Innovation centres, Technology Transfer centres
and Technology incubators as promoters of
innovative entrepreneurship
EU Strategy for the Baltic Sea Region
Incentive for Innovative Entrepreneurship
Dr.Phys.Māris Ēlerts, Deputy Director of LIAA
MBA. Evija Pudāne
M.Soc.Sc.Viesturs Zeps
Riga, 21.09.2011
Importance of H-tech sector
• America’s robust economic expansion is being led by high-
technology sector, which is currently generating one third of real
economic growth. US leadership in the high-tech sector highlights the
gap between US fast-growing and dynamic economy and the slowgrowth economies of Europe and Japan … These income gaps show
no sign of narrowing any time soon.
• Not only is the volume of funds raised for venture capital investment in
the US some five times the European total, but a far higher
proportion of equity investment is directed in the US towards high
technology sectors.”
Gill D., Martin C., Minshall T., Rigby M. Funding
Technology. Lessons from America. 2000
Innovation = Economic Growth
“If you want real growth, you have
to have new technologies”
Source: Business Week
Dr. Eli Opper – Chief Scientist, Ministry
of Industry, Trade and Labor
Export from Israel
(forecast)
3500
3000
2500
exports 2000
($millions) 1500
1000
Software
Citrus
?
500
0
Dr. Eli Opper – Chief Scientist, Ministry
of Industry, Trade and Labor
Weizmann institute – research;
Yeda – a world leader in Technology Transfer
•
•
•
Weizmann institute:
2400 people; 250 research groups; 1000 MSc, PhD students and
postdocs; 850 scientific support staff
Budget: about $170 Million/year
•
Yeda’s mission:
•
Tens of products from Weizmann on the market.
•
Total annual royalty-generating sales in 2004: $6,000,000,000.
•
Over 40 new companies where established around Yeda’s
technologies (some already public), 18 in the last 5 years.
1. To allow society to benefit from discoveries made at
Weizmann.
2. To create an additional source of income to the institute so
that more independent research can be conducted.
Dr. Isaac Shariv, CEO Yeda
TECHNOLOGY TRANSFER – A LINK BETWEEN RESEARCH
AND INDUSTRY
R&D
Technology Transfer
Research
Results
Market
Marketable
IP
Development of IP
University
Research
Organization
Contract
research
MARKET
Licensing
Creation of new
company
What Technology Transfer is about?
•
Technology Transfer is a contact sport… it is about building relationships
•
Technology Transfer programs are expensive
– It takes 10 to 15 years for an office to generate enough revenue to off-set
their expenses
– One “winner” may make enough money to pay for an office…but most
technologies do not generate significant income
•
Technology Transfer programs do more than commercialize technology
– Build relationships with the business community
– Build relationships with the financial (Venture Capital) community
– Improve community awareness of institutional research activity
– Provides institutional participation in economic development
– Educate Faculty and Students about intellectual property, market research and
commercializing innovative technology
•
Technology Transfer is a long-term process
– From the time a patent is filed until revenue is coming to the institution can
be 10+ years
Source: Stuart Gordon
The Legal Framework for Technology Transfer
•
Motivating legislation on protection of intellectual property rights (IPR). Legal structure
similar to Bayh – Dole act. Are the laws in Latvia Supportive of University Technology
Transfer?
– Institutional ownership of the IP and management on behalf of Inventor
– Royalty sharing with Inventors is crucial.
– Effective Patent and Copyright protection
•
Easy starting and closing an enterprise
•
Legislation favorable to risk investors (e.g. – individual income tax benefits)
•
University has effective policy for IP management
– Incentive to Inventor/Author
– Effective management of Conflicts of interest
•
Established policy for corporate sponsored research and consultation
– Fair and appropriate access to University research and resources
– Guidelines and policies for faculty consultants
Government support programs
– Incubators
– Direct tech transfer support programs
•
Developed VC community, Entrepreneurs
University and Industry:
Two diverse cultures
University culture
Research to educate, break ground, provide
service (economic development)
Pace is slower
Mission = basic and applied research
Technology transfer activities are companion
to applied research mission
Industry culture
Mission toward research / R&D / commercialization
Quick-paced
Solve problems - develop new products - profit
Maintain control of science to explore full potential of discovery
(initially)
Direct and indirect economic impact
Lessons from Israeli Tech Transfer system
• Weizmann Institute is aimed at basic science excellence
(not applied science).
