing. I know, I know — you are probably reading this and saying 'duh,' but you would be stunned to realize how many times a company has made assumptions regarding its intellectual property assets that are, quite simply, incorrect." He further recommends taking "the time to not only understand what is being licensed, but whether and how it can be licensed in the first place."

On the topic of exclusivity, Mr. Kulik writes:
Exclusivity in licensing should only be done after careful consideration has been paid to the potential licensee, the market and the licensor’s other intellectuals property obligations. This may come as a surprise to you, but I have personally dealt with situations where a lack of such care resulted in multiple exclusive licenses needing to be "unwound" by amendments so that the appropriate intellectual property rights were in place. Assuming any grant-back rights, as a general rule exclusivity basically hands a licensee a set of intellectual property rights that cannot be exercised by the licensor for the duration of the license. Tying the hands of the licensor under an exclusive license should be met with appropriate royalties, minimum guarantees and, in some cases, even upfront fees or advances depending upon the nature of the underlying deal. Further, additional responsibilities are placed upon the parties in exclusive licenses (i.e., joinder of the licensor in intellectual property infringement litigation). Sometimes a non-exclusive construct with specific restrictions may work equally well for the parties. In any event, when it comes to exclusivity in intellectual property licenses, always proceed with caution.

For those who are considering patenting their technology, I am often asked: "But isn't it expensive to file a patent application?" It can be a lot less costly that you may think. Mr. Phillp published a post of his firm's blog that says while "[f]iling a US patent application can cost less than $1,000 for a do-it-yourself version, or more than $16,000 for a complex application (such as for software or a complex machine) drafted by a patent lawyer, the US Patent and Trademark Office (USPTO) makes things a little easier for small businesses by providing discounts to those who qualify for small or micro entity status. For example, the basic filing fee for a utility patent application is $320. It’s $160 for a small entity and $80 for a micro entity."

When I was serving as co-founder and chief executive of ROI3, Inc., our primary product was an mobile application to allow Chinese speakers to learn specialized English terminology. One app was focused on English medical terminology (see screenshot on the left) and another app that presented English terms used in aviation settings. Rather than making our apps available for consumers to download on one of the many app stores available in China, ROI3's business model focused on licensing our technology to enterprise customers. We licensed our medical app to Chinese medical schools and research institutions and our aviation app to flight training centers in China. Items my colleagues and I had to consider included exclusivity or non-exclusivity, when license fees were to be paid, auditing mechanisms to insure that the licensee was accurately reporting revenues resulting from the use of our technology, and insuring that our technology was not be used by the licensee in ways not defined in the license agreement.

However, it is no secret that licensing foreign technology in China carries significant risks with preventing IP theft as the most significant one. And while most people think about members of the Chinese People's Liberation Army hacking into the computer systems of American firms, I advise most companies doing business in China that having their Chinese partner or licensee use their technology in ways not mutually agreed upon or explicitly prohibited in a license agreement should be their primary concern. For those readers thinking of licensing their technology in China, the following posts authored by Dan Harris, via the China Law Blog, may be a useful resource:

What advice do you have on how to successfully license your technology?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.