1. IFISE Starting to plan for Seed and Start-up Capital Sources in Italy Vittorio Modena University of Pavia IFISE - Third Meeting, Pavia October 14-17

2. Outline IFISE 1.Administrative decisions and project status (in short) 2.Second meeting objectives 3.Existing programmes for high-tech enterprises fostering in Italy. 4.Major planning guidelines-Brainstorming 5.Seed Capital Sources Planning-Brainstorming

3. IFISE Administrative Issues 1.Ending Phase 2 - Field Surveys; 2.Starting Phase 3 – Planning for public programmes 3.Light Delay – Are we asking for more time? 4.Second Interim Report has been sent to the EC

4. IFISE 2nd Meeting Objectives 1.Results presentation 2.Planning guidelines 3.Issues to be clarified for better planning from each team

5. IFISE General Planning Issues 1.Relating to general Italian R&D situation (“preliminary phase”-According to Morris) 2.Integration of our recommendations with existing legal framework, optimal planning or both? 3.Separating seed from start-up capital according to the continuity of public intervention (following the Israeli scheme)

6. IFISE General Planning Issues 4.Public seed capital– hardly existing – to be created 5.Start up capital (Venture Capital Funds): Existing, to be shaped or directed (geography/sectors etc)

7. IFISE General Issue – Low R&D (I) High (Over 20% of EU mean) Average Low (Below 20% of EU mean) Italy 1998

8. IFISE General Issue – Low R&D (II) High (Over 20% of EU mean) Average Low (Below 20% of EU mean) Italy 1998

9. IFISE General Issue – Low R&D (III) High (Over 20% of EU mean) Average Low (Below 20% of EU mean) Italy Total R&D personnel per thousand labour force 1998

10. IFISE General Issues – Sectoral Specialization Low specialization in the classic High-tech sectors Specialization in the mechanics/industrial automation sectors

11. IFISE General Planning Issues – Geography North much better than South. No international level HT clusters Milan, Rome Pisa are interesting (but not in a single field) Many small and medium sized cities throughout Italy mostly with a technical university VC and private incubators concentration in Milan Many Italian potential entrepreneurs…overseas !!

12. IFISE General Issue – Geography (II)

13. IFISE Law 297 and the existing framework (I) Fast Changing Programmes Law 297 Startech European Programmes (BICs, ETF…) Regional Programmes – Lombardia Fund of funds and law 35/96. Sicily - mostly implementation of National or European Programmes

14. IFISE Law 297 and the existing farmework (II) Law 297 Enacted 8/1999 started operation 2/2001 Up to 0.5M Euro 50% of eligible research cost ; 25% of precompetitive costs Only Public employees are eligible (professors, researchers Ph.D Students), but other entities may join them (funds, banks, financial institutions)

15. IFISE Law 297 and the existing farmework (III) Law 297 performance February-September 2001 : 3 Proposals (for new start-ups) !!!! Possible reasons: 1.Scarce potential (but start-ups do exists) 2.For public employees only 3.Undefined academic regulation+no conflict of interest available

16. IFISE Startech Programme by Sviluppo Italia Very new programme (Started May advertised only since September 15,2001) Investing in ventures smaller than 2.6 ME Investing up to 0.5M Euro Disinvesting within 5 years Not for profit (can get money back at most) Regional teams of consultants/evaluators Around 150 proposals received hitherto Everyone is eligible

17. IFISE BRAINSTORMING – GENERAL ISSUES 15 minutes think 3 ideas each presentations

18. IFISE LONG LIST - General BRAINSTORMING – GENERAL ISSUES 1.For a limited time University of Pavia should not consider the conflict of interest (see L297). Creation of few success cases. 2.Grants to companies that let people go, promise to take back the person in case of failure of the project 3.Assistance in preparing a plan and advice on how to continue 4.Compulsory courses (in scientific faculties) preparing to the steps necessary to establish a company. 5.Invite venture capitalists at university 6.Simplify the law (L297) 7.Public funds to university incubators (around 20 – selection). The incubators should admit also projects from outside university.

