1. January 13, 2005ESTER project meeting in Tel Aviv Results, Problems, Strategy of the ESTER project in Estonia MTÜ CONNECT Estonia

2. January 13, 2005ESTER project meeting in Tel Aviv Presentation outline Ester project- what are the results so far What are the problems What are the challanges and what we can achieveby Ester

3. January 13, 2005ESTER project meeting in Tel Aviv Deliverables Identification of Potential Entrepreneurs and Analysis of Business Environment in Estonia – report delivered Interviews with potential actors in the high- tech sector in Estonia-report delivered Interviews with potential VCs– interviews completed

4. January 13, 2005ESTER project meeting in Tel Aviv Interviews with potential actors in the high-tech sector in Estonia Key findings

5. January 13, 2005ESTER project meeting in Tel Aviv Interviews with potential actors in the high-tech sector in Estonia General Conclusions 1.There is no lack of ideas for potential application among researchers of R&D institutions in Estonia. There are missing skills, experiences and motivation to realize the ideas. Knowledge transfer and the process of commercializing an idea are not effective and are mainly based on initiative of a researcher. 2.R&D institutions develop technology mainly by “technology push” model. The main gap is related to knowledge of market and existing contacts with the businesses in the world market.

6. January 13, 2005ESTER project meeting in Tel Aviv

7. January 13, 2005ESTER project meeting in Tel Aviv Researchers

8. January 13, 2005ESTER project meeting in Tel Aviv Companies

9. January 13, 2005ESTER project meeting in Tel Aviv Interviews with potential actors in the high-tech sector in Estonia General Conclusions 3.R&D institutions and companies both declare the importance of cooperation with each other. At present the real cooperation is weak, under motivated for both sides, and mainly based on personal contacts. Differences in understanding of expected results and working cultures are also factors inhibiting productive collaboration. 4.Role of public sector support is crucial for activating application of research results and developing cooperation between R&D institutions and industry. At present there are missing clear targets on governmental level (plans by fields of technology) and expectation to private sector input in first stages of technology development are very high. Limited amount of available seed funding and a few business angels limit the development of emerging high-tech companies.

10. January 13, 2005ESTER project meeting in Tel Aviv

11. January 13, 2005ESTER project meeting in Tel Aviv Interviews with potential actors in the high-tech sector in Estonia General Conclusions 5. Today the role of science parks in the process of creating start-up companies and developing technology is weak in Estonia. They have no available funds and facilities for support of technology development. 6. There are no priorities or clear strategy in development of technology infrastructure in Estonia. Decisions depend on possibilities of lobby groups to influence the process. Due to limited resources the interest in cooperation is weak, which in turn reduces the effectiveness of using these limited resources.

12. January 13, 2005ESTER project meeting in Tel Aviv

13. January 13, 2005ESTER project meeting in Tel Aviv

14. January 13, 2005ESTER project meeting in Tel Aviv

15. January 13, 2005ESTER project meeting in Tel Aviv Interviews with financial manager Outcomes from the interviews Legal and tax problems Limited range of financial instruments Taxing of stock options Taxing of consolidated concerns– it is not suitable for domicile Negative equity – forced liquidation according to legal Portfolio company valuation and tax basis

16. January 13, 2005ESTER project meeting in Tel Aviv Interviews with financial manager Outcomes from the interviews Business related issues Small size – limited dealflow Poor communication between researchers and scientists

17. January 13, 2005ESTER project meeting in Tel Aviv Interviews with financial manager Outcomes from the interviews Finacial managers’ proposals to improve the situation Tax incentives and solving current tax/legal problems To provide additional funds to leverage current investments Public fund or public provision of funds with strong upside incentives Improvement of public RD grant system

18. January 13, 2005ESTER project meeting in Tel Aviv Problems- General Enterprise Estonia– main business grant agency- struggling with EU requirements– not enough agile and without sufficient vision and business leadership Business sector with limited RD Universities with limited business interaction Very week ecosystem to support SUs

19. January 13, 2005ESTER project meeting in Tel Aviv Key Challanges in Estonia Whether and how to define priority clusters and niche sectors for support provided that resources (both human and financial) are scarce and industry structure does not always support university best research excellence areas and vice versa? How to define pre-conditions for venture capital intervention schemes and how to increase the efficiency for technology development support system? How to lay down a framework for innovation-based entrepreneurship? How to improve linkages between universities and businesses? How to initiate industry-university co-operation and how to design incentives for that sake? How to match technology-push applied research and technology development university initiatives with market demand as local industrial clusters are limited or almost non-existent? How to design initiatives which push forward technology development and other RTD initiatives within universities?

20. January 13, 2005ESTER project meeting in Tel Aviv What we can achieve during the final phase of the Ester project VC, Seed capital schemes To propose sensible changes to legal framework to faciliatete private equity/VC funding in general To propose alternative pilot project for early stage seed financing To contribute to the development of early-stage private investor community development Technology grant funding, incubators To propose changes to current grant provision schemes to make public funding schemes more agile To propose incentive scheme changes to current incubator system

21. January 13, 2005ESTER project meeting in Tel Aviv Promising sectors ICT Dynamic private sector Well- developed and competitve local markets (telco) Weaks links between companies and research projects Companies investing marginally into risky projects & RD Life Sciences and Medical Devices Internationally competitive research Growing pool of qualified personnel in life science Limited number of companies (ca 10 companies) No pharma companies

22. January 13, 2005ESTER project meeting in Tel Aviv Promising sectors Material Sciences (nanotechnology) Good research, mostly not commercialy or application – driven Very limited business knowledge Fairly small industrial sector to co-operate with