• Industrial funding (<15% of research budget) are
restricted, in order to preserve integrity and academic
freedom.
• Scientists focus on science, not on commercialization.
• Scientists are rewarded for success (40%).
• Tech transfer team which knows the campus and the
market: Weizmann graduates with industrial
background.




More significant discoveries and inventions.
better patents.
Very high income from commercialization.
More money for basic research.
The Open Science Model
• University (PRO) does not retain any IP rights (no
patent applications)
• No need for active IP management
• Little incentive to invest in applications of inventions
• Often no direct impact on regional economy
• Still the most widespread model in Europe
• Innovation rests on Industry
• Most inventions from PROs are not turned into
innovations
• Responsibility of Inventor for IP
© IMG GmbH, T. Schwing, 2005
IMG Innovations-Management GmbH
ESTER-Workshop 23.09.2005 / Folie 11
The interaction model
• Builds on the Licence Model and IP management
• Proof of principle is made in partnership with industry
• Demonstration funded in part by public money
(example EC framework programs)
• Fosters innovation as interactive process
• Compatible with PROs missions:
– Contributes to Science
– PRO can capitalize on foreground
– Fair share of returns
• Contributes to regional economy
• Starts to works in Europe, but could work much
IMG Innovations-Management GmbH
better
© IMG GmbH, T. Schwing, 2005
ESTER-Workshop 23.09.2005 / Folie 12
1 license produces > $1M
15 licenses produce < $1M
34 licenses produce
license issue fees
50 inventions not licensed
300 inventions rejected
Terrence Feuerborn, Former Executive Director
University of California System, Office of Tech Transfer
16 licenses
produce income
50 inventions licensed
100 patent
applications filed
The Spin-out Model
• Also Build on the licence model and IP management
• Background technology is used as platform to
develop new business concepts
• Proof of principle by the researchers themselves
• Development funded by seed capital and funding
(difficult)
• Only alternative when no industry partner in sight
• Contributes to regional development with labour
• Contributes to European and national economy
• Slow process: more than 10 years for mature
companies
© IMG GmbH, T. Schwing, 2005
IMG Innovations-Management GmbH
ESTER-Workshop 23.09.2005 / Folie 14
Conclusions for PROs
1. PROs should seriously consider taking a pro-active
role in innovation by managing IPR from research.
2. Main objective is maximize benefits for society.
3. Returns for PROs are attracting students, retaining
good scientists, funding research. Not an alternative
source of funding.
4. Straight licensing is not sufficient. More interaction
with industry and creation of spin-outs are
necessary
5. Staffing and training professional KTOs is the
key.
© IMG GmbH, T. Schwing, 2005
IMG Innovations-Management GmbH
ESTER-Workshop 23.09.2005 / Folie 15
TT System Challenges in Latvia
• Need to develop understanding of TT/commercialization issues
among researchers
• Potential entrepreneurs with good ideas don’t want to leave
research
• One way to cope is finding project leaders with good business skills
• Lack of experience for TT managers (in LiOs)
• Companies don’t know what PROs are doing (asymmetric
information)
• Problematic communication between idea holders and investors
(different perspectives – one needs to understand what the other
party thinks)
•
European Knowledge Transfer Society
(EUKTS)
What is EUKTS
– a proposal for a new organization ensuring quality in knowledge and technology
transfer profession
– main objectives is to define professional curriculum and certification and accredit
courses and certify individuals
– includes existing organizations and networks supported by Member States
– not a training provider
– not a professional association
– a not for-profit organization
• FUNCTIONS
– Accreditation/reaccreditation of courses
– Certification/recertification for professionals(3 levels of certification)
– Coordination with main associations working on data collection
• PARTNERS
– Governmental institutions, Agencies; Universities; Private firms; Network of
knowledge transfer offices; IPR professionals; European Patent Organization
Academy; LIAA
– Italy, Austria, Czech Republic, UK, Netherlands, France, Belgium, Germany, Latvia
Yozma Venture Capital (1)
Mission: To create the venture capital market in Israel
Method: To entice the private sector and foreign investors
to set up new VC funds
To participate in the inv. Committee in the new
VC funds
To secure an obligation of the new VC funds to
invest in start-up companies in Israel
Accomplished through: Establishment of a $100M
investment company
Use of proceeds: Establishment of 10 drop down funds
together with strategic partners.
