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President Obama last night had dinner at John Doerr’s house in Silicon Valley and for some reason I wasn’t invited. I wish I had been. Can you imagine Obama making small talk with Steve Jobs? This is an instance where Steve’s lack of an internal censor probably served the event well, or at least I hope it did, because when it comes to the dinner’s goal of stimulating innovation in America every Administration from any political party needs all the help it can get. I should know, because I’ve been working a bit with those White House would-be innovators, trying to get them in the right groove.

Remember Startup America is the name of the TV series on tech startups I’ve been making for most of the last year. Startup America is also the name of the recently-announced White House initiative on entrepreneurship. Interesting coincidence or brand hijacking?

It was, of course, just an interesting coincidence but I used it as an excuse to accuse them of brand hijacking. Wouldn’t you? So we’re literally moving toward the White House getting an IP license from me. I am not making this up. And it also means they are listening ever so slightly to my advice, because my Startup America is 14 months older than their Startup America and we’ve learned many lessons along the way.

So if you’ve been wondering what’s up with the Startup Tour and Startup America, this is the first of at least three announcements coming this week and next that will explain the next phases for both. Today’s announcement is that I am advising the Obama Administration on this topic. Weird, eh?

Here’s the sort of advice I am giving. There’s a great temptation if you have dinner at John Doerr’s very nice house to buy-in to the Silicon Valley innovation model — to attempt to replicate that in other parts of the country possibly with government assistance. But having visited tech startups in 20 states last year I can say with some conviction that it often won’t work, because the Silicon Valley startup ecosystem isn’t the American startup ecosystem.

This is the Silicon Valley innovation model: 1) get a bunch of really smart people and think up ideas for technology startups; 2) choose a dozen of the best ideas and throw some significant money at them for 6-12 months, and; 3) at the end of a year throw even more money at the two surviving ideas knowing that one of those will also be dead before its second birthday. Brainstorming–seed funding–A-round–success, and of course bloodshed along the way — simple as that.

This model works well in Silicon Valley, where everyone knows people who have worked for eight different companies in the last eight years. But for most of America the model doesn’t work well at all. That’s for three reasons:

1) There often isn’t enough technical talent or if there is, that talent is more risk-averse (or less cocky) than the Silicon Valley crowd.

2) There definitely isn’t enough risk capital outside hotspots like Silicon Valley, Boston or Austin or a few other places that are comfortable with a 90+ percent failure rate. Try that argument down at the bank.

3) The strongest difference between Silicon Valley and real America when it comes to tech startups is how the original idea comes to be. In Silicon Valley you decide to start a company then look for ideas. In real America you have an idea that eventually becomes a company.

That third difference may not sound like much but it is critical. Silicon Valley is a boomtown where everyone is looking for the next vein of gold. In the real America founders more often come up simply with ideas they love that morph over time into products. But since no accelerated, laser-zapped, steroid-boosted in vitro fertilization is involved, these ideas take longer to mature than they would be allowed in Silicon Valley, where success is measured in months, not years.

This doesn’t make provincial ideas any worse than Silicon Valley ideas; in fact they are often better. Nor does it mean those ideas go through more or less evolutionary steps on their way to eventual product maturity. Ideas are ideas. But not all ideas are also dreams, and most startup founders outside Silicon Valley are living the dream that is their technology, not the dream that is their startup.

The result is that companies outside of Silicon Valley start slower and grow both slower and more cheaply. Our Startup America companies were an average of six years old and had gone through in those six years an average of $40,000. Time is money, think about it. To do the same job in one year would have cost $240,000. To do it in six months would have cost $480,000. That’s Silicon Valley kind of money, but six-year, $40,000 money is Uncle Phil money.

So here’s the advice President Obama definitely didn’t get last night at John Doerr’s house. Replicating Silicon Valley in other places usually won’t work. Accelerating innovation isn’t the same as nurturing innovation. Debt financing is close to useless for startups (only ONE Startup America company used debt financing that wasn’t a home equity loan or credit cards). Friends-and-family money is key so find ways to encourage it, though that may not really make a difference. Slow nurturing builds good products, too, so don’t assume that a five year-old startup is a failure or penalize it simply for being five years old.

People who are doing what they love are generally doing good work.

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Rested, rejuvenated, and — most important of all — replenished with good ideas, the Startup Tour is getting back on the road, revisiting the companies we saw last summer. That first visit set a baseline, introducing the startup companies, but this trip is our chance to help.

Just like they did on the old Newlywed Game, we’re bringing to each company a gift “chosen especially for you.” This is typically something we sensed was missing on the first visit that — through the power of television — we could help provide on this second trip. Sometimes it will be a customer, a strategic partner, a distributor, an investor, a new head of marketing or CEO for those companies that need one, or even a hero for inspiration. For about a third of the companies we’ll be bringing plain old money.

All startups think they need money and some can actually use it. For many, though, cash alone isn’t the answer, because cash brings complexity and obligation — two things these earliest stage companies often can’t handle. Ready-fire-aim may work in Silicon Valley, but we’re avoiding Silicon Valley, remember? So aiming is what we’re all about.

