network for regional sme finance - finnetsme ”funding for technology and innovations” dr. martti...

Network for Regional SME Finance - FinNetSME

”Funding for technology and innovations”

Dr. Martti af HeurlinDeputy Director General [email protected]

Tekes,

Finnish Funding Agency for Technology and Innovation

Martti af Heurlin Tekes DM 233701

Network for Regional SME Finance – FinNetSME, Martti af Heurlin, Tekes

Main messages:

• High R&D-investments clear results

• Towards wider understanding of innovation

• Strengths of the Finnish approach

• Interactive public-private communication

• Foresight and strategy processes

• National technology programmes + Example

• Important background: confidential strategy discussions with companies

•Business sector R&D funding by Tekes

• Together with others like: Finnvera, TE-Centres, SITRA, Finnish Industry Investments Ltd, Finpro…

0,0

1,0

2,0

3,0

4,0

5,0

6,0

85 87 89 91 93 95 97 98 99 00 01 02 03 04 05

0.91.1

1.51.7 1.8

2.2

3.9

4.4

2.9

4.64.8

3.4

5.35.0

5.4

Est.

Source: Statistics Finland

R&D in Finland…and in Finland companies are ruling the game:

70% private - 30% public

DM 36100 and 3806511-2005 Copyright © Tekes

Billion euros6.0

5.0

4.0

3.0

2.0

1.0

0.0

EnterprisesUniversitiesOther public research

Share of corporate R&D activities fundedby the public sector … going down EU, USA and OECD… and very low in Finland – only half of the OECD and EU level

%

Source: OECD, Main Science and Technology Indicators

FranceNorwayUSAEU15OECDGreat BritainGermanySwedenNetherlandsCanadaFINLANDDenmarkIrelandJapan

0

5

10

15

20

25

90 91 92 93 94 95 96 97 98 99 00 01 02 03

Evaluation of the Finnish innovation environmentFinland´s ranking is mainly very high …

… high ranking in competitiveness scores boards gives basis for success - but is no guarantee

DM 3605411-2005 Copyright © Tekes

Switzerland, Finland and Sweden are the world’s most competitive economies according to The Global Competitiveness Report 2006-2007, released by the WEF on 26 September 2006.

IMD ranks Finland 10th in overall competitiveness in 2006 (6th 2005).

Based on the Lisbon Review, Finland was the most competitive country in the EU in 2004, followed by Denmark and Sweden.

Based on the comparison of the European Commission, Finland wasamong the leading countries in investing into knowledge-basedeconomy and performance of the economy.

Sources: WEF, The Global Competitiveness Report 2005-2006 and The Lisbon Review 2004; IMD, The WorldCompetitiveness Yearbook 2005; EU, Key Figures 2005 on Science, Technology and Innovation andThe European Innovation Scoreboard 2004; United Nations University, The Millennium Project 2001;

OECD, Program for International Student Assessment PISA 2003

Strengths of the Finnish innovation environment… giving firm basis for productivity development

1. Wide consensus in the Finnish innovation policy Over all political parties Industries and trade unions Private – public discussion

2. Good balance in innovation measures Goals: economy – environment – wellbeing Funding targets: basic – applied – industrial research – development Marriage of R&D investments and Venture Capital investments

3. Co-operation – networking – “Club Finland” Universities – enterprises Large companies – sme’s (strategic partnerships) National - regional – international networking Between actors in the innovation system …

… well balanced and dynamic public innovation service system

Very competitive environment in Finland.High investments in innovations in Finland.

Where are results ?

