WORKSHOP 4:

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Plan de Ciencia, Tecnología, Sociedad 2005-2008
WORKSHOP 4 Development of new knowledge
intensive sectors
Funding and help for knowledge intensive projects
Bob Hodgson Zernike (UK) Limited
Bilbao February 2004
2
Structure and purpose
Structure

• messenger
• key messages
• examples
• success factors

• Purpose
• promote integration, differentiation and
  flexibility

Bob Hodgson
Bilbao February 2004
3
Messenger Cambridge structure

• Small city region
• Small high quality university
• High level entrepreneurship
• Private sector driven

Bob Hodgson
Bilbao February 2004
4
Thinking world class region

• Greater Cambridge
• Strengths
• World class research base
• Dynamic high tech community
• Specialist property
• Weaknesses
• Congestion / greenbelt
• Growing issues of affordability
• Disparities across the sub-region

• Milton Keynes / North Bucks
• Strengths
• World class specialisms in education and learning
• Infrastructure for further growth
• Focus for inward investment
• Weaknesses
• Footlooseness
• Skills

• Bedfordshire and Luton
• Strengths
• Research specialisms at Cranfield
• Growing expertise in the environmental sector
• Expertise in manufacturing and light engineering
• Weaknesses
• Comparatively weak skills base and a lack of
  entrepreneurialism
• Some structural economic concerns

• Oxfordshire
• Strengths
• World class research base
• Dynamic high tech community
• Specialist property
• High quality workforce
• Weaknesses
• Congestion / greenbelt
• IT Infrastructure
• Labour and skills shortages

Bob Hodgson
Bilbao February 2004
5
Messenger Zernike model

• Integrated technology entrepreneurship
• Specialist property
• Seed and start-up funds
• Business networks and globalisation
• Consultancy and positioning

Bob Hodgson
Bilbao February 2004
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Key messages
It can be done .. it must be done

• Passion
• Willingness to pay
• Make a market
• Integrate flexibly but target assistance
• Connections and flows not agencies and
  infrastructure
• Differentiation and equity needed

Bob Hodgson
Bilbao February 2004
7
Common experiences

• Trust is at the heart of every success
• Some shared vision
• A language to communicate
• Incentives to motivate behaviour
• Building a history
• Worry about sustainable business model
• Grant
• Capital
• Income
• Build in market motivation and reward

Bob Hodgson
Bilbao February 2004
8
Key features of knowledge enterprises scene
Everybody is doing it so is a moving target

• What needs to be integrated?
• Skills
• Money
• Infrastructure
• Information

Bob Hodgson
Bilbao February 2004
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The starting point is

• What do these firms need?

Bob Hodgson
Bilbao February 2004
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So the diagram becomes
Money
WHAT HELP DO FIRMS NEED
Information
Infrastructure
Know-How
Bilbao February 2004
Bob Hodgson
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The key characteristics of each need are
Wider access
Longer duration
Lower cost
Aid programmes
Physical
Money
WHAT HELP DO FIRMS NEED
Infrastructure
Information
Policy
Markets
Know-How
Technology
Business
Corporate personnel
Professional specialists
Training for skills
Bilbao February 2004
Bob Hodgson
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With tools to help in each area

• Factoring
• Information
• Asset registers
• Guarantees
• Leasing
• Working capital

• Banking efficiency
• new technology
• Targeted grants
• Retained income
• Treasury management

• Investment credits
• Second exchange
• Business angels
• Equity
• Third Party Financing
• International investment

• Local presence
• Regional
• programmes
• National
• Donor/
• international

• Fairs
• exhibitions
• Communications
• Special property
• Transport

Wider access
Longer duration
Lower cost
Aid programmes
Physical
Capital

• Regulations
• procedures
• Requirements/
• access
• Channels
• Intermediaries
• Networks

• Fiscal
• Sector/cluster
• Trade treaty
• Legal framework

WHAT HELP DO FIRMS NEED
Information
Environment
Policy
Markets
Know-How
Business
Technology

• C of C
• Professional
• promotion
• Entrepreneurs
• clubs

• Product
• performance
• Process
• improvement
• Energy efficient
• Environmental
• Innovation
• Standards
• TQM

Corporate personnel
Professional specialists
Training for skills

• Managing transition
• Business growth
• Investors in People
• Fiscal incentives
• Communications

• Networks
• Registers regulation
• Training standards
• Consultancy Initiative

• Entrepreneurship
• Financial
• Productivity
• Marketing

Bilbao February 2004
Bob Hodgson
13
Perspectives and dilemmas firms

• Innovate or die
• NTBFs
• global giants
• Prime area for partnerships
• Innovate and die
• cost minimizer
• buyer defined
• commodity businesses
• Product and service mix

Bob Hodgson
Bilbao February 2004
14
Technology sources
Where do firms look for technology and innovation?

