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EWIPO-IFIA/SEL/02/3

ORIGINAL: English

DATE: December 2002

INTERNATIONAL FEDERATION OFINVENTORS’ ASSOCIATIONS

WORLD INTELLECTUALPROPERTY ORGANIZATION

WIPO-IFIA INTERNATIONAL SYMPOSIUM ONTHE COMMERCIALIZATION OF INVENTIONS

IN THE GLOBAL MARKET

organized bythe World Intellectual Property Organization (WIPO)

andthe International Federation of Inventors’ Associations (IFIA)

in cooperation withthe Korean Intellectual Property Office (KIPO)

andthe Korea Invention Promotion Association (KIPA)

Seoul, December 4 to 7, 2002

PARTNERING WITH VENTURE CAPITALISTS TO ACHIEVE GROWTH AND DEVELOPMENT

Document prepared by Dr. Finarya Legoh, Assistant to the Deputy Minister forScience and Technology Diffusion Mechanism, Ministry for Research and Technology of

the Republic of Indonesia, Jakarta

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S&T FACTS IN INDONESIA (1/3)

1. OECD: Globalization - Links between investment, productivity and growth: greater investment can increase TPF (total productivity factor)- R&D and S&T development play a crucial role in economic growth

2. Government/regional governments should create motivation and provide stimulation and facilitation, as well as build a conducive environment to the development of a S&T system; so that the government must define direction, main priorities, focuses and policies, which is stated in THE NATIONAL STRATEGIC POLICY OF S&T DEVELOPMENT

3. Priorities and policies must include strengthening the development of basic science, strategic S&T, capacity-building of R&D institutions, strengthening the development of technology-based industry, and strengthening the capability of technology audit

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S&T FACTS IN INDONESIA (2/3)

1. Function of Ministry for Research and Technology: • define policies, direction, main priorities, focuses

for national development of S&T • Coordinating RDE institutions, including set

annual budget through S&T sector within national budget – 0,54 % from total

• Accelerate linkages between R&D sector and industry – such as: give incentives for R&D with different targets accordingly

2. Total IPR risen significantly:Year Local Abroad1998 202 17851999 320 28082000 369 3772

2001 408

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Strength of Regional Innovation (3/3)

Medan

Padang

Manado

Bandung Jogjakarta SurabayaSemarangSemarang Mataram Makassar

AboveAbove AverageAverage

AroundAround AverageAverage

BelowBelow AverageAverage

Samarinda

Source : “PERISKOP PROJECT” 2001 - MRT

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POLICY HIERARCHY FOR NATIONAL DEVELOPMENT OF S&T

GBHN 1999

PROPENAS

S&T Nat Syst Law

No 18 / 2002

National Research Agenda

National Research Agenda

MECHANISM

TECHNICAL ACTIVITIES

J akstraIpteknas

2000-2004

R&DPROGRAM

PUNASRISTEK

2001-2005

STRATEGIES

POLICIES

MECHANISM

TECHNICAL ACTIVITIES

J akstraIpteknas

2000-2004

R&DPROGRAM

PUNASRISTEK

2001-2005

STRATEGIES

POLICIES

(Regulations for S&T doers interaction)

(Milestones, focus industry)

Long term National Guidelines

Short Term Guidelines

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KEY PERFORMANCE INDICATORS - NATIONAL STRATEGIC POLICY OF

S&T DEVELOPMENT - 1. Increasing S&T products within national and

international levels, including: prototype, intellectual properties, and national standards

2. Improving the R&D products/results (including innovations) which are applicable and utilized by the community within national and international levels through increasing and strengthening “techno-industrial cluster and techno-preneurship”

3. Increasing cooperation among R&D institutions and business sectors

4. Improving the quality and quantity of S&T resources

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S&T SYSTEM INSTITUTIONS

R&D Inst

Private Sectors

Environmental Condition

Standardization InstStandardization Inst

Professional OrganizationProfessional Organization

Consumer Inst

Consumer Inst

Public InstitutionsPublic Institutions

Policy Making InstPolicy Making Inst

Supervision Inst

Supervision Inst

Universities

IPR InstIPR Inst

Consultant InstConsultant Inst

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R&D ORIENTATION & MANAGEMENT