There are clear results:

The structure of industries has changed stronglytowards more knowledge intensive sectors (1980-2005)

Growth figures and productivity growth relatively good

High tech exports have grown Patenting is active

GDP per capita on fair levelUnemployment is going down

Wood products

Pulp, paper andpaper products

Basic metals andmetal products

Other goods

Electronics andelectrotechnicalproducts

Machines,machinery andvehicles

Chemicals andchemical products

Finnish exports of goods:The structure of industries has changed a lot 1960-2005:

Forest cluster ICT + Forest + Metal Clusters

% of total exports of goods

Source: National Board of Customs

15 15 159 12 13 13 8

11

9 6 13

11

31 27 27 25

18 18 17

15

78

9 9 10 13

42

4030

31

22 21 20 192716 15

8 6 5

6541

4

2

17

18

16

246

65

0 %

20 %

40 %

60 %

80 %

100 %

1960 1970 1980 1990 2000 2002 2003 2004

… the productivity development in high tech industries has been faster

Manufacturing productivity in industryFinland has reached the US-level

Source: University of Groningen

Value added per hour worked,USA = 100

Value added per hour worked,USA = 100

60

70

80

90

100

110

120

79 81 83 85 87 89 91 93 95 97 99 01

France

FINLAND

USA

Netherlands

Denmark

Germany

Sweden

Great Britain


Innovation environment in FinlandResources and funding

Active matching is very important – for customer – for impact

Pri

vate

Basic research Applied research Business R&D

Business developmentMarketingInternationalisation

R&Dat companies

3,770 (prel.)

The figures represent the total extent of each organisation in million euros in 2005, those markedwith star in 2004 or earlier. In parenthesis the share that is funded from the State budget.

** includes venture capital funds from the Finnish Industry Investment Ltd

BusinessAngels

approx. 380*

Pu

blic

Finnvera406 (40)

Universities1,040 (454)*

Academyof Finland219 (219)

Ministries,TE-Centres,

sectorial research312 (221)*

Tekes430 (430)

VTT225 (78)

From abroad169*

Innofin6 (5)

Finpro32 (20)

Venture capitalists:Private 268**

Finnish Industry Investment:direct 13, venture capital funds 42,

seed funding 11Sitra 29

Competitiveness,profitability and

growth

New businesses,start-ups

Impact of Tekes activities

Research institutesand universities

Enterprises

Societal and environmental

impacts

Projects and programmesInternational cooperation

TekesExpert services

and R&D fundingCoordination and funding of programmesActivation to R&DIn cooperation with other services

Renewal of industry and services, economic growth, productivity, good employment and societal well-being.Renewal of industry and services, economic growth,

productivity, good employment and societal well-being.

0

50

100

150

200

250

300

350

400

450

500

550

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

349386

316

252 244

386 395415

390 379

430460

Tekes funding in the state budget

Million euros


National share of EU Structural FundsIndustrial R&D loansCapital loans for R&DIndustrial R&D grantsCoordination of programmesResearch funding

During the years 2000-2006 Tekes also had an annual allocation of around 10million euros from the EU Structural Funds as the EU share. The funding

resources for industrial R&D loans and capital loans for R&D merged in 2004.

For 2007

some 5%

growth

expected

2007

Networking in corporate R&D projects is very important:

SMEs – big companies – universities … nationally ..internationally… for higher targets in R&D and in business development

Share of networked projects, %

Almost all projects funded by Tekes in large companies and more than two thirdsof all R&D projects were networked in 2005. The figures include corporate R&D

projects, but not smaller feasibility studies. DM 58774, 38065 and 18063001-2006 Copyright © Tekes

0

20

40

60

80

2000 2001 2002 2003 2004 2005

Subcontractingfrom researchinstitutes

Large companysubcontractingfrom SMEs

Part oftechnologyprogramme

InternationalcooperationActive boosting

towards networking

Technology Development Departments at the TE-Centres


Technology Development Departments at the Employment and Economic Development Centres (TE-Centres) offer Tekes services to companies and research units as integral part of Tekes network

Technology Development Departments at the Employment and Economic Development Centres (TE-Centres) offer Tekes services to companies and research units as integral part of Tekes network

Lapland

Oulu

Kajaani

SeinäjokiKuopio

JyväskyläJoensuu

MikkeliTampere

PoriLappeenranta

Turku Tekes, Helsinki

Vaasa

Lahti

Tekes´ innovatio

n services support

development in all t

he country

Linking

national – international – regional

measures and environments

… utilising Tekes´ global network

Five offices located in the global technology

hot-spots in USA, Japan and China Brussels office linking EU and Finnish national R&D programmesPermanent staff of 12 technology expertsAdditional short term project personnel

Five international offices build international cooperation with Tekes´ technology programmes and strategy work

Five international offices build international cooperation with Tekes´ technology programmes and strategy work

Helsinki

TokyoBrusselsSan Jose

Washington, D.C.

