Science Parks as a tool for the development of the knowledge economy. A financial institution perspective O. Debande, L. Piovesan European Investment Bank.
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Science Parks as a tool for the development of the knowledge economy. A financial institution perspective O. Debande, L. Piovesan European Investment Bank Brussels, November 18th 2010
European Investment Bank Who we are The EIB is owned by the 27 EU member states The EIB is a policy driven, non-profit institution following sound banking principles The EIB has a subscribed capital EUR 232.4 bn The EIB raises its funds on the capital markets ( 2009: EUR 73 bn ) The EIB signed loans amounted to EUR 79 bn in 2009 The EIB has marked RDI financing as priority policy objective The European Investment Bank is the European Union‘s long-term financing institution. The Bank acts as an autonomous body set up to finance capital investment furthering European integration by promoting EU policies.
Six priority objectives Within the Union: –Cohesion and convergence –Small and medium-sized enterprises (SMEs) –Environmental sustainability –Knowledge Economy –Trans-European Networks (TENs) –Sustainable, competitive and secure energy
Risk Capital 1 CIP Resources (SME) 2 RSFF (SME / MidCap) 3 Entrepreneur, friends, family Business Angels Seed/Early Stage VC Funds Formal VC Funds Bank Loans and Guarantees Seed / Start-Up PhaseEmerging Growth PhaseDevelopment Phase Facility: High Growth Innovative SME Scheme (GIF), Ecotech Purpose: IP financing, technology transfer, seed financing, investment readiness Target Group: VC Funds, Business Angels EIF Product: Fund-of- Funds CIP Guarantee schemes Growth financing for SMEs Formal VC Funds, CLOs SME guarantees (loans, microcredit, equity/mezzanine, securitisation RSFF RDI financing SMEs/MidCaps, Banks, PE Investors (sub- investment grade) Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks (Investors) Investment Loans 4 Investment Loans RDI financing MidCaps/Large Corporates/Public Sector Entities (investment grade) Loans, Guarantees Later Stage Counterparts EIB Group Involvement in RDI Financing EIF & EIB Financing for Company Life Cycle
Knowledge Economy A competitive, innovative and knowledge-based European economy Job creation and sustainable growth Loans signed: EUR 17.1 bn in 2009 EUR 86.7 bn since launch in 2000
RDI projects Industrial RDI (pilot plants, labs, research activities) Prototypes Research organizations Large Infrastructures Science parks, incubators Specific global loans for innovative SME’s Some examples RDI promoters Industry (direct) Research organizations Universities Science Parks Specialized intermediaries Nat’l/Reg’l RDI support systems Networks & trade associations Multitype consortia Partners (Commission /Eureka/Foundations)
ELIGIBLE COSTS € 20m Time Year 1 € 10mYear 2 € 30mYear 3 Total€ 60m € 30 m MAX. EIB LOAN Facilities: project capital expenditures for tangible assets; Activities : project capital expenditures for intangible assets, research staff cost, incremental working capital needs and other related operating expenses. R&D budgets typically cumulated over 3 years (investment programme) Up to 50% of total project cost. What can be financed by the EIB?
Industry-science links are of growing importance in the innovation process An efficient science-industry interface involves: Co-operation (e.g. joint laboratories); Efficient bridging institutions and platforms, e.g. incubators, science parks, intermediaries, clusters; A diversified base of innovators, with a greater role for small technology-based firms, thanks inter alia to a supportive financial system; But also: Well-functioning markets for knowledge; Social and professional networks; Flows of graduates from science to industry (Cfr: D. Pilates, OECD, 18.05.2006)
Science & Technology Parks (STPs) EIB Experience Eight projects : 1.7 bn EUR investments, close to 800 M EUR loans Projects located in EU (Finland, Germany, Italy, Spain) and Mediterranean (Tunisia) countries. Individual loan size : mostly 30-100 M EUR Under long-term financing of research infrastructures - Loan Term : mostly 12-20 years Loan structure : bank intermediated or guaranteed Which are the critical factors that make a Science park a successful tool in support of the innovation process?
STPs: a tool for the Knowledge Economy? Lessons Learned STPs: a growing phenomenon – where are we? morebetterSTPs role in the changing innovation process – what is needed are not more but better STPs –Better planned –Better managed –Better linked to “Universities” A few key lessons - not always being applied for a variety of reasons: local context, poor management, limited sharing of experience
Which are the characteristics of a well planned STP? Suitable location –Availability or capability to attract skilled workers –R&D intensity –Economic environment –Regional /national policy in support of innovation Clear long-term vision, shared by sponsors and management –Careful selection policy –Self- evaluation of performance Flexible physical facilities –Design –Multiphase development
What do we mean by a well managed STP? A professional management team: –With a business background and an understanding of the areas in which on-park companies are operating –A proactive marketing strategy –Focused on providing high value –added services –Smart networker –Regional –International
When does the link with « University » work? Necessary? Definitely not sufficient! –Co-location (i.e. on-campus vs. off-campus) –Presence in the shareholding structure of the STP –Active participation in the management of the STP So what matters? –A research oriented University with an entrepreneurial culture –Careful selection of tenant companies –An incubator well integrated within the STP