DEVELOPMENT FLOW

Research Capacity

Focus on research activities in various scientific fields (uncertainty, risk taking)

Innovation Capacity Focus on clusters of technologies and scientific competencies/ino. impr

Tech Marketing Active search for applications of developed innovations, comm. gap

Tech Licensing Gain additional value through patents and licensing

Tech Partnering Establish high-value collaborations with business enterprises

VenturingLeverage intellectual property through spin-off, equity positions, etc.

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Innovation Resource Management

Strategic Technology Marketing

VenturingTechnology

Services

Build procedure and legal of technology licensingBuild relations with venture capital to secure financing supportHelp start-ups to prepare business conceptSupport start-ups to initiate business

Develop technology transfer strategyProvide support for patenting of innovations Identify technology transfer targets

Support technology transfer process and negotiationsDevelop and deliver professional and accountable servicesMaintain customer satisfaction

Identify opportunities

Develop prospective clusters of technology roadmapBuilding up network of competency resources

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INCENTIVE PROGRAM FOR SUPPORTING CAPACITY OF TECHNO-CLUSTER AND

TECHNO-PRENEURSHIP

• NAT. STRATEGIC COMPETITIVE RESEARCH (RUSNAS) -2000• COOPERATION COMPETITIVE RESEARCH (RUK) -1995• TECHNOLOGY INSURANCE (ASTEKNO) -2001 • IPR STRENGTHENING INCENTIVES:

- PATENTS, INDUSTRIAL DESIGNS -2000- IPR CENTRE -2000 - TRADITIONAL KNOWLEDGE PROTECTION -2002

• TECHNOLOGY AND MANAGEMENT STRENGTHENING(SIPTEKMAN) -2001

• S&T EMPOWERMENT IN INCREASING REGIONAL INVESTMENTS (PRIDA) -2003

• BUSINESS FORUM -2003• TECHNOLOGY INFORMATION KIOSK (WARINTEK) -2001• START-UP CAPITAL -2003

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COOPERATION COMPETITIVE RESEARCH

To bridge and accelerate the gap between industry (technology users) and R&D (technology suppliers)

To increase capability and competitiveness of industry and investment on R&D activities

To create atmosphere of productivity, value added, creation and innovation

To increase utilization of local technology by industry

To minimize risks in R&D investments

OBJECTIVES(1/4)

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(RUK)

R&D institution (one/more) should have an agreement with the industry partner (one industry/more) to implement the program actively

Cost sharing between R&D institutions (funded by Government through MRT) and industry partners

Industry partners are responsible to continue the activities after finishing the RUK program (within 2 years), and to develop/apply technologies produced by RUK

Royalty produced through IPR within RUK activities should be shared appropriately including the amount of funding

Outcomes of post-RUK activities are evaluated by MRT

COLLABORATIVE MODEL (2/4)

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Example 1: BOGIE FOR TRAIN COLLABORATION OF PRIVATE COMPANIES – UNIVERSITY –

GOV., R&D INSTITUTIONS (3/4)

STUDY / RESEARCH

DESIGN &ENGINEERING

PROTYPING

RUNNING TESTSON ANGGREK TRAIN

OPERATIONAL TESTSON ANGGREK TR.

