Technology and Research for
Development
Lalith Gamage
President/CEO SLIIT
Chairman ACCIMT
Sri Lanka’s Vision

Double our GDP to $4000 by 2016

IT/BPO Industry - $ 2 billion by 2016
and 100,000 professionals
Tourism Industry - $ 3 billion by 2016
and 500,000 employment
 Mahinda Chinthanaya - Accelerate
Research and Development to establish
5 Hubs by 2020


Aviation hub, Maritime Hub, Commercial
Hub, Energy Hub, Knowledge Hub
Man Power Contribution
Manpower
Contribution
R&D
Professional
Skills
US$ 0.5mn
Semi
Skilled
US$ 3 bn
Unskilled
US$ 5 bn
IT Industry: Case Study
Insignificant in the late 1990s early
2000s
 Embarked on an Eco-system (Cluster)
based approach






Manpower
Infrastructure
Business and legal environment
Marketing and Image Building
Centres of Excellence (R & D)
Competitiveness Strategy
• Address Issues
(Create the Environment)
• Build Confidence
(Make it Competitive)
• Create Competence
(Sustain Competitiveness)
•
•
•
•
•
Infrastructure
Education & Training
Business Environment
Legal Issues
Marketing & Image Building
•
•
•
•
Quality
Innovativeness
Strengths/Niche
Skills
• Centers of Excellence
• Business Incubators
• Research and Development
IT Industry: Case Study
Today IT industry is one of the fastest
growing industries
 5th Largest export earner for the
country





Annual exports are worth around $400
million
Aims to earn $2 billion by 2016
Ranked 16th in 2009
Addressable market is around $350 billion

Success is due to collective efforts of





Universities/Institutes – developed and
offered the relevant programs and carry out
research
Infrastructure providers – Private sector
understood the industry requirements and
service levels and increased capacity
ICTA – policy, research on requirements
SLASSCOM – promotes research, centres of
excellence
Industry – provides placements,
scholarships, funds research, curriculum dev.
Technology and Research for
Development

Technology and Research as an enabler

Product Improvement

Process Improvement

Compare IT industry

Build competitiveness, Efficiency

Developing Research as an Industry

Research and innovation to build new
companies

New Products
Challenges
Industry is not geared to seeking R & D
expertise from research institutions
 R & D institutions carry out their
research without placing emphasis on
economic and/or social value creation
 Lack of Eco-system based R & D





Industry
Entrepreneurs
Investors
R & D Institutions
Challenges
Lack of entrepreneurial culture in the
research community
 Lack of mechanisms to encourage
innovation, commercialization of research



Business plan competitions
Incubators
Non availability of well established Angel
and VC funds
 Inability to recruit and retain best and the
brightest due to poor compensation

Overcoming Challenges
Industry, Research Institutions,
Government Interaction – Marketplace
 Development of Eco-systems




Mechanisms for commercialisation




Industry clusters – Electronics, Biotechnology,
Nanotechnology
Centres of excellence
Industry liaison cells
Entrepreneurship training
Business plan development concepts
Establishment of funded research chairs
Research to Business (Plan)
 What
is The Product/Service?
 What Technological/Innovative Developments?
 Will there be any Intellectual Property?
 How do you obtain technical input? – Technical Team
 Market Scope?

Key attributes of the target market (size with segmentation,
buying criteria, behaviour, etc.)?

What are the market trends and why?

How will you build your market?
 Market

Need?
Why will customers purchase your Product/Service?
 Distribution

Channels
How or who will sell the Product/Service?
Research to Business (Plan)

Competitive Situation





Management Capacity




Why will your product/service "beat" the competition?
Barriers to competition
Patent or copyright protection
Time to engineer a new product
Highlight the key credentials of the management team
What key skill sets are required?
Does management regularly consult with market-based
advisors or experts? How?
Financial


How will your revenue model enhance market acceptance
in the target market? How are you going to price your
service/product?
How much money is required?
Business/Product Development Process
Research
Institution
Research
Outcome
Entrepreneur
Funds
Product
Prototype
Marketable
Product
Business/Product Development Process
Research
Institution
Research
Outcome
Entrepreneur
Funds
Product
Prototype
Marketable
Product
Amount of Capital
Source of Capital
Public Markets
Founders,
Friends and
Family
Govt.
Angels
Venture Capital
Angel Funds
Strategic Investors
Age of Company
What Investors Want

Groundbreaking Technology

World-class Product

Revolutionary Business Model

Empowered Team

Visionary/Renowned Board

Attractive Return

3 I’s: Intensity, Integrity, Immediacy

3 G’s: Goodness, Greatness, Greed
Angels Vs VCs
Angels

Fun, Interesting Opportunity, A willing protégé

10 investments of Rs. 2.5M each = Rs.25M

1 big payout in 5 years, 50 x Rs.2.5 = Rs. 125M
VCs

10 investments of Rs. 25M each = Rs.250M

2 big payouts in 3-5 years, 10 x 2 x Rs.25M = Rs.
500M
Cap Table (Ideal)
StartUp
Founders/
Mgmt
$~0
(100%)
Angels
Angel
Round
VC
Round
$~0 (75%)
$500K
(25%)
VCs
Market Cap
$~0
$2M
Exit
Gain
$~0
(60%)
$60M
1000X
$500K
(20%)
$20M
40X
$2M
(20%)
$20M
10X
$10M
$100M
Cap Table - Sri Lankan IT Company
StartUp
Founders/
Mgmt
Rs.~0
(100%)
Angels
Angel
Round
Rs.~0
Exit
Gain
Rs.~0
(75%)
Rs.~0
(60%)
Rs.300M
1000X
Rs. 2.5M
(25%)
Rs.2.5M
(20%)
Rs.100M
40X
Rs.20M
(20%)
Rs.100M
5X
Rs.100M
Rs.500M
VCs
Market Cap
VC
Round
Rs.10M
Incubating Success
Incubator Features

Access to Infrastructure

Access to People

Access to Funds

Access to Right Environment
Access to Infrastructure

A/C Space

Dedicated Internet Services

Quality Regulated Power

Communication Facilities

Office Furniture and Equipment

Secretarial services

Financial Services
Access to Human Resources & Funds

Technical Experts

Researchers

Developers

Students

Business Analysts

Strategists

Venture Capital

Business Plan development to seek funds
from other sources
Access to Right Environment

Entrepreneurship Training – Seminars, Workshops

Technical Training

Business Skills Development – Monitoring and Mentoring

Marketing of Resident Companies

Market Plan Formulation

Marketing through known contacts

Networking with Global Companies

Linking up with Universities and Industry

Consulting on strategies at various stages: Launch,
Growth and Harvest of businesses.
Way Forward
 Technology
and Research are essential for
our country’s development
 Develop R & D as an enabler and to create
new companies
 Need to address the issues such as





Industry – Research Institution Interaction
Capacity Building of Research Institutions
Funding Sources
Entrepreneurial culture development
Mechanisms for Commercialisation
 Development
of a Eco-system (cluster)
based approach to R & D
Thank you