1. WORKSHOP 4: Development of new knowledge intensive sectors Funding and help for knowledge intensive projects Bob Hodgson Zernike (UK) Limited Bilbao February 2004 ZERNIKE (UK) Plan de Ciencia, Tecnología, Sociedad 2005-2008

2. ZERNIKE (UK) Structure Structure and purpose  messenger  key messages  examples  success factors Bob HodgsonBilbao February 2004 Purpose  promote integration, differentiation and flexibility

3. ZERNIKE (UK) Messenger: Cambridge structure Bob HodgsonBilbao February 2004 CAMBOURNE WEST UNIVERSITY CAMPUS ST JOHN’S INNOVATION CENTRE CAMBRIDGE SCIENCE PARK PETERHOUSE THE BABRAHAM INSTITUTE GRANTA PARK MELBOURN SCIENCE PARK CAMBRIDGE  Small city region  Small high quality university  High level entrepreneurship  Private sector driven

4. ZERNIKE (UK) Thinking world class region Bob HodgsonBilbao February 2004 Greater Cambridge Strengths: World class research base Dynamic high tech community Specialist property Weaknesses: Congestion / greenbelt Growing issues of affordability Disparities across the sub-region Bedfordshire and Luton Strengths: Research specialisms at Cranfield Growing expertise in the environmental sector Expertise in manufacturing and light engineering Weaknesses: Comparatively weak skills base and a lack of entrepreneurialism Some structural economic concerns Milton Keynes / North Bucks Strengths: World class specialisms in education and learning Infrastructure for further growth Focus for inward investment Weaknesses: Footlooseness Skills Oxfordshire Strengths: World class research base Dynamic high tech community Specialist property High quality workforce Weaknesses: Congestion / greenbelt IT Infrastructure Labour and skills shortages

5. ZERNIKE (UK) Messenger: Zernike model Bob HodgsonBilbao February 2004  Integrated technology entrepreneurship  Specialist property  Seed and start-up funds  Business networks and globalisation  Consultancy and positioning

6. ZERNIKE (UK) It can be done ….. it must be done Key messages  Passion  Willingness to pay  Make a market  Integrate flexibly but target assistance  Connections and flows not agencies and infrastructure  Differentiation and equity needed Bob HodgsonBilbao February 2004

7. Common experiences  Trust is at the heart of every success  Some shared vision  A language to communicate  Incentives to motivate behaviour  Building a history  Worry about sustainable business model  Grant  Capital  Income  Build in market motivation and reward Bilbao February 2004 ZERNIKE (UK) Bob Hodgson

8. ZERNIKE (UK) Everybody is doing it so is a moving target Key features of knowledge enterprises scene  What needs to be integrated?  Skills  Money  Infrastructure  Information Bob HodgsonBilbao February 2004

9. The starting point is What do these firms need? ZERNIKE (UK) Bob Hodgson Bilbao February 2004

10. So the diagram becomes WHAT HELP DO FIRMS NEED Money Know-How Information Infrastructure Bilbao February 2004 Bob Hodgson

11. The key characteristics of each need are WHAT HELP DO FIRMS NEED Money Know-How Information Infrastructure Wider access Longer duration Physical Policy Technology Aid programmes Business Markets Lower cost Corporate personnel Professional specialists Training for skills ZERNIKE (UK) Bilbao February 2004 Bob Hodgson

12. With tools to help in each area WHAT HELP DO FIRMS NEED Capital Know-How Information Environment Wider access Longer duration Physical Policy Fairs & exhibitions Communications Special property Transport Fiscal Sector/cluster Trade treaty Legal framework C of C Professional promotion Entrepreneurs’ clubs Technology Aid programmes Business Markets Lower cost Corporate personnel Professional specialists Training for skills Local presence Regional programmes National Donor/ international Regulations & procedures Requirements/ access Channels Intermediaries Networks Product performance Process improvement Energy efficient Environmental Innovation Standards TQM Networks Registers & regulation Training & standards Consultancy Initiative Managing transition Business growth Investors in People Fiscal incentives Communications Entrepreneurship Financial Productivity Marketing Investment credits Second exchange Business angels Equity Third Party Financing International investment Banking efficiency & new technology Targeted grants Retained income Treasury management Factoring Information Asset registers Guarantees Leasing Working capital Bob Hodgson Bilbao February 2004