1996 - 1997

1997 - 1998

1998 - 2000

DES 2000

FEB 2001 - AUGUST 2001

Up to now has reached more than 100.000 km and no

complains of the performances

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Biofertilizer EMAS®

Collaboration among R&D Inst. (Bogor Plantation), Semi-private R&D Inst., (Biotecnology Institution) and Semi-Gov. Owned company (PT Nusantara Plantation III, V, VII, VIII)Competitiveness:• reduce 50% of artificial fertilizer usage• 20-40% < cost of fertilizers• environment friendly• can be used in all crops• has been patented: No. ID 0 000 206 S.• has been licensed by PT Bionusa and a biofertilizer factory has been constructed and operated in Purwakarta (West Java) – its capacity 5,000 tonnes/year

Example 2: DEVELOPMENT OF BIOFERTILIZER INDUSTRY (4/4)

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TECHNOLOGY INSURANCE (1/3)

For new business/business that applys new/local technology -- face critical period in the up-scaling phase To bridge mis-match risks between pilot scale and commercial scale Risks: - Real risks - in general covered by insurance

company - Speculative risks not always covered by

insurance company, unless has specific characteristics

Participants: inventors, investors (industry esp. SMEs),

insurance company consortium, and MRT as a facilitator

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Technologyproducers(Inventors)

High Risksof

investments

Prototype/Pilot scale Technolo

gy users(Investors)

Technologyready for com

Highbudgetting

EngineeringPhase (Upscaling)

Techn. Insurance

TECHNOLOGY INSURANCE (2/3)

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TECHNOLOGY INSURANCE (3/3)

The program started in 2001 and was implemented successfully, and at the moment 3 packages were given to 3 industries:

development of Industry for Flower Seedling (investment of US$61,000) development of Type B Gelatin Business as a by- products from leather industry (investment of US$103,500) development of Activated Bleaching Earth Technology for Bentonit Refinement Industry (investment of US$940,000)

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WARINTEK(Technology Information Kiosk) (1/3)

– Incentives to increase and to empower S&T information by improving S&T information access, developing IT quality and HR competency for regional development, in order to support SMEs development, includes:

1. S&T information services

2. Development of local/regional S&T data-bases and packages

3. Training, HR capacity building in the field of documentation, information, library, etc.

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BUSINESS MODEL OF WARINTEK (2/3)

• Partnership between MRT and private providers - MRT’s role: giving supervision/TA, management training and IT content starter-package, and making sure that the program is implemented properly according to terms and conditions; provider’s role: provide funds for hardware investments, technical assistance, S&T information development, technical training (IT platform products and services), internet access services

• The business model pattern is adopted - to create better management, quality and standard of services

• This model is quite popular - approximate 2,300 outlets within community (IT providers, universities, libraries, regional governments)

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WARINTEK (Warung Informasi Teknologi) (3/3)WARINTEK (Warung Informasi Teknologi) (3/3)

( July 2002 = 2,358 kiosks in 30 Provinces; Target 9,000 by end of 2003 )

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START-UP CAPITAL (1/2)

• Technology commercialization process is in emergence phase, usually need investment that is difficult to be given by a bank loan, because:– Innovation products still don’t have reliable markets

(innovation based)

– Investment is needed in the long run– New company usually doesn’t have track record (not solid

business road map) and minimal business system development (lack of qualified management to develop business plan), as well as less physical asset for collateral

• To develop technology-based industry in emergence phase - need early-stage financing to help new industry: – To prove concept and develop business plan – To develop products and to explore potential market – To make limited production

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START-UP CAPITAL (2/2)

• Incentives given as seed capital to a new business applying domestic/ new technology

• Collaboration between MRT and PT PNM Techno-Venture• At the moment very limited business candidates fulfil

requirements of investment through venture capital• Proposals that not yet reliable for venture capital, will be re-

evaluated for start-up company incentives within 2-3 years - to bridge the gap towards venture capital financing

� BPPT has a Research Institute for Incubator Technology - at the moment has several tenants to be nurtured towards start-up companies

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• The Ministry for Research and Technology of the Republic of Indonesia

• The Indonesian Inventor Association • Assistant to Deputy Minister for S&T Diffusion

Mechanism - Deputy for S&T Utilization and Socialization • Building II BPP Teknologi, 6th floor,

Jl. MH. Thamrin No. 8, Jakarta 10340• Tel: +62-21-316 9166–9, 391 6329• Fax: +62-21-310 1952, 391 6329