GROWTH ECONOMICS and Fundraising in international cooperation SECSP

GROWTH ECONOMICS and Fund-raising in international cooperation SECS-P 01, CFU 9 Economics for Development academic year 2017 -18 9. INNOVATION TRANSFER Roberto Pasca di Magliano Fondazione Roma Sapienza-Cooperazione Internazionale roberto. pasca@uniroma 1. it

Innovation= value creation Pagina 2

Value Creation Innovation converts research into economic value and creation of specialized jobs “Capitalism is based on a process of continuous revolution based on technological innovation through phases in which new structures emerge and old ones are destroyed. This process of 'creative destruction' is the fundamental fact of capitalism” ( Joseph Schumpeter) 3

Meening of Innovation is the action of making new products or new methodologies/process that did not exist before In order to innovate one has to focus applied research on technology transfer towards the business sector as follows: a) Identification of new technologies and their industrial application b) Protection of the investment into new technologies via patent, copyrights, license, design rights c) Definition and development of appropriate marketing strategies d) Technology transfer via licensing and commercial agreement towards existing companies or new startups Innovation: ü Makes a discontinuity in traditional knowledge, and know-how. This discontinuity increases overall productivity and labour productivity. i. e. with the same amount of resources it is possible to produce more goods (development) or to use less resources needed to produce the some amount of goods than before (sustainability) ü Development and sustainability are linked to technology diffusion and production process, quality of life (rise of income) and to the environment (improved use of available resource) 4

New entrepreneural capitalism of Research & Innovation Ø It is a tech-based capitalism focused on research as the main driver for competition and enterprice’s development Ø It is a capitalism based on innovative entrepreneurs with an advanced university curriculum Ø It is a capitalism improving technology and innovation diffusion through spill-overs and knowledge sharing) and the creation of new start ups with a direct benefit fo the overall economy Ø It is a capitalism that is able to attract foreign investment either in the equity acquisition of existing companies or in the green field investments 5

Life cycle of innovative firms and finacing resouces Spin-off Idea market Continuous innovation of the product Activity Analysis and idea evaluation Product definition Business plan Market analysis - Incubatorors - Business Angels - Public Admin. support Tuning of innovative Company set up Final organization structure Innovative prototype product Commercial feed Commercial structure marketing e 6 sales backs investments Strategic Partnership and acquisitions Support Family financing Pre- Family financing. Seed seed financing Venture Capital Private Equity Venture capital Second Round - Private Equity - IPO Expansion Capital 6

Start up and spin-off are unattractive to the conventional credit R I S K Ø Ø Ø «Lab-pure» Research Base Research Market Test 100% financing from Public Institutions ( Incentives, contributions, scholarships, …) Applied Research Patents and Licences Prototype Partnership private-public sector (Equity Capital, Loans, guarantees) Produce and Put the innovative product on the market Venture Capital hi tech investments (Private sector) DON’T have a solid bankable DON’T generate a positive cash flow DON’T have a business model to understand Risk High Medium Low DON’T have access to forms of finance based on collateral DON’T generate interest for the banks because of the limited investment 7

Financing technogical innovation Venture Capital Ø Financing of business ventures in high-technology sectors in the initial phase of their business Ø Investment in risk capital for firms having an high growth potential, on the part of specialist Venture Capitalist Ø Mechanisms to define return to the investors of the capital collected by start-up Ø Limits -> considerable managerial skills of the start-up’s team Business Angels Ø Non-institutional investors (managers) which manifest themselves through management support and forms of direct financing to companies still in their infancy and therefore requiring initial financial resources Ø Reflecting their a strong risk attitude, they subscribe to a part of the capital investment in spin off with high growth potential and they provide important management consulting and financial 8

R&D investments: EU comparison Svezia 3, 74% Finlandia 3, 45% Germania 2, 54% Danimarca 2, 48% Austria 2, 46% Francia 2, 10% Belgio 1, 88% Regno Unito 1, 76% Olanda 1, 71% Lussemburgo Slovenia Average UE 1, 85% 1, 66% 1, 56% Rep. Ceca 1, 55% Irlanda 1, 30% Spagna Italia 1, 20% 1, 16% Fonte: Eurostat, Key dati 2006 9

R&D investments in Italy = R&D Investments % GDP Fonte: Commissione europea, Key Figures 2006, Media EU-27 10

Innovation Performance comparison 11

Investors in R&D in Italy (million euro 2010) subjects Investment in R&D % University 4. 792 33% Public and/or governamental bodies 2. 565 18% Private firms and private research center 7. 057 48% 186 1% 14. 600 100% Non Profit Organization TOTAL In Italy private companies have a very low involvement in the R&D process and investments Fonte: Elaborazioni IPI su dati ISTAT “Indagine sui centri per l’innovazione e il trasferimento tecnologico in Italia” 12

R&D distribution within firms more than 80% of private investment in R&D is concentrated in only 3% of the firms < 20% R&S > 80% R&S 97% firms 3% firms Fonte: Elaborazioni IPI su dati ISTAT “Indagine sui centri per l’innovazione e il trasferimento tecnologico in Italia” 13

Measures to improve relationships among research centers and firms in Italy Ø In Italy there are many actors trying to fill the gaps within the innovation value chain. These actors have to create links between the different subjects involved This implies Ø different and more effective organizations to bring innovation from public research centers to private companies, in particular small and medium-through services for spin-offs and start-ups in the areas as follows: Ø promoting innovation (joint lab) Ø service quality management Ø business plan and market analysis Ø business management systems Ø support the participation of venture capital Ø support to finance investment projects Fonte: Elaborazioni IPI “Indagine sui centri per l’innovazione e il trasferimento tecnologico in Italia” 14

Conclusions Spin-offs and high-tech start-ups are the best way to create value from applied reasearch and innovation diffusion. In order to promote such a process, the following interventions are needed: • Support activities (e. g. : how to incorporate a company, how to manage it, market analysis, business plan, procedure for quality control and patenting) • Laboratories and offices (Innovation parks) • Coordination with selected partners in Italy and abroad • Equity financing from SEED and Venture Capital • Preferential credit lines for research and innovation activities 15