15 Direct investments
© Yozma Proprietary
Yozma Drop-Down Funds (2)
FUND
CAPITAL MANAGED ($MM)
Original size
•Eurofund
•Gemini
•Inventech
•JPV
•Medica
•Nitzanim-Concord
•Polaris
•Star
•VERTEX
•Walden
© Yozma Proprietary
Today
20
25
20
20
20
20
20
20
20
25
90
350
40
580
70
280
645
400
250
175
210
2,880
,
Government Vs. Private Investments
in Incubator Graduate Projects
,
,
Private
,
Thousand Dollars
,
Government
,
,
Lessons from Israeli Tech Transfer system
Venture capital funds and “angels” are the most important sources for
investment funds
The major difficulties:
Fund raising –
Establishment of business contacts: strategic partners and –
marketing
Protection & management of IPR –
The most meaningful government assistance:
Promoting the establishment of VC funds through the –
Yozma program
Industrial background and experience enforce the creation of successful
enterprises
Investment s in R&D promote an “R&D culture” that becomes a breeding
ground for entrepreneurs and entrepreneurial ideas
The incubators program provides a “ balancing” measure to concentrating
in few market trendy industrial sectors
The involvement of “angels” and other individuals in funding the surge of
establishing start-ups needs to be evaluated
•
•
•
•
•
•
•
Knowledge Transfer Platform
Sources of knowledge (PROs and others)
Technologies
with
commercial
potential
Technologies
with
commercial
potential
Technologies
with
commercial
potential
Technology search/ Scouting/ pre-feasibility
New
Ventures
Reactor
Preseed
Pirmsinkubācija
INCUBATION
Inkubācija
Business
Developers
Technology
Transfer
Jauni produkti/ tehnoloģijas
Jauni
produkti/
tehnoloģijas
esošiem
uzņēmumiem
Jauni
produkti/
tehnoloģijas
esošiem uzņēmumiem
New
technologies
in existing
esošiem uzņēmumiem
companies
Role of TTO
• Marketing of
Latvian
technologies
• Expert role
• Support to
PROs
• Support to
LiOs
(coordinated
activities)
GLOBAL TECHNOLOGY MARKET
International companies
Technology brokers
EXECUTIVE MARKETING ROLE:
Contact network development/
international marketing
Technology licensing
Collaborative research deals/ contracts
based on IP portfolio
Latvia-based JVs (inward investment)
TTO
(Mandated under agreement
with PRO partners)
Selected IP portfolio under TTO management
EXPERT ROLE:
Repository of best practices and
model contracts
Partnership-building within NIS and
other innovation schemes
Support to LiOs in educational tasks and
building interface with local companies
MAIN SERVICES for PRO
partners:
Auditing of research results
Patenting advice
Intellectual Property Support project
control and management
Coordinated functions of LiOs:
Joint database of research interests and competences
Training of researchers in IP/patent matters
Intellectual property development
LiO
PRO1
LiO
PRO2
LiO
PRO3
Latvian
companies
LiO
PRO4
Independent functions of LiOs/PROs
Local marketing and information dissemination activities
Service & consultancy contracts for Latvian industries
Technology Transfer LiOs
• Technology Transfer Liaison Offices
– 8 TT Liaison offices integrated in Latvian PROs
– Database on research capacities;
– Collaboration projects between PROs and Companies
2009
2010
2011 (IIQ)
Contracts (for research,
licencing etc)
11
51
5
International Patent
applications
5
5
1
National Patent applications
44
36
5
Other IP applications
48
4
1
Commercialization offers
51
67
5
Income (k.LVL)
13.54
29.86
10,89
The international technology development and
commercialization project “Commercialization
reactor”
in collaboration with Virtual CEO
Project aim is to connect researchers with serial
entrepreneurs who will lead the invention or technology to
the market place and who will attract investors and the
support needed to create and operate a successful high tech
start-up in Latvia and the European Union.
