Innovation= value creation

Value Creation

“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)

Innovation converts reasearch into economic value and creation of specialized jobs

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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 :a)Identification of new technologies and their industrial applicationb)Protection of the investment into new technologies via patent, copyrights, license, design rightsc)Definition and development of appropriate marketing strategyd)Technology transfer via licensing and commercial agreement towards existing companies or to new stratups

Innovation:Makes a discontinuity in traditional knowledge, and knowhow,. This discontinuty increase overall productivity and labour productivity: with the some ammount of resources we can produce more goods (development) or with less resources we can produce the some ammount of goods than before (sustenability)Development and sustenability are linked to technology diffusion and production process, quality oflife (rise of income or more spare time) and to the environment (improved usage of resource)

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The new enterprenerual capitalism of Research & Innovation in Italy

It is a tech-based capitalism focused on researh as the main levr for competition and development

It is a capitalism based on innovative eneterpreneurs with an advanced university curriculum

It is a capitalism that favour technology and innovation diffusion (via spill overs and knowledge sharing) and and the creation of new strat ups with a direct benefit fo the overall economy

It is a capitalism that is able to actract foreign investment as both acquisition of equity into existing companies and green field investments

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In Italy

Life cycle of innovatoive firms and finacing resouces

Structure and what it does

Idea Spin-off Start-up market

Family financing Pre-seed financing

Family financingSeed Venture capital Second Round

- Private Equity- IPO

Support

Company set upInnovative prototypeCommercial feed backs

Venture Capital

Private Equity

Tuning of innovative product

Commercial structure

Strategic Parteneship

Continous innovation of the product

Final organization structure

marketing e6 sales investments

Partneship and acquisitions

- Incubatorors- Business Angels- Public Admin. support

Analysisi and idea evaluation

Product definitionBusiness planMarket analysis

Expansion Capital

Activity

FInancingI

Pre-seed financing: typically involved in the analysis and evaluation of the idea

Seed financing: It intervenes in the testing phase of the innovative idea. The idea is often channeled into paths of incubation to determine the product, the technical validity and the target market

Start up financing: It occurs at an advanced stage of the idea. The idea became a prototype of which must be checked for validity commercial

RiskHigh

MediumLow

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Start up e gli spin-off are unattractive to the conventional credit

RISK

«Lab-pure» Research

Base ResearchMarket Test

Applied ResearchPatents and Licences

Prototype

100% financing from Public Institutions( Incentives, contributions, scholarships,…)

Partnership private-public sector (Equity Capital, Loans, guarantees)

Venture Capital hi tech investments

(Private sector)

Produce and Put the innovative product on the

market

NOT have a solid bankable NOT generate a positive cash flow NOT have a business model to understand NOT have access to forms of finance based on collateral NOT generate interest for the banks because of the limited investment

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RiskHigh

MediumLow

How to finance tech. innovation

Venture Capitalfinancing of business ventures in high-technology sectors in the initial phase of the business

investment in risk capital for firms with high growth potential, by a specialist Venture Capitalist

mechanisms to return to investors the capital collected final goal is to exit advantageous

limit: considerable managerial skills of the team

Business Angelsnon-institutional investors (eg managers) that can occur through management support and forms of

direct financing to companies still in their infancy and require limited financial resources

Notwithstanding a strong risk attitude, they take a limited equity capital investment in companies with high growth potential and they provide important management consulting and financial

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R&D investments as a percentage of GDP

Private sector

Public sector.

R&D invetsments -% over GDP-

0 1 2 3 4Italy

UK

Canada

France

Germany

United States

Japan

Sweden

Both Italian private and public sector present a R&D gap when copared with other developed counties

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R&D investments: EU comparisonSvezia 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 1,66%Slovenia 1,56%Rep. Ceca 1,55%Irlanda 1,30%Spagna 1,20%Italia 1,16%

Fonte: Eurostat, Key dati 2006

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Average UE1,85%

R&D investments in Italy

R&D Investments

GDP= %

Fonte: Commissione europea, Key Figures 2006, Media EU-27

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Innovation Performance comparison

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Who invests 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%

Non Profit Organization 186 1%

TOTAL 14.600 100%

In Italy private company has a very law involvment inthe R&D process and investments

Fonte: Elaborazioni IPI su dati ISTAT “Indagine sui centri per l’innovazione e il trasferimento tecnologico in Italia”

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R&D distriution within firms

Fonte: Elaborazioni IPI su dati ISTAT “Indagine sui centri per l’innovazione e il trasferimento tecnologico in Italia”

more than 805 of private investment in R&D is concentrated in only 3% of the firms

3% firms

> 80% R&S97% firms

< 20% R&S

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How to facilitate the relationship between research center and firms

In Italy there are many actors who try to fill the gaps within the innovation value chain . These actors have to create links between the differnt subjects involved

This means

different organizations are seeking to bring innovation from public research to private companies, especially small and medium-through services for spin-offs and start-ups in the areas of:

promoting innovation (joint lab)

service quality management

business plan and market analysis

business management systems

support the participation of venture capital

support to finance investment projects

Fonte: Elaborazioni IPI “Indagine sui centri per l’innovazione e il trasferimento tecnologico in Italia”

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Conclusions

Sin-offs and high-tech start-ups are the best way to create value from applied reasearch and innovation diffusion. In order to favour such a process we need:

•Support activities (e.g.: how to incorporate a company, how to manage it, market analysis, business plan, procedure quality control, patenting)

•Laboratories and offices (Innovation parks)

•Coordination with selected partners in Italy and aborad

•Equity fianancing from SEED and Venture Capital

•Preferencial credi lines for research and innovation activities

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