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Tapio Koivu - VTT - Stanford - Jan 25 2010


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Tapio Koivu - VTT - Stanford - Jan 25 2010

  1. 1. Spinning out business from contract reseach organizations Tapio Koivu Stanford, January 25th 2010 Numerotiedot päivitetään kalvoihin helmikuussa, kun kaikki tilastoluvut vuodelta 2009 ovat tiedossa. Lisäksi kalvoja täydenne-tään uusien yhtiöiden esityksillä. /Sari Halme
  2. 2. CONTENT <ul><li>VTT in brief </li></ul><ul><li>Commercialization at VTT </li></ul><ul><li>Some examples </li></ul><ul><li>Challenges in Finland and in a contract research organization </li></ul><ul><li>What are we doing to change? </li></ul><ul><li>Future model? </li></ul><ul><li>Conclusions </li></ul>
  3. 3. VTT’s status as performer of R&D work Basic research Development VTT INDUSTRY UNIVERSITIES Applied research
  4. 4. Knowledge flow between VTT and customers Commercial contracts Pre-competitive R&D Recruiting of scientists Spin-off companies Patents, licenses, publications VTT Customer company
  5. 5. Summary of VTT’s strategy TARGET STATE MEANS OF ACHIEVEMENT Mission VTT produces research services that enhance the international competi-tiveness of companies, society and other customers at key stages of their innovation process, and thereby creates the prerequisites for growth, employment and wellbeing. <ul><li>Values </li></ul><ul><li>Passion for innovation </li></ul><ul><li>Support and respect to the core </li></ul><ul><li>Together for the client </li></ul><ul><li>One step ahead </li></ul>VTT increases the competitiveness of its customers’ businesses, promotes the creation of new business, and improves and speeds up the productivity of R&D. VTT exploits it know-how by licensing technologies and spinning off successful technology companies. VTT strengthens its top-class research in technology centres and creates new nodes for the global innovation network. VTT promotes the development of industries and public services, the wellbeing of society, the health and safety of the environment, and improves the knowledge base for political decision-making. <ul><li>Strategic focus areas </li></ul><ul><li>Foresighting and impact </li></ul><ul><li>Business from technology </li></ul><ul><li>Strengthening of international activities </li></ul><ul><li>Development and integration of competencies </li></ul><ul><li>Efficient and effective project work </li></ul><ul><li>Customer accounts and services </li></ul><ul><li>Emphasis on key customer accounts </li></ul><ul><li>Larger international customer base </li></ul><ul><li>VTT’s services cover all key stages of the customer’s innovation process </li></ul><ul><li>Spearhead programmes </li></ul><ul><li>Industrial Biomaterials </li></ul><ul><li>eEngineering </li></ul><ul><li>Digital World and Ubiquitous Computing </li></ul><ul><li>Printed Intelligence </li></ul>BUSINESS FOUNDATIONS Vision VTT creates business from technology for the benefit of its customers, partners and other stakeholders.
  6. 6. VTT Group in brief Personnel 2920  Turnover 276 M€ (budget for 2010) VTT’s operations Research and Development  Strategic Research  Business Solutions  IP Business  Corporate Services VTT’s companies VTT Expert Services Ltd  VTT Ventures Ltd  VTT International Ltd <ul><li>Focus areas of research </li></ul><ul><li>Applied materials </li></ul><ul><li>Bio- and chemical processes </li></ul><ul><li>Energy </li></ul><ul><li>Information and communication technologies </li></ul><ul><li>Industrial systems management </li></ul><ul><li>Microtechnologies and electronics </li></ul><ul><li>Technology in the community </li></ul><ul><li>Business research </li></ul><ul><li>Customer sectors </li></ul><ul><li>Biotechnology, pharmaceutical and food industries </li></ul><ul><li>Electronics </li></ul><ul><li>Energy </li></ul><ul><li>ICT </li></ul><ul><li>Real estate and construction </li></ul><ul><li>Machines and vehicles </li></ul><ul><li>Services and logistics </li></ul><ul><li>Forest industry </li></ul><ul><li>Process industry and environment </li></ul>