Process
Technology
and researcher
+
Entrepreneurs
New
enterprise
New investment
opportunity
Results of Commercialization Reactors
November
2009
May
2010
November
2010
June
2011
Technology presentations (CIS,
Georgia, Armenia)
9
10
13
9
Technology presentations
(Latvia)
0
1
2
3
Attendees from CIS, Georgia,
Armenia (researchers and
experts)
25
25
23
20
Entrepreneurs from Latvia
90
170
150
150
Matchmaking (individual
meetings)
46
60
50
30
Signed MoU
3
6
9
6
Established new enterprises
2
2
planned 3*
n/a
*1 technology from Riga Technical University
Commercialization of technologies from local
research institutes and universities
•
It is the time to evaluate operations of Technology Transfer
Centers at Universities
Process
•
To identify technologies with commercial potential
•
Training for scientists about technology transfer
–
training – September 22-23,
–
19 technologies were submitted for a commercialisation
proposal,
– 4 of them were selected for small market research to be
prepared before training
•
Matchmaking event – technology owners and entrepreneurs
–
estimated date - October 21
•
Training for entrepreneurs – how to manage high tech
company
–
estimated dates - October 26-27
•
Matchmaking event – entrepreneurs and investors
–
estimated date - November 02
New forms of Business Incubation
In late 1990s has been driven to multiply the number of succesful, fast-growth,
high technology businesses in US
a)
b)
c)
Its led by serial entrepreneur;
it has its own seed fund drawn from founder’s own, VCF or corporate
partner’s capital;
it may have specific sector focus
Conventional incubators offer “heat, light and dial tone”, but “Smart” Venture
Investment claim to offer more, developing ideas and incubating them in-house
as well as providing late seed capital and A, B and C round investment.
Incubation today is seen as a way in which capital can be efficiently
applied to support new technology businesses
Gill D., Martin C., Minshall T., Rigby M.
Funding Technology. Lessons from America. 2000
SOLUTIONS
One-to-one technical advice and support
Product Development Process/ Development Path Options
Concept Evaluation
Competitor Analysis
Technology Options
Feasibility Studies
Materials Advice
Prototyping
Product Design
Product Compliance
& Certification
Manufacturing
Technology
Screening Process
Team, Team & Team
- Technology – Feasibility, Richness, IP
- Market – Size, Growth, Penetration
Can we help? Budget, Expertise
- Can we identify Exit strategies?
Incubation Period
- Business Planning & Modeling
- Marketing Intelligence & IP Strategies
- Global Business Development & Executive
Mentoring
Mentoring
Chairperson
- Infrastructure
& Administration
Execution
CEO
Technology
Founder
Entrepreneurship in education and pre-incubation
concept
Source: Zeps, V., Avotiņš,V., ( 2010). Critical Conditions to Establish Efficient Incubation Cycle in Latvia. Proceedings of the
XXI ISPIM Conference. Bilbao, Spain, 2010 (ISBN 978-952-214-926-8 (2010))
Key elements of BI system
Source: Zeps, V., Avotiņš,V., ( 2010). Critical Conditions to Establish Efficient Incubation Cycle in Latvia. Proceedings of the
XXI ISPIM Conference. Bilbao, Spain, 2010 (ISBN 978-952-214-926-8 (2010))
Latvia – selected initiatives in
pre-incubation stage

Promotion and Awareness
◦
◦
◦
◦

Student Companies(Junior Acheiveivement Latvia)
Business Men in 5 days (Training + Consultations)
Idea Cup (Training + Consultations + Awards)
ALTUM (Training + Consultations + Credits/ Grants)
Business laboratories
◦ Business lab of SSE Riga

Mentoring
◦ SSE Riga MC
◦ SO “Līdere”

Investment Rediness
◦ CONNECT
◦ SEED Forum
◦ Pre-seed facility
Israeli TI performance
•
•
•
•
•
•
•
TI operation grant max 300 kUSD / two Years
23 incubators, budget 20 MUSD in 2004
