1. First Annual STCU Survey: Preliminary View, Fall 2003

2. 2 Table of Contents Purpose Organizations Surveyed Categorization by Funding Source –Organizations in each category –Descriptions of each category Yes/No Responses Financial and Numerical Responses Tentative Conclusions Questions that Emerge Provisional Definitions

3. 3 Purpose In order to understand better the nature of the transition to self-sustainability….STCU will begin an annual survey of each of the institutions and companies which have received and continue to receive our financial support.

4. 4 Questions Asked How would you characterize the usefulness to your institute of an STCU research grant? Aside from your work through STCU on any partner projects, what is the commercial value of business partnerships which you might have established? Please provide the average annual percentages of income to your institute from each of the following sources: the Government, private companies, non-STCU research foundations and STCU grants. What is the total approximate US Dollar value of any non-STCU research grants which you have received? What is the number of spin-off companies (or commercial groups) which you have formed and what is the legal status of each of them? Have any of these resulted from STCU grants or assistance? How many patents (national, international, U.S.) have been granted to your project teams and institute and what is their approximate value in US Dollars?

5. 5 Organizations Surveyed (188 total)

6. 6 Analysis and Presentation of Results Challenge: -Characterize that part of the scientific sector in Ukraine, Georgia and Uzbekistan which STCU impacts. -Present results without direct linkage to the organizations surveyed. -Establish baseline for subsequent annual surveys. -Interpret varied responses to open-ended queries. Approach: -Use clearly defined rules to group each responding organization into one of several broad categories. -Present survey data linked to these larger categories, rather than specific organizations.

7. 7 Summary of Results The Survey characterizes the population of institutes and other scientific organizations that STCU has assisted. Over 40% of the organizations report a strong commercial orientation or diverse sources of income. However, 34% still depend heavily upon government support. Two groups would likely benefit from targeted STCU training: –IPR for those with private investment and grant-writing skills, but no patents; –Market analysis for those with patents but no business partners. In subsequent years, while the questions will be refined slightly, these results will serve as a baseline to recognize trends over time.

8. 8 Basis for Categorization One question offered the most uniform and consistent basis for separating respondents into different groups: Please provide the average annual percentages of income to your institute from each of the following sources: the Government, private companies, non-STCU research foundations and STCU grants. Nearly all organizations responded with four values, W, X, Y, and Z, totaling 100%:

9. 9 Five Categories Emerged* Confidential: Organization declined to respond wholly to questions about annual budget distribution. Government-dependent: More than 60% of budget from government. STCU-reliant: 40% or more of budget attributed to STCU grants. Commercially-oriented: Private companies contribute more than 40% of budget. Diversified, multi-source: Funds from three or four different categories. No single category accounts for more than 58% of budget. *The rules were applied in the order provided above. Overlaps were few. Three organizations placed in the STCU category also had private funding greater than forty percent.

10. 10 Organizations grouped by Funding Source

11. 11 Types of Organizations in each Grouping * Blue dot indicates organization founded, reformed, or spun-off since early 1990s. ConfidentialGovernment- dependent STCU- reliant Commercially -oriented Diversified, multi-source Commercial Entities Institutes Universities Centers, Foundations & Other

12. 12 Considering each Category Responses took the form: Color-Coding: For each response, the values W, X, Y, and Z were assigned colors, according to chart below. Grouping: These colors helped to highlight patterns within categories.

13. 13 Confidential Category 11 Organizations declined to respond to questions about the distribution of their annual budget These organizations did supply answers to non-financial survey questions, including numbers of patents.

14. 14 Government-Dependent 39 organizations rely upon the government for more than 60% of their budget. 17 have no private company involvement. 15 report small (0.9-10%) percentages of private funding. 7 report greater private funding (15-32%) than grants (1-15%)

15. 15 STCU-Reliant 19 organizations say they rely upon STCU for more than 40% of their budget. 6 receive no government support. 4 depend almost entirely on STCU and the government. 9 government- supported report funding from at least 3 sources.

16. 16 Commercially-oriented 25 organizations said private company financing accounted for more than 40% of their annual budget. Government involvement ranged from 0% to 50%.

17. 17 Diversified, Multi-source 24 organizations report diverse, multiple sources of funding: One third receive more from STCU and other research foundations than they do from the government. They receive no private company financing. Two organizations receive no government funding, but have private sector contributions of 20-30% and grants of 70-80%. One half compete successfully for funding in all four categories: government, private sector, non-STCU, and STCU. No source accounts for more than 60%.

18. 18 Questions with partial Answers Which groups are key STCU constituencies? What does sustainability look like? Does competing for research grants improve odds of forming successful business partnerships? Do all groups need the same training? What is the relationship between patents and profitability? What factors influence the creation of spin-offs?

19. 19 Groups arrayed by Budget Distribution Step 1: Use a bubble to represent each sub-group Step 2. Use x axis to show funding from government Step 3: Use y axis to show total grant funding (from STCU and other research foundations) Step 4: Use bubble size to show relative contributions from private companies (range from 0% to 95%)

20. 20 Traditional STCU Focus Confidentiality Gov & STCU only Gov & minimal other influences

21. 21 Sustainability may take different forms Sustainable #1: high grants & mod private Sustainable #2: high private Sustainable #5: gov & priv Sustainable #3: gov & grants Sustainable #4: 3-4 balanced sources True test of Sustainability is whether organizations continue to exist into the future.