Beijing

Shanghai

The sun never sets down in Tekes

Application focus areas Technology focus areas

Strategic areas of clusters Potential areas for new business

Tekes strategy focus areas

Process for strategy focus areas… active communication with industries

Market trends

Technology trends

Globalmegatrends

Values and goals of society

Researchorganisations,

universitiesCompanies

Ministry of Trade and Industry

Tekes vision, strategy and resources

Internationalforesight

EU, USA, China,Japan and other

countries

Internationalbusiness

environment

e.g. ETLAand Sitra

Regionalstrategies and

regionaltechnologystrategies

Academy ofFinland

Industryorganisations and

their strategies

Technology programmesand project funding

Strategy discussionswith companies

Security and safety Security at work

and in systems Information security

Tekes´ strategy focus areas 2005 -2007…in applications

Renewing products andbusiness concepts

The aim is to renew and strengthenour strong industrial clusters

Competitive products and services Modern process and production

technologies in business applications

Health and well-being Human approach, quality and

productivity in health care Products and services to

support health and well-being

Services Quality and productivity New service businesses

New models for public andprivate partnerships

Service innovations

Environment and energy Sustainable and

eco-efficient solutions Solutions for

climate change mitigation Acceptable and profitable

energy

Work and leisure Productive, creative and

motivating solutions Use of space

Enjoyment and experiencesin leisure time

Tekes´ strategy focus areas 2005…2007… in technology and basic knowledge

Biotechnology

Innovative nanostructured materials New structures for nanoelectronics

Nanosensors and actuators

Mobility Broadband communications

Software-intensive products and systems Knowledge and content management

Test environments for new applicationsand services

DM 12986305-2005 Copyright ©

Tekes

Materials technology Interdependencies between

properties, structures and production Surface phenomena

Materials design

Nanotechnology

Systems biology Bioprocess technology Combining biosciences

with ICT

ICT

Innovation activities Business renewal Growth companies and

internationalisation

Customer-oriented approach Managing a networked business Knowledge management Service business

Business competence and business development

20 ongoing programmes 2006 with a totalvolume of 1.5 billion euros

Each programme typicallylasts 5 years

Tekes generally financesabout half the totalinvestment in R&D of aprogramme

2,000 companyparticipations and 500research unitparticipations annually

Technology programmes implement the strategy… Tekes together with companies, research institutes, universities, …

About half of Tekes resources in programmes – some 200 Meur/y

Steering group enterprises

Tekes

PreparationCoordinationDecision

making

Company R&Dprojects

Grants

GrantsLoansCapital loans

Research projectsat universities andresearch institutes

SynergyNetworkingPart financing


Programmes are a unique gateway to Finland…… a unique platform for international co-operation

