European Investment Fund European Investment Fund in Support of Tech Transfer This presentation was prepared by EIF. Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.
EIF at a Glance EU specialised institution for SMEs, risk financing Venture Capital and Mezzanine (fund of funds) Structuring and Guaranteeing portfolios of SME and microfinance loans/leases Geographic Focus / Intermediaries EU 27, EFTA, Candidate Countries Distributing through Banks and Funds Authorised Capital EUR 3bn EIB: 61% EU: 30 % Fin. institutions: 9 % AAA rated Dual Objective of meeting EU Policy Goals & Generating a Satisfactory Return on Equity 1
EIF s Shareholders EIB: Main shareholder (61%) European Investment Bank s shareholders: 27 EU Member States European Community represented by the European Commission (30%) 28 public and private financial institutions from 17 countries (9%) including: 2
The PE/VC Market Covered by EIF INNOVATION VENTURE CAPITAL PRIVATE EQUITY Tech Transfer/ Incubators Business Angels, Side Funds, Pre-Seed Seed Stage Early Stage Expansion Development Capital Mid-Market Later-stage Buy-out Stock Exchange/ Public Equity EIF INVESTMENT FOCUS 3
Technology Transfer - Converting Research into Products for the Market R&D Technology Transfer Marketable Product technology IP prototype IP University / Research Organisation Spin-out Market Licensing IP / Idea Collaboration (contract research, ) 4 Technology Transfer can take different forms to convert scientific findings from research organisations into commercial products for the market
Tech Transfer Dissected a Continuum Origination phase Concept and opportunity testing phase Exploitation and start-up phase Stages Stakeholders Scientific discovery University scientist/ researcher Invention disclosure - University scientist/ - researcher TTO staff Evaluation of invention for IP protection University scientist/ researcher TTO staff IP protection decision University scientist/ researcher TTO staff Marketing of technology to firms University scientist/ researcher TTO staff Firms/ entrepreneur IP / knowledge transfer interlinked Licensing agreement Spin--off decision University scientist/ researcher TTO staff Firms/ entrepreneur IP transfer to existing firms Creation of the spin- off University scientist/ researcher TTO staff Firms/ entrepreneur Activities Opportunity identification Opportunity selection Proof of concept - testing IP protection testing Business concept testing Selection and market confirmation Internal advising Network support Compensation schemes Exploitation decision 5
The Knowledge Transfer Challenge Knowledge or Technology Transfer takes different forms of transforming research into concrete products and services: Proof of concept, prototypes Contract research with industry Creation of start-up and spin-off New financial instruments to accelerate / facilitate Knowledge Transfer are an increasingly important area: IP markets, IP funds are two key models All of the above are important to build a healthy, sustainable European Knowledge Transfer ecosystem 6
ElF's Tech Transfer Experience Since 2005, EIF has been able to invest resources into Tech Transfer, to create awareness and to develop new TT initiatives with leading research universities Focus is on research organisations which are leaders in their respective fields and act in an entrepreneurial environment Accelerated process through framework agreements (covering issues such as company valuations, shareholder structure, ) Several transactions already, in which EIF played a key role 7
EIF Tech Transfer Transactions Chalmers Innovation SEK 170 m Signed July 2008 Investing in start-up companies originating from Chalmers University and incubated by the Chalmers Innovation incubator in Gothenburg Karolinska Development EUR 26.7 m Signed Nov 2009 Co-investment fund, investing alongside Karolinska Development in life science spin-outs throughout Scandinavia UMIP Premier Fund GBP 32m fund Signed April 2008 Fund, managed by MTI, invests in university spin-outs originating from the University of Manchester IP venture fund UK GBP 31m fund Signed September 2006 Fund invests 25% of all financing rounds of IP group spinouts, originating from more than 10 UK universities 3T ( Télécom Technologies Transfert ) EUR 20.5m fund Signed 2010 Early stage TT fund, investing into start-up companies originating from the Institut Télécom and its incubators Imprimatur Capital (JEREMIE: development objective) EUR 20.4m Signed 2010 Seed & Start-Ups / Tech Transfer in Latvia Leuven CD3 (Centre for Drug Design and Discovery) EUR 24m fund Signed 2006, extended 2010 Financing early stage drug development projects originating from Leuven and elsewhere in EU 8
Manchester: the Largest UK University Research Budget Manchester University / UMIP Premier Fund 10 year Limited Partnership. Managed by VC firm: MTI partners GBP 32 m raised. 18 months between first pitch to EIF and first closing in 4/2008 9
