Financing the Knowledge Society

Seed and Venture Capital Financing,

the roles of the public and the private sector

Claes de Neergaard
CEO Industrifonden
THEMES
The commercialisation of R&D – the driving forces

The technology transfer challenge – how does

Sweden tackle it?

The regional dimension of venture capital financing

Can EU policy to improve technology transfers

2007-2013 benefit from the Swedish experience?
THEMES
The commercialisation of R&D – the driving forces

The technology transfer challenge – how does

Sweden tackle it?

The regional dimension of venture capital financing

Can EU policy to improve technology transfers

2007-2013 benefit from the Swedish experience?
 What do we get out of R&D investments?

Financial Times Nov 8, 2005

R&D expenditures in relation to GDP 2003
Business Universities Government
sector & colleges organisations
Israel
Sweden
Finland
Japan
Korea
United States
Germany
Denmark (2001)
Belgium
France
Canada
Netherlands (2001)
United Kingdom
Norway
Ireland (2001)
New Zealand

0 1 2 3 4 5
Per cent of GDP
Source: OECD 2005
Commercialisation of R&D
– EU vs. the US
• Stronger output from US research clusters
• Stronger tax incentives in the US
• Stronger incentives for US universities
• The US capital market is more powerful
• US military spending boosts research
• US one homogenous market.
EU still too fragmented

EU does not catch up!

 The road map from idea to invoice

R&D Technology transfer

Collaboration industry –

research organizations

Basic Applied Licensing Market

Creation of a

new company
 Good ideas can end up in

“ The Valley
of Death ”

Knowledge Market

©Jan Edling
THEMES
The commercialisation of R&D – the driving forces

The technology transfer challenge – how does

Sweden tackle it?

The regional dimension of venture capital financing

Can EU policy to improve technology transfers

2007-2013 benefit from the Swedish experience?
Enhancement of Technology Transfer
– some Swedish measures
• Increase government funding for R&D
• Focus on cutting edge research in centres of excellence
• Public/private partnership program in six
industry branches
• Improve the effectiveness of both Tech Transfer Offices in
universities and Joint Research Institutes
• Innovationsbron – a dedicated financing vehicle for the
commercialisation of research
• Maintain a strong Industrifonden
• A welcoming approach to venture capital
Financing in different stages

Basic R&D Applied R&D Pre-seed Seed Start-up Expansion

Private sector

Public sector

Pre-commercial financing Commercial financing

Conclusions from a joint US-EU report

• The venture markets in US and EU invest too little

in early stage start-ups
• Constitutes a “market failure”
• Public sector measures are justified to plug this gap
• Public measures should
– work with markets and not crowd out private
investment
– support funds with the necessary track record
and economies of scale

Source: Department of Commerce and EU Commission, 2005

Venture capital investments in EU-15
2004
Seed
EUR 148 m

Expansion Start-up
EUR 7,900 m EUR 2,200 million

Total investments EUR 12,000 million

Criteria for an effective innovation system
Idea
Increases flow of high quality business ideas
Provides rigorous screening
Involves business angels
Brings in market
perspective early
Based on centres
of excellence

Market
 Seven
regional
Three focus areas companies Luleå

Umeå
Seed capital

Academia –
Business co-op. Uppsala
Infrastructure - Stockholm
Incubators
East
West

South
Independent trust set up by the Swedish
government in 1979

Total equity: SEK 3.2 billion

Invested capital: SEK 1.6 billion

Direct investments in about 100 companies

Co-owner in 11 regional VC-companies
and Innovationsbron
Invests in high-tech companies in ICT,
Life Science and Industrial and Energy
Ventures
Regional venture
capital companies
Venture capital investments
Percent of GDP

0.23
0.21

0.16
0.15
0.12 0.12
0.11 0.10
0.10
0.08
0.07 0.06
0.04 0.04
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EVCA 2005
THEMES
The commercialisation of R&D – the driving forces

The technology transfer challenge – how does

Sweden tackle it?

The regional dimension of venture capital financing

Can EU policy to improve technology transfers

2007-2013 benefit from the Swedish experience?
The regional dimension of venture capital

• Private sector venture funds usually covers Sweden

or the Nordic countries from one or several capitals
• There is room for smaller regional venture funds for early stage
investments in proximity to companies
• Co-investment funds copied on the model developed in
Scotland are helpful additions
• Proximity to companies is an advantage but company selection
can be too much influenced by regional/local preferences
• Regional investment funds should not be seen as a tool of
regional policy but of innovation policy
THEMES
The commercialisation of R&D – the driving forces

The technology transfer challenge – how does

Sweden tackle it?

The regional dimension of venture capital financing

Can EU policy to improve technology transfers

2007-2013 benefit from the Swedish experience?
Can EU policy to improve technology
transfers benefit from the Swedish
experience ?
• Measures to stimulate commercialisation of research must get a
high priority
• Create two European incubator support programs;
one for Life Science and one for Technology
• Focus on national and European R&D centres of excellence
• Positive attitude to mixing financing from the Commission,
European Investment Bank, European Investment Fund
and national sources
• Do not go too far in defining “European interest”. Good research
benefits all EU-countries