1. How Can We Become More Successful in Fostering Early Stage Ventures? Kjell-Håkan Närfelt Chief Strategy Officer, VINNOVA kjell-hakan.narfelt@VINNOVA.se

2. First some words on VINNOVA…

3. 2015-10-03Bild 3 VINNOVA is Sweden’s Innovation Agency

4. 2015-10-03Bild 4 2 billion SEK were invested in Swedish R&D 2009 by VINNOVA BY SECTOR BY COUNTY WITH TOP 25 RECIPIENTS 1807 R&D projects received funding 614 of these involved SME’s 500- 250-500 200-250 150-200 125-150 100-125 75-100 50-75 20-50 0-20 (mkr)

5. Public R&D-funding in Sweden per receiving body (budgets 2008) Univer- sities 12 bn SEK 42% Univer- sities 12 bn SEK 42% Swedish Science Council 3.6 bn SEK 13 % Swedish Science Council 3.6 bn SEK 13 % Formas 0.7 bn SEK 3 % Formas 0.7 bn SEK 3 % FAS 0.3 bn SEK 1 % FAS 0.3 bn SEK 1 % VINNOVA 1.8 bn SEK 7 % VINNOVA 1.8 bn SEK 7 % Energy Agency 0.9 bn SEK 3 % Energy Agency 0.9 bn SEK 3 % Space 0.8 bn SEK 3 % Space 0.8 bn SEK 3 % Other Civilian Agencies 2.8 bn SEK 7 % Other Civilian Agencies 2.8 bn SEK 7 % Public reseach foundations 1.5 bn SEK 6 % Public reseach foundations 1.5 bn SEK 6 % Defence Agencies 1.5 bn SEK 11 % Defence Agencies 1.5 bn SEK 11 % Mainly curiosity drivenMainly needs driven Ministry of Education and Research Min. of Environ- ment Min. of Health & Social Affairs Ministry of Enterprise, Energy and Communications Swedish GDP 3 220 bn SEK Public R&D funding: 0.84 % of GDP = 27.1 bn SEK

6. Sustainable society Competitiveness of Swedish industry Improved innovation capabilities Sustainable society Competitiveness of Swedish industry Improved innovation capabilities Sweden 2020 Strategy areas Challenge-led innovation and growth Information Society 3.0 Health and wellness of citizens Sustainable and attractive cities Competitive production in industry and public sector

7. Established firms New companies Market exploitation intensive R&D- intensive The Support System for Commercialisation Venture Cap, e.g.Industrifonden Create and Verify Innovationsbron Launch and establish Grow and Expand Improve and renew VINNOVA

8. 2015-10-03Bild 8 INNOVATIVE STRENGTH Investment & Utilization of research and innovation (R&I) Innovation capacity SMEs Effective cooperation Policy development Global linkages Public sector Swedish participation in EU R&D programs Benchmarking Catalyzing meeting places Globally competitive innovation environments Universities Research institutes Intermediaries Bilateral R&I cooperations R&I projects Verification Coaching R&I projects for growth Participation in Intl cooperation Industry Test- and Demo sites Strategy processes

9. We need to be better in commercialising our research or.. How Can We Become More Successful in Fostering Early Stage Ventures?

10. Is Our Challenge A Funding Gap?

11. Performance of US and EU Seed Funds? Fund type3y5y10y20y US Early/Seed 1.73.736.021.8 US Balanced4.68.413.514.5 US Later Stage9.48.77.514.5 US All ventures4.36.415.517.0 NASDAQ-10.3-4.6-3.27.3 S&P 500-10.0-4.0-3.06.1 EU Early/Seed -1.7-0.2-2.4-1.1 EU All Ventures0.02.10.43.1 EU All Buyouts8.514.113.314.1 Source: Thomas Reuters Performance Data 2008-12-31

12. Or are we working ineffectively? More Money…?

13. Business Growth Business Operation Technology Invention Business Plans, Patents, Prototypes Valorisation of Research and Technology – Current Situation Requirement: A Newco AB

14. After You Have Received Funding… It’s all about product development… …and execution... – Drives organisation development – Drives sales and marketing – Drives costs Prototyping Alpha test Beta test Launch Business Operation in early stages

15. Do ventures fail due to the lack of products or technologies? No, they fail because they lack customers and proven business operations

16. Business Growth Technology Invention Business Operation Business System Beachhead on market Operational Effectiveness Business Invention Verify Business concept & customer value proposition NABC Valorisation – A Reference Model For Tackling The Right Risks First Operational Efficiency Innovation Business Creation Verify Sales process & Business Model Reference Customers Investor Value Proposition

17. Conclusions

18. Focus on verifying your value proposition = customer benefits of business concepts Then learn how to sell and make money = business benefits of customer value propositions

19. From funding gaps to investment readiness  it’s about customer driven invention and verification of business concepts

20. From product development and execution to learning and discovery driven processes  it’s about understanding and discovering what will make your venture successful

21. You are not out there selling – You are trying to understand the customer, the competition, the market and the industry

22. Thanks for Your Attention!