Network for Regional SME Finance - FinNetSME ”Funding for technology and innovations” Dr. Martti af Heurlin Deputy Director General Tekes, Finnish Funding Agency for Technology and Innovation Martti af Heurlin Tekes DM
Network for Regional SME Finance – FinNetSME, Martti af Heurlin, Tekes Main messages: High R&D-investments clear results Towards wider understanding of innovation Strengths of the Finnish approach Interactive public-private communication Foresight and strategy processes National technology programmes + Example Important background: confidential strategy discussions with companies Business sector R&D funding by Tekes Together with others like: Finnvera, TE-Centres, SITRA, Finnish Industry Investments Ltd, Finpro…
Est. Source: Statistics Finland R&D in Finland …and in Finland companies are ruling the game: 70% private - 30% public DM and Copyright © Tekes Billion euros Enterprises Universities Other public research
Share of corporate R&D activities funded by the public sector … going down EU, USA and OECD … and very low in Finland – only half of the OECD and EU level % Source: OECD, Main Science and Technology Indicators France Norway USA EU15 OECD Great Britain Germany Sweden Netherlands Canada FINLAND Denmark Ireland Japan
Evaluation of the Finnish innovation environment Finland´s ranking is mainly very high … … high ranking in competitiveness scores boards gives basis for success - but is no guarantee DM Copyright © Tekes Switzerland, Finland and Sweden are the world’s most competitive economies according to The Global Competitiveness Report , released by the WEF on 26 September IMD ranks Finland 10th in overall competitiveness in 2006 (6th 2005). Based on the Lisbon Review, Finland was the most competitive country in the EU in 2004, followed by Denmark and Sweden. Based on the comparison of the European Commission, Finland was among the leading countries in investing into knowledge-based economy and performance of the economy. Sources: WEF, The Global Competitiveness Report and The Lisbon Review 2004; IMD, The World Competitiveness Yearbook 2005; EU, Key Figures 2005 on Science, Technology and Innovation and The European Innovation Scoreboard 2004; United Nations University, The Millennium Project 2001; OECD, Program for International Student Assessment PISA 2003
Strengths of the Finnish innovation environment … giving firm basis for productivity development 1.Wide consensus in the Finnish innovation policy Over all political parties Industries and trade unions Private – public discussion 2. Good balance in innovation measures Goals: economy – environment – wellbeing Funding targets: basic – applied – industrial research – development Marriage of R&D investments and Venture Capital investments 3. Co-operation – networking – “Club Finland” Universities – enterprises Large companies – sme’s (strategic partnerships) National - regional – international networking Between actors in the innovation system … … well balanced and dynamic public innovation service system
Very competitive environment in Finland. High investments in innovations in Finland. Where are results ? There are clear results: The structure of industries has changed strongly towards more knowledge intensive sectors ( ) Growth figures and productivity growth relatively good High tech exports have grown Patenting is active GDP per capita on fair level Unemployment is going down
Wood products Pulp, paper and paper products Basic metals and metal products Other goods Electronics and electrotechnical products Machines, machinery and vehicles Chemicals and chemical products Finnish exports of goods: The structure of industries has changed a lot : Forest cluster ICT + Forest + Metal Clusters % of total exports of goods Source: National Board of Customs … the productivity development in high tech industries has been faster
Manufacturing productivity in industry Finland has reached the US-level Source: University of Groningen Value added per hour worked, USA = 100 France FINLAND USA Netherlands Denmark Germany Sweden Great Britain
DM Copyright © Tekes Innovation environment in Finland Resources and funding Active matching is very important – for customer – for impact Private Basic researchApplied researchBusiness R&D Business development Marketing Internationalisation R&D at companies 3,770 (prel.) The figures represent the total extent of each organisation in million euros in 2005, those marked with star in 2004 or earlier. In parenthesis the share that is funded from the State budget. ** includes venture capital funds from the Finnish Industry Investment Ltd Business Angels approx. 380* Public Finnvera 406 (40) Universities 1,040 (454)* Academy of Finland 219 (219) Ministries, TE-Centres, sectorial research 312 (221)* Tekes 430 (430) VTT 225 (78) From abroad 169* Innofin 6 (5) Finpro 32 (20) Venture capitalists: Private 268** Finnish Industry Investment: direct 13, venture capital funds 42, seed funding 11 Sitra 29
Competitiveness, profitability and growth New businesses, start-ups Impact of Tekes activities Research institutes and universities Enterprises Societal and environmental impacts Projects and programmes International cooperation Tekes Expert services and R&D funding Coordination and funding of programmes Activation to R&D In cooperation with other services Renewal of industry and services, economic growth, productivity, good employment and societal well-being.