13. ZERNIKE (UK) Perspectives and dilemmas: firms  Innovate or die  NTBFs  global giants Prime area for partnerships  Innovate and die  cost minimizer  buyer defined  commodity businesses  Product and service mix Bob HodgsonBilbao February 2004

14. ZERNIKE (UK) Where do firms look for technology and innovation? Technology sources  Customers  Capital equipment suppliers  Competitors  Shows and exhibitions  Peer professionals .  Public agencies  Universities Bob HodgsonBilbao February 2004

15. ZERNIKE (UK) Avoid current emphasis on spin outs Contributions in order of significance: Universities – contribution and role  Graduates  Knowledge reservoir  Facilities and equipment  Magnet and networks  Social and cultural  Research and development Bob HodgsonBilbao February 2004

16. ZERNIKE (UK) Bob HodgsonBilbao February 2004 Cambridge University roll call Glaxo SmithKline Beecham Marconi

17. ZERNIKE (UK) A different model of leading edge development Silverstone and Formula 1  Advanced engineering cluster  Not university based  Business innovation centre  Funding and state aids…….  Competition and IP  Events and engineering Bob HodgsonBilbao February 2004

18. ZERNIKE (UK) Bob HodgsonBilbao February 2004 Differential research intensity

19. ZERNIKE (UK) A process to develop high growth firms Incubation and incubators  Climate and culture  Assistance pre launch  Launch and market  Harden and move on  Celebration and empowerment  Post graduate assistance and pay back Bob HodgsonBilbao February 2004

20. ZERNIKE (UK) Born or made? Entrepreneurship  Illogical behaviour  Knowledge and skills can be added  Challenge for the trainer  Enterprise in education – Oslo example  EMSEN internal and external networks Bob HodgsonBilbao February 2004

21. > Market consolidation > Market expansion > Market penetration > Product enhancement > Sales & distribution > Product development > Marketing & research > Prototyping > Market definition > Innovation & R&D Tier 0Tier 1Tier 3Tier 4Tier 5Tier 2 Product Development Stage The Commercialisation Cycle Tier 3 - Post-incubation  Funding  Structuring  Relationships etc Tiers 4/5 - Commercial Maturity Business Development Tiers Risk Of Failure HIGH LOW Commercial Value R&D Angels /3F’s Seed VC/IIF VC/ Expansion IPO/MBO /Trade Sale Sources Of Funding Tiers 0/1 - Pre-incubation  Direction  Collaboration  Guidance  Resources etc  Pre-Seed funding Tier 2 - Incubation  Mentoring  Seed funding  Contacts  Consulting  Clients Fiscal approaches

22. ZERNIKE (UK) Entrepreneurs create firms in response to market needs But they need help including from public incentives Some examples of fund interventions  Great Eastern Investment Forum  White Rose Consortium  Regional Investment Funds Bob HodgsonBilbao February 2004

23. ZERNIKE (UK) Making a place of exchange Great Eastern Investment Forum  Forum to bring together those with ideas and those with capital  Ideas helped to become investment ready  Led to elevator pitch  Forum meets for breakfast each month  Web site and open access  Lots of investment results  No public role Bob HodgsonBilbao February 2004

24. ZERNIKE (UK) Competitive funding for university spin outs White Rose Consortium  Competitive bid for university challenge funds  Consortium of three universities  York Sheffield Leeds  3 million euro  Managed by private agents  After proof of concept and before seed  Emphasis on biotech Bob HodgsonBilbao February 2004

25. ZERNIKE (UK) Filling the equity gap Regional Venture Funds  3Fs and angels below 300,000  Commercial funds above 1.5 million  Gap in between  Regional partnership funds  Leverage  State aids problems  Commercial behaviour Bob HodgsonBilbao February 2004

26. ZERNIKE (UK) Typical model: Callon et al Bob HodgsonBilbao February 2004

27. ZERNIKE (UK) Typical model: Kline-Rosenberg Bob HodgsonBilbao February 2004

28. ZERNIKE (UK) To summarise what is needed Bob HodgsonBilbao February 2004  Purpose - having a clear shared vision of future  Language - being able to talk to each other  Incentive - funding to lubricate and rewards  History - no substitute for doing it USEFUL TOOLS Exactly this sort of exercise Do it with passion