• Customers
• Capital equipment suppliers
• Competitors
• Shows and exhibitions
• Peer professionals
• .
• .
• .
• .
• Public agencies
• Universities

Bob Hodgson
Bilbao February 2004
15
Universities contribution and role
Avoid current emphasis on spin outs Contributions
in order of significance

• Graduates
• Knowledge reservoir
• Facilities and equipment
• Magnet and networks
• Social and cultural
• Research and development

Bob Hodgson
Bilbao February 2004
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Cambridge University roll call
Glaxo
SmithKline Beecham
Marconi
Bob Hodgson
Bilbao February 2004
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Silverstone and Formula 1
A different model of leading edge development

• Advanced engineering cluster
• Not university based
• Business innovation centre
• Funding and state aids.
• Competition and IP
• Events and engineering

Bob Hodgson
Bilbao February 2004
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Differential research intensity
Bob Hodgson
Bilbao February 2004
19
Incubation and incubators
A process to develop high growth firms

• Climate and culture
• Assistance pre launch
• Launch and market
• Harden and move on
• Celebration and empowerment
• Post graduate assistance and pay back

Bob Hodgson
Bilbao February 2004
20
Entrepreneurship
Born or made?

• Illogical behaviour
• Knowledge and skills can be added
• Challenge for the trainer
• Enterprise in education Oslo example
• EMSEN internal and external networks

Bob Hodgson
Bilbao February 2004
21

The Commercialisation Cycle
Risk Of Failure
HIGH
LOW
Product Development Stage
CommercialValue

• gt Market consolidation
• gt Market expansion
• gt Market penetration
• gt Product enhancement
• gt Sales distribution
• gt Product development
• gt Marketing research
• gt Prototyping
• gt Market definition
• gt Innovation RD

IPO/MBO /Trade Sale
VC/ Expansion
Fiscal approaches
VC/IIF
Seed
SourcesOf Funding
Angels/3Fs
RD
Tier 0
Tier 1
Tier 3
Tier 4
Tier 5
Tier 2
Business Development Tiers

• Tier 2 - Incubation
• Mentoring
• Seed funding
• Contacts
• Consulting
• Clients

• Tier 3 - Post-incubation
• Funding
• Structuring
• Relationships etc

• Tiers 4/5 - Commercial Maturity

• Tiers 0/1 - Pre-incubation
• Direction
• Collaboration
• Guidance
• Resources etc
• Pre-Seed funding

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Some examples of fund interventions
Entrepreneurs create firms in response to market
needs But they need help including from public
incentives

• Great Eastern Investment Forum
• White Rose Consortium
• Regional Investment Funds

Bob Hodgson
Bilbao February 2004
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Great Eastern Investment Forum
Making a place of exchange

• Forum to bring together those with ideas and
  those with capital
• Ideas helped to become investment ready
• Led to elevator pitch
• Forum meets for breakfast each month
• Web site and open access
• Lots of investment results
• No public role

Bob Hodgson
Bilbao February 2004
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White Rose Consortium
Competitive funding for university spin outs

• Competitive bid for university challenge funds
• Consortium of three universities
• York Sheffield Leeds
• 3 million euro
• Managed by private agents
• After proof of concept and before seed
• Emphasis on biotech

Bob Hodgson
Bilbao February 2004
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Regional Venture Funds
Filling the equity gap

• 3Fs and angels below 300,000
• Commercial funds above 1.5 million
• Gap in between
• Regional partnership funds
• Leverage
• State aids problems
• Commercial behaviour

Bob Hodgson
Bilbao February 2004
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Typical model Callon et al
Bob Hodgson
Bilbao February 2004
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Typical model Kline-Rosenberg
Bob Hodgson
Bilbao February 2004
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To summarise what is needed

• Purpose - having a clear shared vision of
  future
• Language - being able to talk to each other
• Incentive - funding to lubricate and rewards
• History - no substitute for doing it
• USEFUL TOOLS
• Exactly this sort of exercise
• Do it with passion

Bob Hodgson
Bilbao February 2004