  7. 7. VTT Group structure 2010 <ul><li>R&D </li></ul><ul><li>Research personnel </li></ul><ul><li>Research resources </li></ul><ul><li>IP Business </li></ul><ul><li>IPR sales and licensing </li></ul><ul><li>IPR portfolio management </li></ul><ul><li>VTT Expert Services Ltd </li></ul><ul><li>Specialist reports and assessments </li></ul><ul><li>Certification and approval services </li></ul><ul><li>Testing, inspection and calibration </li></ul><ul><li>VTT International Ltd </li></ul><ul><li>Administration and development of international service points </li></ul><ul><li>VTT Ventures Ltd </li></ul><ul><li>Ownership and development of spin-offs </li></ul><ul><li>Strategic research </li></ul><ul><li>Self-financed research </li></ul><ul><li>Jointly funded research </li></ul><ul><li>Group Services </li></ul><ul><li>Support functions </li></ul>V T T Technical Research Centre of Finland <ul><li>Business Solutions </li></ul><ul><li>Management of customer accounts </li></ul><ul><li>Contract research </li></ul><ul><li>Technology licensing as a part of contract research sales </li></ul><ul><li>Separate finances for commercial activities </li></ul><ul><li>Separate finances for commercial activities. </li></ul>(State-owned research centre under the domain of the Ministry of Employment and the Economy)
  8. 8. VTT on map Silicon Valley, USA Saint Petersburg, Russia Brussels, Belgium Shanghai, China Seoul, South Korea Tokyo, Japan Finland • • • • • Tampere Oulu Jyväskylä Espoo Lappeenranta • • Turku Rajamäki • Raahe • Kajaani Kuopio •
  9. 9. Revenues 245 M€ in 2008 Basic governmental funding External funding Self-financed projects M€ Commercial activities Jointly funded projects 0 50 100 150 200 250 2004 2005 2006 2007 2008
  10. 10. Income from commercial activities in the domestic private sector 73 M€ in 2008 (* *) Classification according to VTT’s customer segments Energy 18% Real estate and construction 15% ICT 14% Forest industry 13% Machines and vehicles 13% Electronics 10% Chemistry and environment 6% Biotechnology, pharmaceutical and food industries 6% Metal refining 3% Services and logistics 1%
  11. 11. Results <ul><li>364 notifications of inventions and 25 notifications of software in 2009. </li></ul><ul><li>About 1,000 patents and patent applications in VTT’s patent portfolio in the beginning of 2009. </li></ul><ul><li>VTT Ventures Ltd has ownerhip in 18 enterprises based on VTT’s technology in the beginning of 2009. </li></ul><ul><ul><ul><ul><ul><li>About 2,000 publications yearly, of which over 50% scientific publications. </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>About 2,800 publications in VTT’s own publication series during the past 20 years. </li></ul></ul></ul></ul></ul>
  12. 12. IP Business <ul><li>VTT’s IP Business </li></ul><ul><li>manage and commercialize VTT’s IP Portfolio </li></ul><ul><li>is responsible for packaging of IP based offering </li></ul><ul><ul><li>” From Research to Business (TULI)” program </li></ul></ul><ul><ul><li>Preparation of commercialization </li></ul></ul><ul><li>Budget of 7,5 M€ ( jointly and privately </li></ul><ul><li>funded). </li></ul>
  13. 13. Some figures
  14. 14. Examples PlexPress Oy SoluCel Oy Envault Corp Oy Vergo Oy Nicanti Oy Zora Biosciences Oy Technology enabling multiplex high-throughput gene expression analysis Production of plant-based molecules to pharmaceutical, fine chemical and biotech industries Digital content protection software solutions Network and risk management solutions Product and brand authentication technology Novel diagnostic and prognostic biomarkers for healthcare applications, specialized laboratory services (metabolomics and bioinformatics) for pharmaceutical industry
  15. 15. THE CHALLENGE: . RESEARCH OR INNOVATION? Research = Transforming money into knowledge Innovation = Transforming knowledge into money
  16. 16. OUTPUT COMPARISONS Metric Population (millions) Share of academic degrees N:o of newcos per annum R&D investment per capita N:o of patents filed per 1M capita N:o of initial investments (app.) Average initial investment Tot. Annual VC investments Deloitte Fast 500 companies Stock exchange listings p.a. Nasdaq listings (currently) N:o of early stage VCs R&D centers of global companies Finland 5.2 25 % 23 000 3.3 % (3rd ww) 166 100 0.3 M$ 180 4 1 0 10 5-6 Israel 6,9 24 % 20 000 4.1 % (1st ww) 186 100 2.8 M$ (4th ww) 1 650 (3rd ww) 44 35 (1H/07) 100 60 30-40 Massachusetts 6,3 NA 27 000 App. 4.9 % (NA) 300 (NA) 150 6.2 (M$ 2nd ww) 2 400 (2nd ww) 36 9 60 50 10-20
  17. 17. Opportunity Creation Opportunity Discovery Opportunity Exploitation and Evaluation Source: Research Research Lab. Researchers Knowledge/ Invention Transfer object Existing Firms Start-up Firms Research Organization Spin-Offs Transfer Recipient Technology Transfer <ul><li>The Gap: </li></ul><ul><li>Biz model </li></ul><ul><li>Culture </li></ul><ul><li>Goal-setting </li></ul><ul><li>Time </li></ul><ul><li>Money </li></ul><ul><li>Principals/ </li></ul><ul><li>agents </li></ul>Effectiveness What gives?