Some examples: Energy, Environment and Construction


2002-2006

2003-2006

2003-2007

2003-2007

2004-2008

40

18

60

33

70

17

8

20

16

23

200

12

138

164

122

Technology programmes in 2006CUBE - Building Services

FUSION - Fusion Energy Research Programme

DENSY - Distributed Energy Systems

Sara - Construction Adding Value

ClimBus - Business Opportunities inMitigating Climate Change

Totalvolume

mill. euros

Participatingresearch

unitscompa-

nies

2003-2007

2004-2009

2005-2009

2005-2010

2005-2010

2005-2010

Some examples: Information and Communications Technology


Technology programmes in 2006FENIX - Interactive Computing

FinnWell - Future Healthcare

MASI - Modelling and Simulation

GIGA - Converging Networks

NORDITE - Scandinavian ICT

VAMOS - Value Added Mobile Solutions

VERSO – Vertical Software Solutions

Totalvolume

mill. euros

Participatingresearch

unitscompa-

nies

84

150

92

237

15

202

21

21

38

2

15

11

82

66

47

5

-

56

FinnWell - Healthcare Technology Programme


Programme duration: 2004-2009Programme volume: approx. 150 million

euroof which Tekes provides 50 %

Programme Coordinator: Kalevi Virta, Navicre OyProgramme Manager: Anne Turula, TekesFurther information: www.tekes.fi/programmes/finnwell

Focus areas of Future Healthcare (FinnWell)


Well-being

Clin

ical

med

icin

e

Pu

blic

hea

lth

ExperiencesCare /

diagnosisMaintaining

healthPreventing

illness

Technologies for diagnostics and care

Healthcare IT related products and services

Processes of healthcare

Viewpoint of organisationsand business

Citizens’- / patients-viewpoint

Tekes’ mission statement

Tekes boosts the development of Finnish industryand the service sector by technological means and

through innovation.

This will renew the economy andincrease added-value, productivity and exports,

thereby creating employment and enhancing well-being.


Tekes, Finnish Funding Agency for Technology and InnovationTekes, Finnish Funding Agency for Technology and Innovation

Tekes’ key partners and stakeholders… we hit the target together with our partners

Municipalitiesand cities

Otherministries

Sitra

Academyof Finland

FinnishIndustry

Investment Ltd

Privateinvestors and

Business Angels

Key ministries

National Boardof Patents andRegistration of

Finland

Tekes

RegionalCouncils

Invest inFinland

Scienceand

TechnologyPolicy Council

Centres ofExpertise

TechnologyCentres

CustomersCompaniesUniversitiesResearch institutesPolytechnics

Finpro


Associations forindustry and

services

Finnvera

TE-Centres

Innofin

Funding criteria for company R&D projects


Tekes’ experts evaluate the project, the business, resources and the company from the holistic viewpoint

Tekes’ experts evaluate the project, the business, resources and the company from the holistic viewpoint

Other funding applications and the indirect impacts of the project on other companies will be taken into account in the evaluation.

Other funding applications and the indirect impacts of the project on other companies will be taken into account in the evaluation.

The key issues of the evaluation areBusiness activity to be pursuedTechnology, innovation, competence and

know-how to be developedResources available for the projectCooperation to be developed and utilisedDirect affect on social, environmental and

welfare aspects Impact of Tekes’ funding and expert work

on project implementation

Forms of Tekes’ funding

R&D grants are aimed at research projects that create new knowledge

for the development of products and services feasibility studies

R&D capital loans are primarily aimed atstrengthening the risk-taking capacity of small

and starting enterprises in their R&D activitiesprojects that will develop a product, process or service

Start-up capital loans for technology companies are aimed at

sharing the costs at the start-up phase

R&D loans are primarily aimed atprojects that will develop a product, process or servicewell established SMEs

Tekes’ funding is often a combination of a grant and a loan DM 42097

04-2004 Copyright © Tekes

Funding depends on the project’s technological challenge and on the market distance


Distance frommarket increases

Degree of challengeand novelty increases

R&D loan or capital loan for R&D

Loan-weighted combined funding

R&D grant orcombined funding

R&D grant

Total 429 million euros and2,134 projects

Total 429 million euros and2,134 projects

Total Tekes R&D fundingin 2005

R&D grantsto companies

178 million euros

Research fundingfor universities,research institutesand polytechnics179 million euros

R&D loansto companies43 million euros

Capital loans for R&Dto companies

25 million euros


Start-up loans to newtechnology companies

4.1 million euros

Figures include 21 million euros funding from EU Structural Funds.