Tekes funding in the state budget Million euros DM and Copyright © Tekes National share of EU Structural Funds Industrial R&D loans Capital loans for R&D Industrial R&D grants Coordination of programmes Research funding During the years Tekes also had an annual allocation of around 10 million euros from the EU Structural Funds as the EU share. The funding resources for industrial R&D loans and capital loans for R&D merged in For 2007 some 5% growth expected 2007
Networking in corporate R&D projects is very important: SMEs – big companies – universities … nationally..internationally … for higher targets in R&D and in business development Share of networked projects, % Almost all projects funded by Tekes in large companies and more than two thirds of all R&D projects were networked in The figures include corporate R&D projects, but not smaller feasibility studies. DM 58774, and Copyright © Tekes Subcontracting from research institutes Large company subcontracting from SMEs Part of technology programme International cooperation Active boosting towards networking
Technology Development Departments at the TE-Centres DM Copyright © Tekes Technology Development Departments at the Employment and Economic Development Centres (TE-Centres) offer Tekes services to companies and research units as integral part of Tekes network Technology Development Departments at the Employment and Economic Development Centres (TE-Centres) offer Tekes services to companies and research units as integral part of Tekes network Lapland Oulu Kajaani Seinäjoki Kuopio Jyväskylä Joensuu Mikkeli Tampere Pori Lappeenranta Turku Tekes, Helsinki Vaasa Lahti Tekes´ innovation services support development in all the country Linking national – international – regional measures and environments
… utilising Tekes´ global network Five offices located in the global technology hot-spots in USA, Japan and China Brussels office linking EU and Finnish national R&D programmes Permanent staff of 12 technology experts Additional short term project personnel Five international offices build international cooperation with Tekes´ technology programmes and strategy work Five international offices build international cooperation with Tekes´ technology programmes and strategy work Helsinki Tokyo Brussels San Jose Washington, D.C. Beijing Shanghai The sun never sets down in Tekes
Application focus areas Technology focus areas Strategic areas of clusters Potential areas for new business Tekes strategy focus areas Process for strategy focus areas … active communication with industries Market trends Technology trends Global megatrends Values and goals of society Research organisations, universities Companies Ministry of Trade and Industry Tekes vision, strategy and resources International foresight EU, USA, China, Japan and other countries International business environment e.g. ETLA and Sitra Regional strategies and regional technology strategies Academy of Finland Industry organisations and their strategies Technology programmes and project funding Strategy discussions with companies
Security and safety Security at work and in systems Information security Tekes´ strategy focus areas …in applications Renewing products and business concepts The aim is to renew and strengthen our strong industrial clusters Competitive products and services Modern process and production technologies in business applications Health and well-being Human approach, quality and productivity in health care Products and services to support health and well-being Services Quality and productivity New service businesses New models for public and private partnerships Service innovations Environment and energy Sustainable and eco-efficient solutions Solutions for climate change mitigation Acceptable and profitable energy Work and leisure Productive, creative and motivating solutions Use of space Enjoyment and experiences in leisure time
Tekes´ strategy focus areas 2005…2007 … in technology and basic knowledge Biotechnology Innovative nanostructured materials New structures for nanoelectronics Nanosensors and actuators Mobility Broadband communications Software-intensive products and systems Knowledge and content management Test environments for new applications and services DM Copyright © Tekes Materials technology Interdependencies between properties, structures and production Surface phenomena Materials design Nanotechnology Systems biology Bioprocess technology Combining biosciences with ICT ICT Innovation activities Business renewal Growth companies and internationalisation Customer-oriented approach Managing a networked business Knowledge management Service business Business competence and business development