Sometimes finding what we can do to help is easy. The company can’t get a meeting at WalMart, for example. We can fire-up the cameras and maybe get that meeting in Bentonville, but first we’d argue against it, because working with WalMart kills many companies, especially those with shallow pockets. WalMart shows vendors no mercy and doesn’t care how big or small they are. It may be better to aim our cameras elsewhere.

But finding money, it turns out, is a little harder.  At least it was for me.

Every startup needs a break, a lucky accident like sitting next to exactly the right person on an airplane or finding the ideal partner at your son’s Cub Scout meeting. But such accidents happen only to those who actually get on planes and attend Cub Scout meetings. Good fortune rarely knocks on doors.

Nor does capital, it turns out.

I had this idea right from that start that venture capital would play a role in both the Startup Tour and the TV show. Here I had this crowd-sourced deal funnel filtering hundreds of good companies into a couple dozen really exceptional opportunities. Readers did the work of a dozen overpaid VCs finding the best startups. What resident of Sand Hill Road wouldn’t want to hitch a ride on something like that? I envisioned offering my VC friends the chance to tag along, giving sage advice on TV and snapping-up the best investment opportunities in the process. It was going to be a win-win.

Except I couldn’t interest anyone in seriously participating.

“We’ll eventually see all those companies,” my VC friends said to me. “They’ll come to us. ”

No they won’t.

Most of our Startup Tour companies have never even met a VC and wouldn’t know how to arrange a pitch, much less do a good one. That’s the Silicon Valley tradition of startup-as-theater. Startup Tour companies have real products, not just ideas, and they’ve already survived an average of six years. I’m not saying they can’t do an elevator pitch nor that they shouldn’t have to do one. I’m saying the Tour and the show aren’t about pitching, but doing.

My VC friends turned out to be too lazy, I think, to participate in what would have been an amazing opportunity for any of them. That’s their loss. But where was I going to get the money?

Hong Kong, mainly.

Now does it make more sense that I’ve been writing about China?

America is strapped (all except the banks and of course the big corporations sitting on $1.4 trillion in cash). Okay, Americans are strapped, while Asians seems more prosperous and less risk-averse, at least for now. Little Hong Kong has plenty of accredited investors still interested in the American Dream. Ironic, eh?

So with my friend Jong Lee, the guys and gals of Hambrecht & Quist Asia Pacific, and Kingsway, a Hong Kong investment bank, we raised the Startup America Fund specifically to help some of these little Startup Tour companies. H&QAP is a Hong Kong-based private equity firm that is 25 years-old and has $2.8 billion under management, so there is adult supervision, which means no new RV for Bob, dammit.

These aren’t prizes, they are investments. We sat down in Hong Kong and decided as a group to practice old-time venture capital, investing modest amounts in real companies with real products that are ready — or nearly ready — to go. The investments vary from $100K to $5 million, which are amounts beneath the threshold of many Silicon Valley VC firms, and involve a substantial component of sweat equity — the fund’s sweat, not the founder’s. Helping startups to succeed is what this is all about, though making a profit is nice, too.

So we’re getting that win-win after all from this desparate exercise in me channeling Simon Cowell.

I only wish more American investors and institutions had taken my call.

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So the phone rings at a big publishing company in New York. “How long is a book? ” asks the caller.

“Well it varies from book to book and genre to genre,” explained the publishing company receptionist.

“This is a novel. How long is a novel?” the caller asked.

“That varies, too, but many of ours are around 80,000 words,” the receptionist said.

“Thank God, I’m finally finished!” said the caller.

By the same token, how much money does it take to start a technology business? I’ve just spent the summer with more than 30 startups and can tell you the amount varies greatly — more than you could even imagine.

In the simplest sense how much money it takes to start a technology business depends mainly on how much money you have, because it generally takes it all. But all can vary a lot.

The most money raised by any of the Startup Tour companies we visited this summer was $70 million. The least was $5. There were plenty in the $1+ million range but I’d guess the median was around $40,000.

There are plenty of companies that claimed to have not raised any money at all, but that’s not true. The founders of those companies generally went without pay for six months or more, so their companies were self-funded with significant dollars. That makes the $5 company all the more amazing, because it really did start with just $5 — for business cards at Kinkos — and was profitable before the end of its first day in business.

Remember these are companies outside Silicon Valley. Most of the companies we visited this summer had never even met a venture capitalist. Most were funded by family and friends. A surprising number relied on government funding, primarily in the form of Small Business Innovation Research (SBIR) grants.

If there’s a role for government in encouraging tech startups, SBIR defines that role. For those unfamiliar with the SBIR program, federal agencies that spend more than $500 million per year on outside research are required to set aside a small percentage (I think it is two percent) of that money for research contracts with small businesses. The two-phase contracts are for $100,000 and $600,000 to develop technologies of interest to the government. But while the government gets use of the technology, they don’t get to own it or even have equity in the developing company, so from an entrepreneurial standpoint this is ideal.

From what I have seen, the SBIR program is modest, yet extremely successful at encouraging innovation. Perhaps it should be expanded.

