Reference CITATIONS : • “Today’s markets are being transformed by intangibles, a growing number of them are scrambling to find methods that will help them better use, develop and communicate about them” NYT report Sep 09 • ”there is huge value & first mover advantage becoming a leading intermediary in this unconsolidated multi-billion ”corporate service” in Europe” Global head of technology, B of A (14bn portfolio) • Europe’s priority is the creation of OTTs (offices of technology transfer), be they internal like ours or external like MrgoodIDEA - V.Fykovski, former Head of technology transfer at University of California. • Future competition in the world is IP competition - Wen Jibao, chinese prime minister • “The European Model has finished its “value cycle”. Creativity, flexibility, adaptation of existing technologies no longer suffice. It needs true Research & Innovation!” G.Pietro, head Autostrade+Turin Univ. “Early-Stage Technology Financing” G. Migliori at the Conference on : IP Financing and Monetization - Opportunities during the Economic Crisis JagiellonianUniversity, Krakow, 6th-7th September 2012
Transcript
Reference CITATIONS :
• “Today’s markets are being transformed by intangibles, a growing number of them are scrambling to find methods that will help them better use, develop and communicate about them” NYT report Sep 09
• ”there is huge value & first mover advantage becoming a leading intermediary in this unconsolidated multi-billion ”corporate service” in Europe” Global head of technology, B of A (14bn portfolio) • Europe’s priority is the creation of OTTs (offices of technology transfer), be they internal like ours or external like MrgoodIDEA - V.Fykovski, former Head of technology transfer at University of California. • Future competition in the world is IP competition - Wen Jibao, chinese prime minister
• “The European Model has finished its “value cycle”. Creativity, flexibility, adaptation of existing technologies no longer suffice. It needs true Research & Innovation!” G.Pietro, head Autostrade+Turin Univ.
“Early-Stage Technology Financing”
G. Migliori at the Conference on :
IP Financing and Monetization - Opportunities during the Economic Crisis
JagiellonianUniversity, Krakow, 6th-7th September 2012
Sales Budget R&D Budget
Patent Application
FINANCING GAP – upstream-phase of Innovation: - from idea to mould to prototypes to selection of projects. Europe’s true “competitive gap” with the USA. Facilitating the intervention of Banks or VCs in this phase would be “the” breakthorugh for European innovation.
Time
Value J-Curve
Here is“The BEAST” : death valley !
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“EU” Changes : revolution in European policies and funding from RESEARCH/HIGH TECHNOLOGY/LARGE CORPNS
to EU 2020 which geared to R & I / ALL-TECH / MSME POLISH and EU Start-Ups, Micro, SMEs can enter the MARKET ! “CORPORATE” Changes : R&D becomes “External”. Priority : More Products/Processes - More “Competitive Positioning” which = More Technology Exchange - More Internat. Expansion, JVs, M&A ! “R&I ASSET” Changes : Intellectual Property (IP) - becomes “driver” of Technologies (see USA+China+Bras+India race!) - rules Transactions/Margins/Profitt (see mega M&A on PI negli USA) “FINANCIAL” Changes : rise of “Innovation Finance” More Competitive Positioning = Technology Mapping Services More Tech & IP Exchange = Valuation/Selection/Valorisation Services More Micro & SME = All-Tech & Low-Cost Services (competing with LC)
The Context : CRISIS bringing CHANGES
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The consequent EARLY-STAGE MATRIX
INNOVATION as “KEY COMPETITIVE ADVANTAGE” at the CENTRE for INDUSTRY AND FINANCE !
ASSET STRENGTH (i.e. IP) at the CENTRE of INNOVATION
VALUE-CREATION at the CENTRE of both INNOVATION and FINANCE
CONCLUSION : INNOVATION FINANCE at the CENTRE OF EVERYTHING ! 2011 - Nobel’s Ed Phelps speech on need for “Innovation Bank”
“ we must not cling to the highest standards for financing innovative investments when the more important objective is to get a larger volume of innovative investment projects underway by boosting the availability of their finance and perhaps their cost of capital“
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(Some of ) The
P R O B L E M S
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PROBLEM : the EARLY-STAGE SQUEEZE
A “Key Obstacle” to R&I & TechTransfer :
PUBLIC FINANCE Until last Year EUROPE (and in turn: Ministries, Regions, Provinces, Cities) distributed FUNDS only to RESEARCH - i.e. the area closer to IDEAS, but further from MARKETS, from perception of “RISK MGMT”, from PROFIT.