20 ongoing programmes 2006 with a total volume of 1.5 billion euros Each programme typically lasts 5 years Tekes generally finances about half the total investment in R&D of a programme 2,000 company participations and 500 research unit participations annually Technology programmes implement the strategy … Tekes together with companies, research institutes, universities, … About half of Tekes resources in programmes – some 200 Meur/y Steering group enterprises Tekes Preparation Coordination Decision making Company R&D projects Grants Loans Capital loans Research projects at universities and research institutes Synergy Networking Part financing DM Copyright © Tekes Programmes are a unique gateway to Finland… … a unique platform for international co-operation
Some examples: Energy, Environment and Construction DM Copyright © Tekes Technology programmes in 2006 CUBE - Building Services FUSION - Fusion Energy Research Programme DENSY - Distributed Energy Systems Sara - Construction Adding Value ClimBus - Business Opportunities in Mitigating Climate Change Total volume mill. euros Participating research units compa- nies
Some examples: Information and Communications Technology DM Copyright © Tekes Technology programmes in 2006 FENIX - Interactive Computing FinnWell - Future Healthcare MASI - Modelling and Simulation GIGA - Converging Networks NORDITE - Scandinavian ICT VAMOS - Value Added Mobile Solutions VERSO – Vertical Software Solutions Total volume mill. euros Participating research units compa- nies
FinnWell - Healthcare Technology Programme DM Copyright © Tekes Programme duration: Programme volume: approx. 150 million euro of which Tekes provides 50 % Programme Coordinator: Kalevi Virta, Navicre Oy Programme Manager: Anne Turula, Tekes Further information:
Focus areas of Future Healthcare (FinnWell) DM Copyright © Tekes Well-being Clinical medicine Public health Experiences Care / diagnosis Maintaining health Preventing illness Technologies for diagnostics and careHealthcare IT related products and servicesProcesses of healthcare Viewpoint of organisations and business Citizens’- / patients- viewpoint
Tekes’ mission statement Tekes boosts the development of Finnish industry and the service sector by technological means and through innovation. This will renew the economy and increase added-value, productivity and exports, thereby creating employment and enhancing well-being. DM Copyright © Tekes Tekes, Finnish Funding Agency for Technology and Innovation
Tekes’ key partners and stakeholders … we hit the target together with our partners Municipalities and cities Other ministries Sitra Academy of Finland Finnish Industry Investment Ltd Private investors and Business Angels Key ministries National Board of Patents and Registration of Finland Tekes Regional Councils Invest in Finland Science and Technology Policy Council Centres of Expertise Technology Centres Customers Companies Universities Research institutes Polytechnics Finpro DM Copyright © Tekes Associations for industry and services Finnvera TE- Centres Innofin
DM Copyright © Tekes Business from R&D Tekes’ R&D funding services for companies DM Copyright © Tekes
Funding criteria for company R&D projects DM Copyright © Tekes Tekes’ experts evaluate the project, the business, resources and the company from the holistic viewpoint Other funding applications and the indirect impacts of the project on other companies will be taken into account in the evaluation. The key issues of the evaluation are Business activity to be pursued Technology, innovation, competence and know-how to be developed Resources available for the project Cooperation to be developed and utilised Direct affect on social, environmental and welfare aspects Impact of Tekes’ funding and expert work on project implementation
Forms of Tekes’ funding R&D grants are aimed at research projects that create new knowledge for the development of products and services feasibility studies R&D capital loans are primarily aimed at strengthening the risk-taking capacity of small and starting enterprises in their R&D activities projects that will develop a product, process or service Start-up capital loans for technology companies are aimed at sharing the costs at the start-up phase R&D loans are primarily aimed at projects that will develop a product, process or service well established SMEs Tekes’ funding is often a combination of a grant and a loan DM Copyright © Tekes
Funding depends on the project’s technological challenge and on the market distance DM Copyright © Tekes Distance from market increases Degree of challenge and novelty increases R&D loan or capital loan for R&D Loan-weighted combined funding R&D grant or combined funding R&D grant
Total 429 million euros and 2,134 projects Total Tekes R&D funding in 2005 R&D grants to companies 178 million euros Research funding for universities, research institutes and polytechnics 179 million euros R&D loans to companies 43 million euros Capital loans for R&D to companies 25 million euros DM Copyright © Tekes Start-up loans to new technology companies 4.1 million euros Figures include 21 million euros funding from EU Structural Funds.
