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Venture Capital funding of public spin-offs

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Presentation on theme: "Venture Capital funding of public spin-offs"— Presentation transcript:

1 Venture Capital funding of public spin-offs
OECD workshop on high-technology spin-offs from public sector research Paris, December 8th, 1999 Risto Kalske Director, Technology Transfer SITRA, Finnish National Fund for Research and Development

2 Sitra’s structure: principals and functions
Research Training Innovative operations Financing of technology companies International funds Regional funds Commercialisation of technologies Finnish Parliament Supervisory Board Board of Directors Management

3 Sitra’s Operational Sectors
Corporate finance Seed finance and commersialisation of technologies Investments in venture capital funds Research and innovative operations Training

4 Sitra's Venture Capital Activities
155 pcs (726 Mmk, ECU 121 million) Sitra Venture Capital 48 (201 Mmk) 102 (375 Mmk) Direct investments Inv. in technology transfer Investments in funds Tech.transfer 7 (16 Mmk) Seed and start-up Growth stage Strategic investments Regional funds 60 (148 Mmk) 42 (227 Mmk) 25 (145 Mmk) 16 (40 Mmk) 5 (150 Mmk) Privatised part of Sitra Bio Fund Management Oy Eqvitec Partners Oy Sitra Fenno Management Oy (Sitra 31%, managers 69%), 0,3 Mmk (Sitra 30%, man. 70 %), 0,5 Mmk (Sitra 40%, managers 60%), 0,8 Mmk Sitra Bioventures Ky Eqvitec Tech Fund I Ky Fenno Program 74,5 Mmk 74 Mmk

5 Clear tendency from public to private investments as the VC business matures
Source: FVCA

6 Motives for VC investment; public investments shift to the early stages
Source: FVCA

7 Sitra focuses on seed & start-up financing
International financing Domestic venture capital companies Tekes (Sitra) (3rd round) Sitra 2nd round Sitra

8 Breakdown of Sitra's funding in 1998

9 Business maturity within Sitra’s portfolio companies in 1998
5 companies, EUR 7.8 million 36 companies, EUR 6.9 million 13 % 10 % 27 % 14 companies EUR 16.1 million 27 % 24 companies EUR 17.8 million 23 % TOTAL 102 companies EUR 63 million 23 companies EUR 14.2 million

10 Industrial distribution within Sitra’s portfolio companies in 1998
Medical companies (22 companies) 18.8 m Industrial production (13 co.) 10.4 m Other electronics (17 co.) 7.5 m Biotechnology (11 co.) 6.0 m Other manufacturing (2 co.) 5.2 m Information technology (9 co.) 4.7 m Chemical industry (7 co.) 3.2 m Communication (5 co.) 2.7 m TOTAL 102 companies EUR 63 million Consumer goods (5 co.) 1.7 m. Transportations (3 co.) 1.4 m Control and monitoring (7 co.) 1.3 m Travelling (1 co.)

11 Management network of the regional funds
Tekno Advisors Oy, Oulu (100%) Savon Invest Management Oy Kuopio (100 %) Indekon Management Oy Lappeenranta (100%) Sentio Invest Oy, Tampere (100%) Aboa Venture Management Oy Turku 25,2%

12 Network of regional funds
Teknoventure Oy, Oulu Savon Teknia Oy, Kuopio Karinvest Oy, Joensuu Pikespo Invest Oy Ltd, Tampere Midinvest Oy, Jyväskylä Indekon Oy, Lappeenranta Spinno-seed Oy, Espoo Innoventure Oy, Helsinki

13 Network for technology transfer
Oulutech Oy Oulu Helsinki University Licensing Ltd. Oy Helsinki Tamlink Oy Tampere Oy Aboatech Ab Turku Finntech Finnish Technology Ltd Oy Espoo

14 Public sector activities for R&D in Finland
P A R L I A M E N T G O V E R N M E N T Science and Technology Policy Council Ministry of Trade and Industry Other ministries and their institutes Ministry of Education National Technology Agency Tekes Funds like: SITRA Kera Oy Academy of Finland Technical Research Centre of Finland Universities 12/95-06

15 Universities and technology transfer
Universities and Sitra co-own 6 technology transfer companies in 4 university towns The technology transfer companies identify ideas with commercial potential evaluate technologies serve researchers in commercialising their idea (on a royalty sharing basis)

16 Future Development Harmonized practices to commercialise university IPRs Advanced Technology Transfer Network to offer professional licencing services enhance the birth of spin-off companies offer international Technology Brokearage services link the financing institutions to the spin-offs advice on suitable options to utilize the IPRs

17 Three approaches to the commercial utilisation of innovations
Growth company • true entrepreneurship Innovation Acquisition vehicle • exit means Sale/License of IPRs • technology brokerage

18 VC criteria - special concerns with spin-off firms
Spin-offs Early stage Professional management  Level of commitment  Business plan  Novelty value Identified customer need  Ownership of the IPRs  Growth potential Total financial plan  Terms of partnership Exit plan

19 Licensing is also a viable option for the commercialisation of IPRs
Scientist and entrepreneurship - a rare combination The promotion of spin-off activities attracts top-notch researchers Financial benefits tend to supersede scientific calling Brain drain affects the quality of university research Professionally organised licensing may offer a balanced win-win solution in many cases

20 Thank you!

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