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Venture Capital funding of public spin-offs

Venture Capital funding of public spin-offs. OECD workshop on high-technology spin-offs from public sector research Paris, December 8th, 1999 Risto Kalske Director, Technology Transfer risto.kalske@sitra.fi SITRA, Finnish National Fund for Research and Development.

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Venture Capital funding of public spin-offs

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  1. Venture Capital funding of public spin-offs OECD workshop on high-technology spin-offs from public sector research Paris, December 8th, 1999 Risto Kalske Director, Technology Transfer risto.kalske@sitra.fi SITRA, Finnish National Fund for Research and Development

  2. Sitra’s structure: principals and functions • Research • Training • Innovative operations • Financing of technology companies • International funds • Regional funds • Commercialisation of technologies Finnish Parliament Supervisory Board Board of Directors Management

  3. Corporate finance Seed finance and commersialisation of technologies Investments in venture capital funds Research and innovative operations Training Sitra’s Operational Sectors

  4. Sitra's Venture Capital Activities 155 pcs (726 Mmk, ECU 121 million) SitraVenture Capital 48 (201 Mmk) 102 (375 Mmk) Direct investments Inv. in technology transfer Investments in funds Tech.transfer 7 (16 Mmk) Seed and start-up Growth stage Strategic investments Regional funds 60 (148 Mmk) 42 (227 Mmk) 25 (145 Mmk) 16 (40 Mmk) 5 (150 Mmk) Privatised part of Sitra Bio Fund Management Oy Eqvitec Partners Oy Sitra Fenno Management Oy (Sitra 31%, managers 69%),0,3 Mmk (Sitra 30%, man. 70 %),0,5 Mmk (Sitra 40%, managers 60%),0,8 Mmk Sitra Bioventures Ky Eqvitec Tech Fund I Ky Fenno Program 74,5 Mmk 74 Mmk

  5. Clear tendency from public to private investments as the VC business matures Source: FVCA

  6. Motives for VC investment; public investments shift to the early stages Source: FVCA

  7. Sitra focuses on seed & start-up financing International financing Domestic venture capital companies Tekes (Sitra) (3rd round) Sitra 2nd round Sitra

  8. Breakdown of Sitra's funding in 1998

  9. Business maturity within Sitra’s portfolio companies in 1998 5 companies, EUR 7.8 million 36 companies, EUR 6.9 million 13 % 10 % 27 % 14 companies EUR 16.1 million 27 % 24 companies EUR 17.8 million 23 % TOTAL 102 companies EUR 63 million 23 companies EUR 14.2 million

  10. Biotechnology (11 co.) Industrial distribution within Sitra’sportfolio companies in 1998 18.8 m Medical companies (22 companies) Industrial production (13 co.) 10.4 m Other electronics (17 co.) 7.5 m 6.0 m Other manufacturing (2 co.) 5.2 m Information technology (9 co.) 4.7 m 3.2 m Chemical industry (7 co.) Communication (5 co.) 2.7 m TOTAL 102 companies EUR 63 million Consumer goods (5 co.) 1.7 m. Transportations (3 co.) 1.4 m Control and monitoring (7 co.) 1.3 m Travelling (1 co.) 159 000

  11. Tekno Advisors Oy, Oulu (100%) Management network of the regional funds Savon Invest Management Oy Kuopio (100 %) Indekon Management Oy Lappeenranta (100%) Sentio Invest Oy, Tampere (100%) Aboa Venture Management Oy Turku 25,2%

  12. Teknoventure Oy, Oulu Network of regional funds Savon Teknia Oy, Kuopio Karinvest Oy, Joensuu Pikespo Invest Oy Ltd, Tampere Midinvest Oy, Jyväskylä Indekon Oy, Lappeenranta Spinno-seed Oy, Espoo Innoventure Oy, Helsinki

  13. Network for technology transfer Oulutech Oy Oulu Helsinki UniversityLicensing Ltd. Oy Helsinki Tamlink Oy Tampere Oy Aboatech Ab Turku Finntech FinnishTechnology Ltd Oy Espoo

  14. Public sector activities for R&D in Finland P A R L I A M E N T G O V E R N M E N T Science andTechnologyPolicyCouncil Other ministries and theirinstitutes Ministry ofTrade andIndustry Ministry ofEducation NationalTechnologyAgencyTekes • Funds like: • SITRA • Kera Oy Academy ofFinland TechnicalResearch Centreof Finland Universities 12/95-06

  15. Universities and technology transfer • Universities and Sitra co-own 6 technology transfer companies in 4 university towns • The technology transfer companies • identify ideas with commercial potential • evaluate technologies • serve researchers in commercialising their idea (on a royalty sharing basis)

  16. Future Development • Harmonized practices to commercialise university IPRs • Advanced Technology Transfer Network to • offer professional licencing services • enhance the birth of spin-off companies • offer international Technology Brokearage services • link the financing institutions to the spin-offs • advice on suitable options to utilize the IPRs

  17. Three approaches to the commercial utilisation of innovations Growth company • true entrepreneurship Innovation Acquisition vehicle • exit means Sale/License of IPRs • technology brokerage

  18. VC criteria - special concerns with spin-off firms Spin-offs • Early stage • Professional management • Level of commitment • Business plan • Novelty value • Identified customer need • Ownership of the IPRs • Growth potential • Total financial plan • Terms of partnership • Exit plan

  19. Licensing is also a viable option for the commercialisation of IPRs • Scientist and entrepreneurship - a rare combination • The promotion of spin-off activities attracts top-notch researchers • Financial benefits tend to supersede scientific calling • Brain drain affects the quality of university research • Professionally organised licensing may offer a balanced win-win solution in many cases

  20. Thank you! risto.kalske@sitra.fi

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