Graduates rate versus entrants no. 84%
Long-term survival rate 34%
Fails ~50%, from them during incubation 19%
Further investments receive 50% graduates in avg 0.9-1.0 MUSD
50% graduates reach 0.1 MUSD sales, 27% - 0.1-0.5 and 23% 0.5-5.0 MUSD respectively
• 0.41 MUSD per graduate in 14 years, 20% pays back seed loans
• Extremely important in VC industry creation (40% of all high
tech start-ups created by TI) and to cover seed investment gap
• Privatised 12
Naiot, Israel at a glance
• An Incubator working under Israel’s OCS TIP (operational grant
1.8MUSD per 6 years; 35% of total TI budget)
• Acts as a VC willing to take higher development risk
• Fully owned by the OHTG, acquired in 1997
• Makes 4 to 6 $500K investments annually, 8-10 NTBC in incubator
• Graduated companies raised >$140M
• Best Incubator Award five years in a row
• Hands-on management
• Investing in Medical Devices (70%), software (20%) and
miscellaneous (10%)
• Seed finance: 200 kUSD from Private HT matched with 300 kUSD
public loan
Incubator Network
Innovation Centres and Business
Incubators 2007-2008
5
Total Outcome 2007-2008: 178
new
innovative
companies
established, 455 new working
places created, approx. 1.645
MEUR on tax payments
Innovation Centres and 6
Business Incubators established
in all regions of Latvia
Funding: 2007: 2.316 MEUR
2008: 2.334 MEUR
Outcome 2007: 67 new innovative
companies established, 136 new
working places created, approx. 355
k EUR on tax payments
Outcome 2008: 111 new innovative
companies established, 319 new
working places created, approx. 1.29
MEUR on tax payments
Funding programme 2010 – 2014:
22 MLVL, 10 operators, business
incubators established in 21
town of Latvia
Tenants
Virtual
Pipelined
(waiting list)
Left
New products
developed
Jobs
338
56
46
53
136
1 255
Venture capital instruments 2007 - 2013
5
Pre-Seed
projects
(MolPort, Naco Technologies,
BuzzPodium,
E-Tag,
Blue
Bridge Technologies)
VC
Funds
Business Angel Coinvestment Funds
Pre-Seed
Funds
Ave. deal size €50K
Seed
Funds
€1m
€3m
3 Investments
(Primekss, EUROLCD,
Oobelisk)
Seed Fund and Co-Investment Fund (provided by EIF within JEREMIE)
Funding for the initiative: 12.00 MEUR
Seed-Fund for early stage business development up to 200.00 kEUR
Co-Investment Fund, investments above 200.00 kEUR coinvested with
private investors.
37
Technology Incubators
(support system for research related start-ups)
• Funding – EIF pre-seed and seed funds
• Services
?
“Green” industry Technology incubator
Program still in design phase
• In cooperation with Innovation Norway and SIVA
• Available funding: 8,0 MEUR
• Intended Structure:
– Operation costs for TI
– Pre-Seed for SMEs, 5.0 kEUR, intensity 90%
– Seed for SMEs, 200.0 kEUR, intensity 70%
• Timing:
– April 2012, programme proposal accepted by the donor
representatives;
– May 2012, procurement documentation completed and
procurement commenced;
B. The designed draft
Growth4Future Scheme
1. Technology incubator grant
2. Pre-seed grant – Think for month
3. Seed soft loan (I and II)
Management companies or Operators
of TI’s – private companies providing
space & infrastructure, management
and S&M advice, basic business
services and private investment
structuring in exchange for equity
position in the tenant company
Target groups:
– Potential
entrepreneurs from
industry
– Potential
entrepreneurs from
academia
Tested in Israel, with WB experts, EU experts, local expert panels
– Repatriating
scientists and R&D
personnel
SUCCESS STORY – MOTIVATION PROGRAM, INTRAPRENEURIAL
TECH TRANSFER, VENTURE CAPITAL FUND, BUSINESS INCUBATOR
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Thank you!
Pērses iela 2, Rīga, LV-1442
Tālrunis: +371 67039410
Fakss: +371 67039401
E-pasts: maris.elerts@liaa.gov.lv
www.liaa.gov.lv