PRIVATE FINANCE Until Today VC and even more PE FUNDS have allocated FUNDS to : - Companies or Projects – “Already Proven” - With Turnover - Later-Stage (consequently, VCs active in Seed o Start-Up are very few !!!) - High-Tech propositions, preferably from Large Corporations
- Very promising EXIT - (NB. even if Exchanges or M&A irrelevant !) i.e.: ALL same way, same sectors, same trends (very damaging)
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PROBLEM : tough “Identikit” for an E-S Company/Tech PROOF OF CONCEPT (relatively easy)
PROOF of SALES or SUCCESS (a lot harder pre-death valley)
CLEAR COMPETITIVE POSITIONING (hard with no funds)
(Actual) KEY to FUNDING: a Financial Network or Visibility !
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PROBLEM : all “Investors” have limitations
INDUSTRIAL (SALES or PARTNERING)
Specific Industrial/Commercial STRATEGY
FINANCIAL
ANGELS (growing but complex + local)
VENTURE FUNDS (impose “Identikit” in previous page)
SPECIALIST FINANCE (eg. IP – promising but small+sectorial)
PUBLIC SOURCES (-Direct : will be better with EU 2020.
-Guarantees : getting better.)
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(Some of ) The
S O L U T I O N S
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NEW, DEVELOPING, “SOLUTION” FACTORS
The CENTRAL ROLE of IP : Patents etc. managed as key “Management STRATEGY” and not only technical/legal is a major reinforcement of the Company + attracts E-S Finance !
INNOVATION ECO-SYSTEMS : each Country or Region is working on Support & Funding from Chamber-of-Commerce – Science/Tecno Parks – Clusters – Corporate Networks – Regional Facilities.
INTERNET-Based KILLER APPS (eg. Social Media in 2012)
INTERMEDIARIES : priority is move to “economic value”
Phase 1 is essentially in-house R&D. Phase 2 is the classic technical/legal advisory Phase 3 : the new way of valuing, market-making and monetizing Technology & IP
Europe needs to build more top class R&I and IP economic value-creators
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EARLY-STAGE PRIORITY : Tools & Eco-systems
TIPPING POINT is access to NEW TOOLS (also) for SMEs
Low-Cost Valuation, Ratings, Competitive Positioning Low-Cost Tech & IP Landscape and Positioning Low-Cost Technology Exchange Platforms Integrated Public/Private Development and Funding Large-Scale Solutions for Eco-Systems (i.e. portfolio management) (eg. Regions - Macro-Sectors - Science/Tecno Parks - Universities) Examples for “integrated systems” like Territories, Universities, Science or Tecno Parks, National Portfolios :
VALOR EU emanated Valuation system DDC Top EU+US Benchmark methods in 1 tool ItoV (Idea-to-Value) pre-market value-chain solution ItoM (Idea-to-Market) full value-chain solution - i.e. actual
Innovation Corporate Finance !
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EARLY-STAGE PRIORITY : Investments
PUBLIC SECTOR is KEY to “push” PRIVATE FINANCE. Eg :
VOLUNTARY has not worked, “identikit”of ASSETS must be “too-good-to-be-abundant” !
STRATEGIC Government “incentivates” Banks & Fund (Moralsuasion?) (eg. fiscally, risk-sharing, higher RoI) in exchange for “agreed % share” of books ! SPECIFIC Targeted schemes - eg. by sector. EXISTING MODELS
European EIF’s Jeremy and more coming … US SBIR Others return of Public/Private partnerships = proliferation of NEW SOLUTIONS Eg. MrGI involved in Region’s 20 M. EU-Fund to VC community Revolving facility incl Region-CC-Industry
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EARLY-STAGE PRIORITY : Investments (2) - Example [ Following is “Successful NATIONAL model in Italy” adaptable throughout EU ]
SUDTECH - a new Public/Private Innovation VC Fund 1. The Ministry for economic development makes available € 37.5 M. for specific investments into Innovative projects and companies provided these have significant Intellectual Property. 2. Private VC and PE Funds are invited to match such Capital to build a € 75 Million mixed Fund. 3. The Fund was fully capitalised in June 2011, including several quality bias (eg. specific ip/sectors, geo focus, size of deal, etc.) 4. RESULT : through typical credit leverage (up to 100% of capital base) the Fund has turned a strategic view by a Public authority into a
€ 150 MILLION Targeted IP and Innovation vehicle for Italy !
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EARLY-STAGE PRIORITY : Investments (3) - Proposal
TARGET : promote EARLY-STAGE Innovation Funding
1. Make a DUAL FUND (to catch Banks, VCs and PEs) A FUND : Seed and Early Stage (the more strategic) B FUND : Development Capital (the easier sell) Same Amount, cannot enter A without B. Investment Limit : A. up to 250-300K - B. up to 2.5 Million 2. Fund Target : MIN 100 MAX 200 FLAGSHIP TECH Companies ! 3. Leverage in the Market : Minimum 100% (i.e. double impact!)