Share of Tekes business R&D funding for companies with less than 500 employees

Annually an additional 10-25 million euros was directed towards companies with less than 500 employees through projects in large companies, which

increases the percentage by 5-10 points.

%

DM 180630 and 58774 02-2006 Copyright © Tekes

0

10

20

30

40

50

60

70

80

90

100

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

SME

(EU-def.)

50-60%

Tekes´ fundingfor companies

2004,%

Tekes´ fundingfor companies

2004,%

Companies R&Dinvestments2003,

%

Companies R&Dinvestments2003,

%

Tekes R&D funding by regionTo Kainuu about 1-1,5% of Tekes´ funding,

which is well above average

Total237 Meur

Total 3,5 Meur

0,4

1,2

0,4

0,2

1,0

0,3

0,3

3,2

1,0

17,1

0,4

15,2

1,2

1,11,6

11,0

2,4

40,8 1,2

0,6

2,6

1,8

1,4

2,1

1,5

0,5

3,7

0,8

11,0

1,2

7,1

2,0

1,93,9

38,914,2

2,2

2,8

DM 125030 ja 5502301-2005 Copyright © Tekes

Tekes R&D funding by industry

Million eurosMachines andmetals

Other

Businessservices

Forest

Construction

Chemicals

Industry

Electricity, gasand water supply

Foods


Electronics andelectricity

0

10

20

30

40

50

60

70

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Networking in corporate R&D projects

Share of networked projects, %

Almost all projects funded by Tekes in large companies and more than two thirdsof all R&D projects were networked in 2005. The figures include corporate R&D

projects, but not smaller feasibility studies. DM 58774, 38065 and 18063001-2006 Copyright © Tekes

0

20

40

60

80

2000 2001 2002 2003 2004 2005

Subcontractingfrom researchinstitutes

Large companysubcontractingfrom SMEs

Part oftechnologyprogramme

Internationalcooperation

International cooperation projects funded by Tekes by country groups

Othercountries

USA

Japan

EU 25 and EEA

Almost 40 percent, equal to 797 projects funded by Tekes were internationally networkedin 2005. The total budget was 430 million euros, of which 234 million was funded by Tekes.

Percentages are calculated from the total funding of the projects.

Any project can belong to more than one country group. DM 180630 and 3194701-2006 Copyright © Tekes

Number of international projects

China0

100

200

300

400

500

600

2001 2002 2003 2004 2005

Large companies (more than 500 employees) receive 16 % of Tekes total funding and 27 % of Tekesbusiness R&D funding during 2003-2005. Large companies co-finance Tekes R&D projects in universities,public research institutes and SMEs as much as Tekes finances their projects.This system is managed by Tekes funding criteria, Increasing the quality of R&D projects and havingimportant externalities in:• knowledge transfer between large companies, universities and research institutes• development of SMEs as subcontractors and strategic partners of large companies

Impact of project funding in large companies


UniversitiesPublic research

centresSMEs

Tekes

66 mill.euros

Projectvolume

191 mill. euros35 mill. euros 19 mill. euros

11 mill. euros Funding flows to/from large companies,million euros

• Tekes funding to R&D projectsof large companies

• Large companies projects buyresearch services from researchorganisations

• Large companies projects useSMEs as subcontractors

• Large companies co-financepublic research projects

• Net flow

Largecompanies

Funding flows of Tekes funded R&D projects between large companies, (more than 500 employees), universities, research institutes and SMEs

Annual average 2003-2005

+ 66

- 35

- 19

- 11

+ 1

Network for Regional SME Finance – FinNetSME, Martti af Heurlin, Tekes

Main messages:

• High R&D-investments clear results

• Towards wider understanding of innovation

• Strengths of the Finnish approach

• Interactive public-private communication – all levels

• Business sector R&D funding by Tekes

• Together with others like: Finnvera, TE-Centres, SITRA, Finnish Industry Investments Ltd, Finpro…

Thank You [email protected]

network for regional sme finance - finnetsme ”funding for technology and innovations” dr. martti...

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