  18. 18. THE GAP <ul><li>Before </li></ul><ul><li>Inventions rather than innovations </li></ul><ul><li>Patent is an academic merit </li></ul><ul><li>No upside for Research Org’s </li></ul><ul><li>No support to tech entrepreneurs </li></ul><ul><li>Researchers motivated by further research </li></ul><ul><li>Pricing as part of research contract </li></ul><ul><li>Reactiveness in commercialization </li></ul><ul><li>Avoid risks </li></ul><ul><li>Domestic focus </li></ul><ul><li>After </li></ul><ul><li>Innovations based on research and science </li></ul><ul><li>No patenting unless there is money to be made </li></ul><ul><li>Research org as a shareholder </li></ul><ul><li>Entrepreneur-in-residence </li></ul><ul><li>Motivation to get rich or see use of results </li></ul><ul><li>Market pricing </li></ul><ul><li>Plan for commercialization </li></ul><ul><li>Fail fast, try again </li></ul><ul><li>No time to waste in becoming global </li></ul>
  19. 19. Enormous Financial Opportunity in IP Commercialisation Only a small fraction of the potential is properly commercialized <ul><li>The evidence from leading academic institutions in USA demonstrate that the key for solid growth is in the a bility to generate royalty income . </li></ul><ul><li>US universities spend $50bn/yr in R&D </li></ul><ul><ul><li>The est. commercial return is 1bn/yr </li></ul></ul><ul><ul><li>Only an estimated 0.1% of output is properly commercialized </li></ul></ul><ul><li>European universities spend $50bn/yr in R&D </li></ul><ul><ul><li>The est. commercial return is less than 0.1bn/yr </li></ul></ul><ul><ul><li>This implies huge existing dormant commercial value </li></ul></ul>
  20. 20. THE VTT EXPERIENCE <ul><li>” Entrepreneur-In-Residence” Model Tested </li></ul><ul><li>PlexPress Oy: CEO from the Valley </li></ul><ul><li>Tests with four domestic completed cases and two starting ones </li></ul><ul><li>Three companies launched so far </li></ul><ul><li>Piloting gave very encouraging signs: </li></ul><ul><ul><li>Transparency for stakeholders, engagement works! </li></ul></ul><ul><ul><li>Incentives for entrepreneurs </li></ul></ul><ul><ul><li>Room to experiment (fail fast, fail cheap) </li></ul></ul><ul><ul><li>Combining business ideas and IP made possible </li></ul></ul><ul><ul><li>Knowledge and support available </li></ul></ul>
  21. 21. New Model? IP sourcing field Universities Polytechnical institutes Institutes Companies IP acquisition & packaging Licensing Funds specializing in IP investments Industry Early stage VC’s and other private investors Spin-offs
  22. 22. CONCLUSIONS <ul><li>Acknowledge some differences in European approaches </li></ul><ul><li>Changing culture as a key, but there is no way to escape our history </li></ul><ul><li>Contract research organizations such as VTT are presented with a huge opportunities to bring their results to the markets, to exploit this we need to: </li></ul><ul><ul><li>Know how managing innovation differs from managing research </li></ul></ul><ul><ul><li>Partner with the best </li></ul></ul><ul><ul><li>Be open and honest about our technologies </li></ul></ul><ul><ul><li>Know how to manage expectations </li></ul></ul><ul><ul><li>TAKE RISKS! </li></ul></ul>
  23. 23. Tapio Koivu <ul><li>Academic background in Construction Management (M.Sc. Helsinki Univ. Of Technology Ph. D. Tampere Univ. Of Technology) </li></ul><ul><li>Researcher </li></ul><ul><li>Research and innovation manager </li></ul><ul><li>Research fellow, CIFE, Stanford </li></ul><ul><li>VP, VTT’s Silicon Valley office </li></ul><ul><li>EVP, VTT’s IP commercialization & venturing </li></ul><ul><li>Boards of VTT’s start-ups and other VTT companies </li></ul>
  24. 24. THANK YOU! [email_address]