Innovative Flanders Innovation Policies for the 21st Century: Report of a Symposium (2008) / Chapter Skim
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Session V: Meeting the Early-stage Finance Challenge
Session V: Meeting the Early-stage Finance Challenge
Pages 90-115
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From page 90... ...
A large portion of the early funding went to "save SEMATECH" for Texas in Austin, but subsequent funding created a $200 million Emerging Technology Fund in 2005, which also benefited SEMATECH and other entrepreneurial ventures. Both funds were reauthorized and refunded in the 2007 session of the Texas legislature.
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From page 91... ...
Third are the Research Superiority Grants, a fund of $50 million to "discover the best researchers we can find in the country or the world and bring them to Texas." This fund has brought researchers to Texas Tech University, the University of Texas Health Science Center in Houston, and other laboratories.
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From page 92... ...
Key elements included the participation of Texas, which is now the 10th or 11th largest economy in the world, and offered considerable support in the form of the Emerging Technology Fund (ETF) and other large initiatives described by Mr.
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From page 93... ...
This third NRI center will provide university research on innovative devices, to be funded initially by the Emerging Technology Fund. Finally, the TxAN Infrastructure Network will operationally link SEMATECH and the TxAN fab to Texas university labs to create a collaborative ~$500 million equivalent "State Lab." Once these programs are in place they will assume the vital task of helping NIST and other units of the federal government fulfill the aspects of their missions that require commercialization.
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From page 94... ...
Because it is separate, each ATDF participant, including companies that are not SEMATECH members, offers support for the core, but has an investment-based capacity allotment and can have private tools and an area for program operations. It can create its own flexible environment and work with suppliers on an individual contractual basis.
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From page 95... ...
Dr. Goodall answered that the idea was not to eliminate university labs or teaching but to provide an industry-like middle step between university labs and actual industrial use.
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From page 96... ...
After only 30 years of existence, he said, this university of about 10,000 students had been able to develop an effective research program that generated on average seven to ten patents per year.25 "Market-oriented PhDs" In Flanders, he said, the traditional focus on fundamental research is giving way to a new paradigm. The university system has de-emphasized traditional 25The VUB is an outgrowth of an older, French-language university founded in 1834 (Université Libre de Bruxelles)
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From page 97... ...
He concluded by saying that Flanders, although it was doing better than much of Europe in developing an innovation-friendly culture, still had many 26The WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the Berne Convention placed software protection solely under copyright.
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From page 98... ...
The Accelerating Pace of Global Competition He addressed the issue of global competition in general, and the rapid increase in scale and effectiveness in China, where becoming the dominant global manufacturing center is a national goal. India brings its own scale advantages and an especially entrepreneurial high-value culture.
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From page 99... ...
For the private equity community, the problem is one of sorting and discovery, and success is never guaranteed. The Danger of the "Valley of Death" The greatest danger to a small firm comes at the stage of development after the end of public support and before the availability of private support, which is traditionally provided by venture capital (VC)
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From page 100... ...
And the United States has been effective in promoting innovation through a variety of mechanisms, such as industry-led consortia for standards and joint research, university-based research, joint ventures with the Advanced Technology program (ATP) , and the Small Business Innovation Research (SBIR)
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From page 101... ...
NOTE: Figures based on 1998 data. SOURCE: Lewis Branscomb and Philip Auerswald, Between Invention and Innovation An Analysis of Funding for Early-Stage Technology Development, Gaithersburg, MD: PROC Figure 10 National Institute of Standards and Technology, 2002.
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From page 102... ...
Also, SBIR awards make it easier for faculty researchers to create new firms without giving up their university posts. Universities help diversify and grow the job base for all types of employment, and participation in SBIR helps validate research funding and generates returns to society.
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From page 103... ...
The market orientation is essential in commercializing ideas that really work and bring value to society." Discussion A questioner asked how one can know that the SBIR competition process really selects the best companies, and whether there is a guarantee that they will succeed.
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From page 104... ...
He said that many venture capital firms avoided risky investments in the smaller businesses, either because they wanted a better guarantee of return on their investment or because they did not want to invest in a scheme in which the government had any role. So the Department of Economy, Science, and Innovation looked at the U.S.
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From page 105... ...
He concluded that Flanders' programs were able to make good use of abundant public money by using these co-investment schemes, and that they brought fiscal advantages to those who invested in innovative SMEs. His summary of the situation was that "Flanders is a paradise for innovative companies." Discussion A questioner asked Mr.
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From page 106... ...
So Professor Clarysse concluded that there were two categories of firms: those that were able to produce a business plan that attracted a lot of capital, and those that had to "bootstrap" themselves with very little start-up capital. Firms winning large amounts of VC usually had business plans based on microe lectronics or similar fields, with clear exit strategies.
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From page 107... ...
They found that firms with international experience from the outset were associated with high early growth in revenues and total assets, but that there was no significant effect on employment growth in the first years. They tried to compare these observations with existing theories, including organizational learning theory, and collected data on all stakeholders and key partners.
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From page 108... ...
30 He illustrated the hypothetical progress of a young firm that typically faces its most severe cash flow pressures just when sources of capital were most scarce -- when crossing the "valley of death." Because this valley coincides with the stage just after technology creation, when a technology is being developed into something useful, it represents the period when a good idea may find a use in society and a commercially valuable form. 30National Venture Capital Association, 2005.
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From page 109... ...
SOURCE: Based on 2005 data from National Venture Capital Association. PROC Figure 12 Technology Technology Creation Development Early Commercialization Successful Cash Flow Cash Flow Moderately Valley of Successful Death Time SBIR & ATP Unsuccessful Unsuccessful Federal Agencies, Initial Entrepreneur & Venture IPO Public Universities, Seed/Angel Investors Capitalists Investors States FIGURE 13 Public-private funding transition between innovation and invention.
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From page 110... ...
Applicants may file for ATP awards either as single firms or as joint ventures. For single firms, there is a 3-year time limit and a maximum award of $2 million.
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From page 111... ...
Broader benefits included substantial product revenues, increased national output, and positive public ROI that make a difference beyond the benefits to the single firm. A History of High Returns Altogether, he said, the program had delivered a net return of almost $1 billion from a government investment of about $2.1 billion.
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From page 112... ...
They also developed their own databases and have become "the only place in Europe where all these data sources are found together." Creating Indicators In order to do their assessments, said Professor van Looy, SOOS had to develop an appropriate IT infrastructure and create S&T indicators for the gov 31In 2007, the Flanders government approved a second generation of policy research centers, result ing in, among other things, SOOS becoming SOOI (Steunpunt O&O Indicatoren)
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From page 113... ...
What is its overall impact -- does it hamper or encourage collaboration between academia and industry? Part of SOOS' objective, said Professor van Looy, is to help the universities ensure that new entrepreneurial activities do not jeopardize the traditional missions.
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From page 114... ...
Professor van Looy concluded by praising the Flemish government for recognizing the value of evaluating its innovation policy, and for its long-term commitment to the data, infrastructure, and people required. "This work could not be done," he said, "without our proximity to scientific research, alignment with international standards, and ability to network both locally and globally." Discussion A questioner asked what kind of jobs could be expected from the work he was describing.
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From page 115... ...
For the Netherlands, he said, election time was drawing near, and the innovation platform had dropped out of the debates, replaced by urgent short-term concerns such as reducing taxes. A goal was to use evaluation tools and other data to make the point that investing in knowledge is as important as investing in other basic structures.
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