Yet that’s about as far as federal success in this area goes. None of the startups had done business, for example, with the Small Business Administration or with SBA lenders. For technology at least, this more traditional program is a non-starter, probably because it is hard to explain to a bank the value of software.

A lot of what we looked at was software, but home equity loans also funded a robotics company and a solar company and probably other companies we didn’t even realize were built on housing bubble money.

The point is that it doesn’t take a lot of money — certainly not Silicon Valley-type money — to start a very fine company. The trick is to either do-it-yourself or do-it-offshore, with the offshore model oddly in decline, probably since there are so many out-of-work engineers in the USA.

One of the more surprising conclusions of the summer is that many of our companies saved so much time by not looking for money that they ended-up not needing the money they might have raised.

Let me explain this last point in more depth. If you spend three months writing business plans and visiting VCs before you have a prototype, then you are three months late (and $X behind) before the first line of code is written or first piece of metal cut. Yet you had to eat during those same three months. Better to go for 90 days on savings or on a 30-second pitch to your rich uncle than to waste three months looking for VC money.

Get a good prototype and the money may come looking for you.

And certainly six months is enough time to know if your idea is going to work or not. So six months of income is the most you should expect to raise or spend from savings.

I don’t care if you are inventing a frigging immortality drug, the same funding rules apply, at least outside Sand Hill Road.

We visited a very promising pharma startup, for example, that had so far spent only $30,000. Yes, a lot more money would be shortly needed for large animal and human trials, but the preliminary work was done, their basic IP was protected, and no equity was burned in the process.

It’s painful for them now, but in the end each of these companies will be glad they were so careful with their spending.

Not that they all were so careful. Home equity money circa 2006 was so abundant many of our founders made stupid mistakes. But to make our list they also recovered from those mistakes. And when you look at the dollars that actually bought the right stuff, they generally came down to that same $30-40K.

So how much money does it take to start a technology company? Less than you think. Maybe even less than you have.

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A week from now I’ll announce in this space an important project involving technology startup companies, which I feel are key to continued economic prosperity for the United States. This will be my major project for 2010 with the Moon shot following in 2011. But first I want to conduct a little experiment involving venture capitalists. How interested are they, really, in your ideas or mine? We’ll see.

This is a tough time to be a VC. Investment returns have been poor for several years. Some of this can be blamed on bad investment decisions, some on a horrific economy, and some of it comes down to what are essentially deferred returns because of the drought of Initial Public Offerings. With not many tech companies going public there are fewer VCs buying private jets.

So the VC community is chastened though not poor and this leads to a trend I’ve noticed of venture firms and their web sites suddenly seeming a lot nicer than they used to be. Nearly every firm on Sand Hill Road says it fosters entrepreneurism, says it gives more than just money (sage counsel, help in hiring, really good coffee, etc.), and offers a channel for you and me to submit our business plans right into the belly of their beast, though with nothing held confidential, of course.

I find this idea fascinating, that anyone (heck, everyone) could submit a business plan for review by some of the smartest (and not so smart) VC’s in the world. Can it really be that easy? If my idea, my technology, my business model, and my target market are all good, can I really get funded through a VC web site alone? History and conventional wisdom suggest not, but those web sites are just so darned cheery that I decided to give it a try anyway.

So last week I wrote a business plan for a real startup. People with good ideas and nowhere better to take them come through my door all the time, so I grabbed one of the better ideas and just wrote it up. The geek in my kitchen this time was supremely experienced and grounded in the real world, his idea was novel and addressed a $7 billion market growing at 30 percent per year. There were, as far as I could tell, only seven competitors, the technology seems protectable, and if any of them rip it off it should be easy to tell. Best of all there wasn’t much money required by VC standards, the development and sales cycles run in parallel, and could be measured in months, not years.

Heck of a deal: one funding stage and profitable in less than a year. This would be many a VC’s dream investment. But only if they know it exists.

I submitted the business plan last week through the very friendly web sites of two Sand Hill Road venture capital firms. One firm is venerable the other fairly new but both are among the best. If they actually read the plan I’m sure they’ll be interested, not just because it is good but because it came from me and these firms both know me. I’m not an idiot — I only play one on TV — and they know that. So the real question is whether the plan will be read at all.

I don’t really know how this vetting process works, but I imagine it must be like the stories I’ve heard about how book publishers handle unsolicited manuscripts, which pile up in corners, are occasionally thumbed through by junior editors, and periodically shoveled in a dumpster, many unread, even unopened.

That’s no way to find the next Moby Dick.

Yet good books are still published because literary agents get their stuff past that pile-from-Hell and into the hands of senior editors who actually buy books. Same with venture capital, where it usually comes down to who you know.

This should be interesting. Will the VC’s read my plan at all? Will they read and reject it? Good plans are rejected all the time. If they reject it will they bother to tell me? If they like it will they bother to tell me? And how long will all this reading and telling actually take? Days? Weeks? Months?

Of course by writing this column I’m unleveling the field a bit. Most firms will do nothing special as a result but a few may actually send someone to paw through that electronic pile of business plans looking for something from me.

I’ll keep you posted.