4. Key Method : Top Quality Financial Valuation/Selection Model 5. ROI : not only Equity, better Royalties (for Public Partner)
Terms (exit) un-balanced in favour of Private Capital 6. RISKS : un-balanced in favour of Private Capital.
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KEY TOOLS : IP valuations low-cost+neutral+objective
Source: OTPR analysis
Valuations Models acceptable to the financial sector are a breakthrough !
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KEY TOOLS : IP Mapping, Landscape, Relevance
Source: OTPR analysis
PATENT MAPPING through the use of BENCHMARK RATING Rating and relational mapping Tracking and ranking of Patent trends Identification of “white” or void spaces Relevance Analysis based on patent population - proximity - voids v. clusters
overlaps - trends - saturation areas
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KEY TOOLS : Licensing and Commercialisation
In few years world-wide value of licences & roys went from Zero to 200 BILLION !
Sales Budget R&D Budget
Patent Application
DEATH VALLEY– upstream-phase of Innovation: MrGI offers a “full value-chain strategy” which offsets or reduces reluctance to finance this classic “GAP” phase. Example of RISKS managed : Valuating of Tech and IP, Rating of IP, Re-balancing of Tech and IP cover, Tech+IP competitive positioning, Pat mapping, Patent Claim charts, financing market mis-match, etc.
Time
Value J-Curve
KEY TOOLS : valuation “risk-mgmt” for Private Finance
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(Some of ) The
R E S U L T S
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SOLUTION : next-gen “Innovation Finance” Services
DAY-to-DAY MANAGEMENT of TECHNOLOGY & IP ASSETS
DEAL-Based MANAGEMENT of TECHNOLOGY & IP ASSETS
TECH & IP VALUATIONS, MAPPING, POSITIONING on a Global Scale :
Low-Cost - Fast - Neutral/Statistical Benchmark for Private/Public Finance
EARLY-STAGE VC & Other CAPITAL - M&A – GROWTH FUNDING - DISTRESS
Economic & Financial VALUE-CREATION on TECH & IP MARKETS
STRUCTURED FINANCE using TECH & IP ASSETS
Funds, Tenders, Subsidies, Investements, on UE, National, Regional, Local scale
PUBLIC, PRIVATE, MIXED FUNDS for TECH&IP Policies
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USA : IP TOOLS driving more Early-Stage Funding
First Round : top VC funds invested 75% of their resources in companies with good IP
2nd Round : only 50% of companies Funding without good IP, against 84% with good patents
§ Professional Investors are turning to Intellectual Property 1st quoted Index (Amex) based on IP portfolios of 300 US Stock (OT 300 Index) Various Private Equity Funds and Hedge Funds invest in IP and Technology
Professional Investors attracted by “mega-commercialitions” or M&A based on IP § OT launches “multiple strategy” Fund for $ 600 M applied to US and EU IP
§ IPXI : strong initial support for 1st Global IP Exchange to be created in Chicago
USA study on 2000 EARLY-STAGE (start-up/seed) investments by top VC funds
RESULTS: 33% more projects with IP succeded, compared with projects without patents !
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EU : Examples of Actual Deals - (multiple client)
1. REGION (as well as Tecno Park Assoc.) reviewing entire TECH Portfolios due to more affordable/reliable IP solutions. Size: up to 500 Patents + other IP and 4.200 Technology projects. 2. NEW mixed PUBLIC/PRIVATE Regional Technology FUND centered on IP. Initial Value : € 37.5 M. (Total Leverage € 150 Million) 3. BANKING GROUP reviewing strategy towards CORP clients through IP (innovation) seeking increases in : A. market share, B. corp client satisfaction, C. share of innovative cos. 4. INDUSTRIAL SECTORS aiming at “Dedicated Marketplace” A. “Traditional EU Sector”, 29.000 Cos, seeking Platform B. High-IP incidence sector with 4.400 creative internat. Cos 5. IP-BASED (i.e. intangible) Import/Export Alliance - eg. Mid-Tech Tech&IP exchanges Italy-India
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RESULTS and CONCLUSIONS To ALL INVESTORS, PRIVATE (Banks, VC+PE Funds, Angels) and INSTITUTIONAL+PUBLIC (Development Banks, Chambers of Commerce, Support&Guarantee Funds, Public Bodies) :
EARLY-STAGE PARAMETERS HAVE CHANGED ! RISKS are LOWER, as they are better Managed with New
Strategies and Tools.
RETURNS can be HIGHER, gas IP is now Better Selected and Monetized.
(mostly) Thanks to IP, EARLKY-STAGE TECH Companies are a
