Financing the Knowledge Society
Seed and Venture Capital Financing,
the roles of the public and the private sector
Claes de Neergaard
CEO Industrifonden
THEMES
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does
Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers
2007-2013 benefit from the Swedish experience?
THEMES
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does
Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers
2007-2013 benefit from the Swedish experience?
What do we get out of R&D investments?
Financial Times Nov 8, 2005
R&D expenditures in relation to GDP 2003
Business
sector
Universities
& colleges
Government
organisations
Israel
Sweden
Finland
Japan
Korea
United States
Germany
Denmark (2001)
Belgium
France
Canada
Netherlands (2001)
United Kingdom
Norway
Ireland (2001)
New Zealand
0
1
2
3
4
5
Per cent of GDP
Source: OECD 2005
Commercialisation of R&D
– EU vs. the US
•
•
•
•
•
•
Stronger output from US research clusters
Stronger tax incentives in the US
Stronger incentives for US universities
The US capital market is more powerful
US military spending boosts research
US one homogenous market.
EU still too fragmented
EU does not catch up!
The road map from idea to invoice
R&D
Technology transfer
Collaboration industry –
research organizations
Basic
Applied
Licensing
Creation of a
new company
Market
Good ideas can end up in
“ The Valley
of Death ”
Knowledge
©Jan Edling
Market
THEMES
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does
Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers
2007-2013 benefit from the Swedish experience?
Enhancement of Technology Transfer
– some Swedish measures
• Increase government funding for R&D
• Focus on cutting edge research in centres of excellence
• Public/private partnership program in six
industry branches
• Improve the effectiveness of both Tech Transfer Offices
in universities and Joint Research Institutes
• Innovationsbron – a dedicated financing vehicle for the
commercialisation of research
• Maintain a strong Industrifonden
• A welcoming approach to venture capital
Financing in different stages
Basic
R&D
Applied
R&D
Preseed
Seed
Startup
Expans
ion
Private sector
Public sector
Pre-commercial financing
Commercial financing
Conclusions from a joint US-EU report
• The venture markets in US and EU invest too little
in early stage start-ups
• Constitutes a “market failure”
• Public sector measures are justified to plug this gap
• Public measures should
– work with markets and not crowd out private
investment
– support funds with the necessary track record
and economies of scale
Source: Department of Commerce and EU Commission, 2005
Venture capital investments in EU-15
2004
Seed
EUR 148 m
Expansion
EUR 7,900 m
Start-up
EUR 2,200 million
Total investments EUR 12,000 million
Criteria for an effective innovation system
Idea
Increases flow of high quality business ideas
Provides rigorous screening
Involves business angels
Brings in market
perspective early
Based on centres
of excellence
Market
Three focus areas
Seven
regional
companies
Luleå
Umeå
Seed capital
Academia –
Business co-op.
Infrastructure Incubators
Uppsala
Stockholm
East
West
South
Independent trust set up by the Swedish
government in 1979
Total equity: SEK 3.2 billion
Invested capital: SEK 1.6 billion
Direct investments in about 100 companies
Co-owner in 11 regional VC-companies
and Innovationsbron
Invests in high-tech companies in ICT,
Life Science and Industrial and Energy
Ventures
Regional venture
capital companies
Venture capital investments
Percent of GDP
0.23
0.21
0.16
0.15
0.12 0.12
0.11 0.10
0.10
0.08
0.07 0.06
Ita
ly
No
rw
ay
Eu
rop
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Ne
the
rl a
nd
s
Fi n
lan
d
Be
lgiu
m
Ge
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an
y
nc
e
F ra
l
rtu
ga
Po
ga
ry
Hu
n
ma
rk
De
n
ain
Sp
UK
Sw
ed
en
0.04 0.04
EVCA 2005
THEMES
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does
Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers
2007-2013 benefit from the Swedish experience?
The regional dimension of venture capital
• Private sector venture funds usually covers Sweden
or the Nordic countries from one or several capitals
• There is room for smaller regional venture funds for
early stage investments in proximity to companies
• Co-investment funds copied on the model developed in
Scotland are helpful additions
• Proximity to companies is an advantage but company
selection can be too much influenced by regional/local
preferences
• Regional investment funds should not be seen as a tool
of regional policy but of innovation policy
THEMES
The commercialisation of R&D – the driving forces
The technology transfer challenge – how does
Sweden tackle it?
The regional dimension of venture capital financing
Can EU policy to improve technology transfers
2007-2013 benefit from the Swedish experience?
Can EU policy to improve technology
transfers benefit from the Swedish
experience ?
• Measures to stimulate commercialisation of research must
get a high priority
• Create two European incubator support programs;
one for Life Science and one for Technology
• Focus on national and European R&D centres of excellence
• Positive attitude to mixing financing from the Commission,
European Investment Bank, European Investment Fund
and national sources
• Do not go too far in defining “European interest”. Good
research benefits all EU-countries