22. 22 Presentation of Yes/No Responses Step 1: Use the fixed array of bubbles as a constant way to represent the population of respondent organizations. Step 2: Vary the color of the center of the bubble to reflect responses to a particular question. -For each question, count number of yes responses as percent of total responses (e.g. 2/8 organizations in grouping responded yes=25%) -Then, assign color to core, using chart below:

23. 23 Business partnerships? For groupings reporting no private financing, higher grants seem correlated to greater percentage of business partnerships.

24. 24 Commercial Value of (Foreign) Business Partnerships? Low Value Average High Value Organizations struggled to assign value to their business partnerships.

25. 25 Non-STCU Research Grants? Do these groups need assistance applying for non- SCTU grants? Or has their private funding been adequate?

26. 26 Value of Other Research Grants? Low Value Average High Value Organizations found assigning value of research grants much easier.

27. 27 Spin-off companies or commercial groups? Groupings with higher private investment report more spin-offs. Likely includes Spin-offs: joint-stock lab, center, design bureau

28. 28 Number of Spin-Off Companies? Low Value Average High Value No private investment, but some spin-offs Some private investment; no clear correlation with number of spin-offs

29. 29 Creation of Spin-Off Companies *Small Company includes: Limited Liability, Private, and Partnership. **Other includes: Technopark, Computing Center, International Organization and Fund. 3 created with STCU help 1 created with STCU help 4 created with STCU help Of those organizations that created spin-offs, those with higher private investment created more

30. 30 Patents? Center & Company: target for focused IPR- training? All report patents, but minimal private sector financing. Focus training on locating partners & understanding markets?

31. 31 Number of Patents? Low Value Average High Value G1: No private invest- ment G2: Some private invest- ment

32. 32 Value of Patents? Low Value Average High Value Few organizations knew how to assign value to their patents; estimates varied wildly.

33. 33 Jurisdiction of Patents Foreign patents account for approximately 3% of total 1,780 patents declared. Specifically mentioned: –Russia (34+) –US (12+) –UK (2+) –Canada (1) –Europe (1) –China (1+) –Pending applications for foreign patents (9 PCT)

34. 34 Conclusions Over 40% of the organizations report a strong commercial orientation or diverse sources of income. However, 34% still depend heavily upon government support. 16% depend upon STCU heavily; this group includes a disproportionate share of new organizational forms. Population of organizations is diverse: within each broad category, there exist substantial differences: –Within Government-dependent, those with no private-sector involvement vs. those with 15-30%; –Within STCU-reliant, those with no government support vs. those with just government & STCU. Two groups would likely benefit from targeted STCU training: –IPR for those with private investment and grant-writing skills, but no patents; –Market analysis for those with patents but no business partners. In subsequent years, while the questions will be refined slightly, these results will serve as a baseline to recognize trends over time.

35. 35 Provisional Definitions (1 of 2) Institute: Organization that engages in scientific research. –Until the early 1990s, all Institutes belonged to the state. The Ministry of Education ran Polytechnic Institutes and Universities. The National Academy of Sciences, Academy of Medical Sciences, and Academy of Agricultural Sciences supported Institutes dealing with broad or fundamental issues of science. Government ministries (e.g. Industry, Agriculture) managed Branch Institutes. Often narrowly focused or applied, these Institutes supported factories or other enterprises run by that ministry. –Since the early 1990s, new Institutes founded by universities have emerged. –Some traditional Institutes have reorganized, and transformed into holding companies with several sub-Institutes: The holding company may be called a Complex, (Scientific-Technological, Scientific-Research) Concern, (National Technical) Center, or (Scientific Research) Institute. Each constituent part may be called an Institute, Technopark, Computing Center, or Center. Ownership may be structured as a joint-stock company; more frequently, the government retains ownership. –Institutes have established commercial entities; Institute staff receive salaries plus dividends on their new shares. Center: Organization established by two or more Institutes or parties to fulfill a specific objective. A center may be commercial, or non-commercial. Laboratory or Department: A part of an Institute or University that responded to the survey as a self-contained entity.

36. 36 Provisional Definitions (2 of 2) Enterprise: a factory or plant that produces something. Often state-owned. Some former state-owned enterprises have been transformed into joint-stock companies. Joint-Stock Company: Commercial organization whose shares are held by multiple owners. –The shares of a closed joint-stock company are held by employees only. –The shares of an open joint-stock company may be held by non-employees, as well. Firm or Small Company: Commercial organization, whose shares are all owned by its founder/s ( one or several individuals.) –Private: Pays lower tax rate, but personal assets of owner can be seized in case of bankruptcy. –Limited Liability (Ltd.): Pays higher tax rate, but personal assets of owner not at risk. –Partnership: several joint owners. Government or State Company: government maintains ownership & control. Foundation: a non-commercial organization.