19. IFISE LONG LIST General - Continued BRAINSTORMING – GENERAL ISSUES 8. More money to PhD students 9. Add to Technological transfer offices an educational role 10. Specialised small incubator on biotech investing in the projects 11. Stage also abroad in R&D units of large companies 12. Multidisciplinary courses 13. Make pressures at political level especially at national level for the creation of incubators 14. Connecting the diffusion of incubators to excellence centres in universities 15. Incubator in Pavia 16. Programmes addressed to Italian specialisation, avoid state overspending

20. IFISE LONG LIST General Continued 17. Manager of start-up different from the inventor 18. Incentive to industries in spending more in R&D 19. Create incubators in Italy with high reputation 20. Act on a regional level 21. Find partnership with key players within the community 22. Theoretical recommendation or pilot implementation? 23. Define a budget 24. Focus on pre-seed activity. Set up a centre which can provide training on business. This could be a pilot and then repeated. 25. Matching fund for all VC that invest in seed. (deal by deal) BRAINSTORMING – GENERAL ISSUES

21. IFISE LONG LIST General Continued 26. One more year to scientific faculties’ students to evaluate their work from a market perspective 27. Set up a vice chancellor committee to report in 6 months key actions to support entrepreneurship from the Italian science base and to detail key barriers 28. Set up a national scientific business plan contest sponsored by industry. 10 awards per year, minimum 50,000$ each 29. Set up and fund competitively a scientific entrepreneurship teaching program, where by scientific university and business schools can bid for 10m$ each for 5 years. 30. Help creating groups of people through specific courses 31. Set up spin-off offices assisting who has ideas to develop 32. Help investors to evaluate projects technologically. Regional basis BRAINSTORMING – GENERAL ISSUES

22. IFISE LONG LIST General Continued BRAINSTORMING – GENERAL ISSUES

23. IFISE Seed Capital Planning (I) Do we accept the general philosophy of the Technological Incubators Programmes ? Integrative incubators (funds-consulting- monitoring, office space etc) “Offering a chance to any good idea” Centrally governed Quite generous

24. IFISE Sponsor/initiating Institutions 1.Universities 2.Industries 3.Local Authorities Seed Capital Planning (II)

25. IFISE Seed Capital Planning (III) Size of grants to projects – A few indicators: 1.Israeli incubators – 300K$ 2.Israeli Most Frequent Israeli Raising (0.3- 0.6M$ - see graph below) 3.Israel Biotech First Raisings (0.4-6M$) 4.Italian Biotech Needs (Potential Entrepreneurs) – 0.5-10M$? 5.Italian Potential Entrepreneurs (design houses sector) 0.6-1M

26. IFISE Seed Capital Planning (III) Source: Arie Sadovski

27. IFISE Seed Capital Planning (IV) ? Sectoral / Non-Sectoral / Focused Incubators ? 1.Sectoral are more efficient 2. Non sectoral will not lose an opportunity 3. Focused usually provide for a “natural specialization 4. What about a special Biotech incubator?

28. IFISE Seed Capital Planning (V) Sectoral Specialisation Strategy In a big city/university a combination of one general Incubator + 2-3 sectoral? What about smaller centers (Catania) or Medium-sized (Bologna)? Efficiency or fair opportunity?

29. IFISE Is it important that? 1.Decision are made quickly (1 month in the Israeli incubator ; 3-5 month in for the Italian 297/99 law) 2.There is a central management for all incubators 3.The incubator’s manager gets incentives/share for success. 4.There is a net of experts at national level Seed Capital Planning (VI)

30. IFISE BRAINSTORMING – SEED CAPITAL ISSUES 15 minutes think 3 ideas each presentations Seed Capital Planning (VII)

31. IFISE LONG LIST Seed Capital Planning -Continued 1.…… 2.……. 3.………

32. IFISE LONG LIST Seed Capital Planning- Continued 1.…… 2.……. 3.………

33. IFISE LONG LIST Seed Capital Planning -Continued 1.…… 2.……. 3.………

34. IFISE 1.Small and isolated center 2.1000-1500 researchers in one sector 3.Minimal private venture capital operation 4.Strong public incentives Planning for Seed Capital Sources in Greater Catania

35. IFISE Ideas for Catania 1…. 2……..

36. IFISE Further Information 1.From Israeli teams 2.From Italian teams

37. IFISE How do we proceed? 1.Roberto is presenting VC planning issues 2.After the meeting completing and refining reports 3.“Planning on line”