IP Group: Bringing together 12 Universities - 26 Spin-Outs in Three Years IP Venture Fund UK Co-investment fund (seed, post-seed financing) Critical mass reached through a network of universities Liquidity vs listing Deal flow and critical mass 10
CD3 (K.U.Leuven) - Next Generation Licensing Empowering Universities Leuven CD3 (Centre for Drug Design and Discovery) Partnership with university Managed by TTO Invests in drug development projects Drug development process steps Target ID Target validation Screening Lead ID Optimisation Pre-clinical development Clinical I Clinical II Clinical III CD3 portfolio Chemical libraries Structural biology Bench synthesis Parallel synthesis Early toxicology UNIVERSITIES CD3 PHARMA/BIOTECH COMPANIES 11 CD3 addresses a demand from both ends of the chain from Universities: be able to offer more finished drug candidates to the industry from the Industry: enrich their pipeline with more proven candidates
Chalmers Innovation: Secondaries or how to Reduce J-Curve Chalmers Innovation EIF Co-investors Management team Professionals from the incubator Investment professionals Maximum autonomy Fund Investments at commercial terms Investments in existing TTO start-ups and new start-ups (both university IP based spin-outs as well as start-ups attracted and grown by the incubator) Seed Investors Federal funds Regional funds Other public/private funds BAs, VCs, Tech Transfer process Pre-seed funding Seed funding Post-seed funding Pre-Incubation Incubation Alumni companies Indicative amounts EUR ~50k EUR 200-500k EUR 1-3m 12
Lessons Learnt after Five Years of TT Activity Clear funding gap Tech Transfer is different to VC and has its own set of rules Not just spin-outs but also licensing IP management required to achieve optimal allocation across IP lifecycle Long-term partnerships with research centres: build trust, no individual entry valuations, ex ante agreements, no dilution -- Privileged access to deal flow and Bears hug Increasing interest from private co-investors but still room for improvement Longer time-horizon for business development and leadtime 13
EU 2020 Agenda: a Vision of Europe's Social Market Economy for the 21st Century Objectives Turn the EU into a smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion Promote the Innovation Union and improve conditions and access to finance for research and innovation, ensure that innovative ideas can be turned into products and services that create growth and jobs Plan for Action Remove obstacles to knowledge transfer (excessive risk, lack of financial resources, lack of qualified human resources) by facilitating access to adequate financial resources, financial structuring, technology risk assessment & encouraging the private sector to do more Active EIF support of EU core objectives through Tech Transfer initiatives 14
EIF Tech Transfer : Where to Next? Development focus Commercial focus JEREMIE 5 Joint European Resources for Micro to Medium Enterprises + 4 University seed funds Support larger number of university seed funds (development objective) 3 Corporate venturing & other types of large commercial transactions 2 Licensing operations Large royalty funds IP funds Scale 1 Extend current activities Current TTA activities commercial operations with leading research institutions Licensing operations CD3 II (Leuven) - SMEs non-smes final beneficiary 15
Knowledge Transfer Strategic Partnership Partners Signed in Rome - 16 June 2010 First initiative to address challenges and widen the reach and scope Creation of joint Working Group between EIF/EIB, CDC (France), (CDP Italy), (CDTI - Spain), Innovationsbron (Sweden), KfW- Bankengruppe (Germany) & Veraventures (Finland) Aim of like-minded Partners is to: Support the emergence of European and national Knowledge Transfer Infrastructures Accelerate transfer of European research and technology to the market Facilitate a well functioning Knowledge Transfer and Intellectual Property economy Encourage more open and transparent marketplaces for Intellectual Property Exchange best practices and potentially to analyse investment opportunities jointly 16
European IP Fund (EIPF) Market Mechanisms CURRENT Invention consumers FUTURE Invention consumers Efficient IP Market Invention suppliers Invention suppliers 17
EIPF How could it Work? EU public research institutions EU SMEs EU corporates Sell or license patents to fund Small management team (10-15) EIPF EUR 400m launch early 2012 Establishes portfolio along market / technology themes Pilot reaches 10-15k patents First milestone early 2014 Uses specialist services (technology, legal, business development Prioritises SMEs Corporates 18
Contact European Investment Fund 96 boulevard Konrad Adenauer L-2968 Luxembourg Tel.: (+352) 42 66 881 Fax: (+352) 42 66 88 200 www.eif.org 19