1. Technology and Research for Development Lalith Gamage President/CEO SLIIT Chairman ACCIMT

3. Sri Lanka’s Vision  Double our GDP to $4000 by 2016  IT/BPO Industry - $ 2 billion by 2016 and 100,000 professionals  Tourism Industry - $ 3 billion by 2016 and 500,000 employment  Mahinda Chinthanaya - Accelerate Research and Development to establish 5 Hubs by 2020 Aviation hub, Maritime Hub, Commercial Hub, Energy Hub, Knowledge Hub Aviation hub, Maritime Hub, Commercial Hub, Energy Hub, Knowledge Hub

4. Man Power Contribution R&D Professional Skills Semi Skilled Contribution Manpower Unskilled US$ 5 bn US$ 3 bn US$ 0.5mn

5. IT Industry: Case Study  Insignificant in the late 1990s early 2000s  Embarked on an Eco-system (Cluster) based approach Manpower Manpower Infrastructure Infrastructure Business and legal environment Business and legal environment Marketing and Image Building Marketing and Image Building Centres of Excellence (R & D) Centres of Excellence (R & D)

6. Competitiveness Strategy Infrastructure Education & Training Business Environment Legal Issues Marketing & Image Building Quality Innovativeness Strengths/Niche Skills Centers of Excellence Business Incubators Research and Development Build Confidence ( Make it Competitive ) Create Competence ( Sustain Competitiveness ) Address Issues ( Create the Environment )

7. IT Industry: Case Study  Today IT industry is one of the fastest growing industries  5 th Largest export earner for the country Annual exports are worth around $400 million Annual exports are worth around $400 million Aims to earn $2 billion by 2016 Aims to earn $2 billion by 2016 Ranked 16 th in 2009 Ranked 16 th in 2009 Addressable market is around $350 billion Addressable market is around $350 billion

8.  Success is due to collective efforts of Universities/Institutes – developed and offered the relevant programs and carry out research Universities/Institutes – developed and offered the relevant programs and carry out research Infrastructure providers – Private sector understood the industry requirements and service levels and increased capacity Infrastructure providers – Private sector understood the industry requirements and service levels and increased capacity ICTA – policy, research on requirements ICTA – policy, research on requirements SLASSCOM – promotes research, centres of excellence SLASSCOM – promotes research, centres of excellence Industry – provides placements, scholarships, funds research, curriculum dev. Industry – provides placements, scholarships, funds research, curriculum dev.

9. Technology and Research for Development  Technology and Research as an enabler Product Improvement Product Improvement Process Improvement Process Improvement  Compare IT industry  Build competitiveness, Efficiency  Developing Research as an Industry  Research and innovation to build new companies New Products New Products

10. Challenges  Industry is not geared to seeking R & D expertise from research institutions  R & D institutions carry out their research without placing emphasis on economic and/or social value creation  Lack of Eco-system based R & D Industry Industry Entrepreneurs Entrepreneurs Investors Investors R & D Institutions R & D Institutions

11. Challenges  Lack of entrepreneurial culture in the research community  Lack of mechanisms to encourage innovation, commercialization of research Business plan competitions Business plan competitions Incubators Incubators  Non availability of well established Angel and VC funds  Inability to recruit and retain best and the brightest due to poor compensation

12. Overcoming Challenges  Industry, Research Institutions, Government Interaction – Marketplace  Development of Eco-systems Industry clusters – Electronics, Biotechnology, Nanotechnology Industry clusters – Electronics, Biotechnology, Nanotechnology Centres of excellence Centres of excellence  Mechanisms for commercialisation Industry liaison cells Industry liaison cells Entrepreneurship training Entrepreneurship training Business plan development concepts Business plan development concepts  Establishment of funded research chairs

13.  What is The Product/Service?  What Technological/Innovative Developments?  Will there be any Intellectual Property?  How do you obtain technical input? – Technical Team  Market Scope?  Key attributes of the target market (size with segmentation, buying criteria, behaviour, etc.)?  What are the market trends and why?  How will you build your market?  Market Need?  Why will customers purchase your Product/Service?  Distribution Channels  How or who will sell the Product/Service? Research to Business (Plan)

14.  Competitive Situation  Why will your product/service "beat" the competition?  Barriers to competition  Patent or copyright protection  Time to engineer a new product  Management Capacity  Highlight the key credentials of the management team  What key skill sets are required?  Does management regularly consult with market-based advisors or experts? How?  Financial  How will your revenue model enhance market acceptance in the target market? How are you going to price your service/product?  How much money is required? Research to Business (Plan)

15. Business/Product Development Process Research Institution Research Outcome Entrepreneur Funds Marketable Product Product Prototype

16. Research Institution Research Outcome Entrepreneur Funds Marketable Product Product Prototype Business/Product Development Process

17. Source of Capital Amount of Capital Age of Company Angels Angel Funds Public Markets Venture Capital Strategic Investors Founders, Friends and Family Govt.

18. What Investors Want  Groundbreaking Technology  World-class Product  Revolutionary Business Model  Empowered Team  Visionary/Renowned Board  Attractive Return  3 I’s: Intensity, Integrity, Immediacy  3 G’s: Goodness, Greatness, Greed

19. Angels  Fun, Interesting Opportunity, A willing protégé  10 investments of Rs. 2.5M each = Rs.25M  1 big payout in 5 years, 50 x Rs.2.5 = Rs. 125M VCs  10 investments of Rs. 25M each = Rs.250M  2 big payouts in 3-5 years, 10 x 2 x Rs.25M = Rs. 500M Angels Vs VCs

20. Cap Table (Ideal) StartUp Angel Round VC Round ExitGain Founders/Mgmt $~0 (100%) $~0 (75%) $~0 (60%) $60M 1000X Angels $500K (25%) $500K (20%) $20M 40X VCs $2M (20%) $20M 10X Market Cap $~0 $2M $10M $100M

21. Cap Table - Sri Lankan IT Company StartUp Angel Round VC Round ExitGain Founders/Mgmt Rs.~0 (100%) Rs.~0 (75%) Rs.~0 (60%) Rs.300M1000X Angels Rs. 2.5M (25%) Rs.2.5M (20%) Rs.100M 40X VCs Rs.20M (20%) Rs.100M5X Market Cap Rs.~0 Rs.10M Rs.100M Rs.500M

22. Incubating Success

23.  Access to Infrastructure  Access to People  Access to Funds  Access to Right Environment Incubator Features

24.  A/C Space  Dedicated Internet Services  Quality Regulated Power  Communication Facilities  Office Furniture and Equipment  Secretarial services  Financial Services Access to Infrastructure

25.  Technical Experts  Researchers  Developers  Students  Business Analysts  Strategists  Venture Capital  Business Plan development to seek funds from other sources Access to Human Resources & Funds

26.  Entrepreneurship Training – Seminars, Workshops  Technical Training  Business Skills Development – Monitoring and Mentoring  Marketing of Resident Companies  Market Plan Formulation  Marketing through known contacts  Networking with Global Companies  Linking up with Universities and Industry  Consulting on strategies at various stages: Launch, Growth and Harvest of businesses. Access to Right Environment

27.  Technology and Research are essential for our country’s development  Develop R & D as an enabler and to create new companies  Need to address the issues such as Industry – Research Institution Interaction Industry – Research Institution Interaction Capacity Building of Research Institutions Capacity Building of Research Institutions Funding Sources Funding Sources Entrepreneurial culture development Entrepreneurial culture development Mechanisms for Commercialisation Mechanisms for Commercialisation  Development of a Eco-system (cluster) based approach to R & D Way Forward

28. Thank you