Technology Incubator Program’s draft model Valdis Avotins, LIDA

Aims of the presentation To present draft model of the program Receive feedback/ comments to the model Discuss linkage with pre-seed and seed scheme

Technology Incubator Scheme Why? Goals Selection criteria Financing Decision mechanism Supporting measures

Goals Stimulate development of new technology intensive SMEs by supporting innovative entrepreneurs in the early stages of technological entrepreneurship Stimulate export of technology intensive products Motivate scientists and engineers that once left Latvia to establish business in Latvia Facilitate attraction of VCF investments in R&D / technology intensive NSMEs It is not regional instrument

It is necessary because The lowest amount of SMEs (18 per 1000 inhabitants) among the EU candidate countries Mental and psychological barriers to establish first company No sufficient support / guidance available to inventors Few R&D intensive projects among NSMEs No real success in existing few “incubators”

Target groups Engineers and designers from private sector (industry) Academy (scientists, PhD students, engineers from universities) High-level scientists and specialists that have left Latvia, including engineers abroad

Selection Criteria for New SMEs Evaluation done by private TI operator: Knowledge intensive SMEs (R&D investment exceeds 3% from annual turnover) Explicit orientation towards global market (export) Market potential Management capability Acceptable time scale IPR transferred to NSMEs (signed commitment letter)

SME’s liabilities The SME has a liability to repay the received grant as regular payments from sales It is done by paying ~3% of yearly revenues till the 100% of the received grant is repayed These revenues government re-circulates within TI support program.

TI services to SMEs basic infrastructure basic (management, marketing, strategy) services specialized technology services Provision of financing for new SMEs IPR services

Grant model to private TI operator approved TI activity business plan This grant is given max for 3 years. It can be used only for ensuring TI activities and not for investing in new SME Up to 75% of operation’s costs = 25% private financing required Next project 3Y period grant reduced (e.g. 65%) Maximal grant for one TI is EUR per year

Selection criteria for TI applicants Evaluated by SAP Commission: TI business plan (deal flow) TI management experience Experience of TI manager / team Amount of offered financing for TI operation Ability to invest 20% in NSMEs Availability of infrastructure

Eligible costs Management costs basic (general) services and consultations specialized technological services and consultations finance management consultations training of employees marketing expenses IPR protection costs

Split of shares Registration author of technology idea (inventor) – not less than 50%; TI operator – 20%; Management, employees, mentors – up to 10%; After registration Rised capital during next 24 month TI is allowed to invest Negotiations with strategic partner ongoing

Performance evaluation 1. For TI operation: number of approved projects number of created new SMEs amount of services provided export volume number of created working places number of stable SMEs in the long run volume of attracted capital 2. For new SME operation: number of created new SMEs export volume amount of taxes paid to the government number of created working places increase in the volume of realization

Supporting measures Entrepreneurship motivation scheme Awareness creation program Dissemination of success stories / best practices

VENTURE CUP – W-Sweden

EMP scheme

Thank you for attention!