Share of Tekes business R&D funding for companies with less than 500 employees Annually an additional million euros was directed towards companies with less than 500 employees through projects in large companies, which increases the percentage by 5-10 points. % DM and Copyright © Tekes SME (EU-def.) 50-60%
Tekes´ funding for companies 2004, % Tekes´ funding for companies 2004, % Companies R&D investments2003, % Companies R&D investments2003, % Tekes R&D funding by region To Kainuu about 1-1,5% of Tekes´ funding, which is well above average Total 237 Meur Total 3,5 Meur 0,4 1,2 0,4 0,2 1,0 0,3 3,2 1,0 17,1 0,4 15,2 1,2 1,1 1,6 11,0 2,4 40,8 1,2 0,6 2,6 1,8 1,4 2,1 1,5 0,5 3,7 0,8 11,0 1,2 7,1 2,0 1,9 3,9 38,9 14,2 2,2 2,8 DM ja Copyright © Tekes
Tekes R&D funding by industry Million euros Machines and metals Other Business services Forest Construction Chemicals Industry Electricity, gas and water supply Foods DM Copyright © Tekes Electronics and electricity
Networking in corporate R&D projects Share of networked projects, % Almost all projects funded by Tekes in large companies and more than two thirds of all R&D projects were networked in The figures include corporate R&D projects, but not smaller feasibility studies. DM 58774, and Copyright © Tekes Subcontracting from research institutes Large company subcontracting from SMEs Part of technology programme International cooperation
International cooperation projects funded by Tekes by country groups Other countries USA Japan EU 25 and EEA Almost 40 percent, equal to 797 projects funded by Tekes were internationally networked in The total budget was 430 million euros, of which 234 million was funded by Tekes. Percentages are calculated from the total funding of the projects. Any project can belong to more than one country group. DM and Copyright © Tekes Number of international projects China
Large companies (more than 500 employees) receive 16 % of Tekes total funding and 27 % of Tekes business R&D funding during Large companies co-finance Tekes R&D projects in universities, public research institutes and SMEs as much as Tekes finances their projects. This system is managed by Tekes funding criteria, Increasing the quality of R&D projects and having important externalities in: knowledge transfer between large companies, universities and research institutes development of SMEs as subcontractors and strategic partners of large companies Impact of project funding in large companies DM and Copyright © Tekes Universities Public research centres SMEs Tekes 66 mill. euros Project volume 191 mill. euros 35 mill. euros19 mill. euros 11 mill. euros Funding flows to/from large companies, million euros Tekes funding to R&D projects of large companies Large companies projects buy research services from research organisations Large companies projects use SMEs as subcontractors Large companies co-finance public research projects Net flow Large companies Funding flows of Tekes funded R&D projects between large companies, (more than 500 employees), universities, research institutes and SMEs Annual average
Network for Regional SME Finance – FinNetSME, Martti af Heurlin, Tekes Main messages: High R&D-investments clear results Towards wider understanding of innovation Strengths of the Finnish approach Interactive public-private communication – all levels Business sector R&D funding by Tekes Together with others like: Finnvera, TE-Centres, SITRA, Finnish Industry Investments Ltd, Finpro… Thank