Radionica ‘’Primeri nacionalnih agencija za inovacije’’

This project is funded by

the European Union

Integrated Innovation Support Programme

An overview of the UK Innovation Agency

Dr Yannis Pierrakis, 17 Sep 2012


the European Union

A few firms create the majority of new jobs

Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database

2002-05 2005-08 2007-10

Firms New jobs

Job creation by existing UK businesses

Firms New jobs

Firms New jobs


the European Union

This isn’t about “growth sectors”…

Source: Vital Growth (NESTA, 2011), based on the ONS Business Structure Database

Manu fact-uring

Const-ruction

Retail & whole-sale

Hotels &

Restaurants

Transport &

comms

Fin svcs

Proportion of high-growth firms by sector, %

Business services & Real estate


the European Union

Source: Business Growth and Innovation (NESTA, 2009).

1 2 3 4 5 or moreAge of business (years)

…nor is it just about start-ups

High-growth firms by age group, %


the European Union

But innovation seems to matter

Source: Business Growth and Innovation (NESTA, 2009).

6%

YesYesNo No No

Product Innovation

Process Innovation

Wider Innovation

Did innovation take place 2002 – 2004?

Average annual employment growth rate (2004-07)

5%

4%

3%

2%

1%

0%Yes


the European Union Much innovation is ‘hidden’

• Hidden innovation is estimated to account for around 75% of all innovation

Can you check with Brian what the 75% figure relates to?Brian confirms this to be true, HOWEVER........we believe Louise came up with this, as it does not appear in the Index report.


the European Union Definitions of innovation

- "The successful exploitation of new ideas" (UK Department for Business, Regulatory Reform)

- “Innovation activities are all scientific, technological, organisational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations.” (OECD)


the European Union

Background

• Founded 1998, with a statutory remit to promote talent, creativity and innovation in science, technology and the arts.

• Several phases of work:

1. 1999-2005: focus on individual innovators; some investments; and education (spun off as FutureLab)

2. 2005-2010: separated investments from innovation programmes; expansion of work on policy and research; open innovation (spun off as 100%Open)

3. 2011-: turned into independent trust (2012): shift to emphasis on impact/outcomes-focused programmes; leveraging external income; innovation skills


the European Union

Key facts• Endowment assets - ~£340m• Legal status - charity• Staff – ~100• Governance – board of trustees• Performance management – varied approaches across

research, programmes, investments• Key stakeholders: government (as funder, policy influence),

both UK and nations; business; civil society; higher education


the European Union

Key activities

• Investment• Research and policy• Programmes• Networks• Skills


the European Union

Financeinvestments

grantsprogrammes

Skillsmethods coachingmentoring

Networkscommunicati

oninterdisciplina

ryconvening

Knowledgeresearch

policydata

The UK’s Innovation Foundation

• Help people and organisations bring great ideas to life.

• An independent charity funded by an endowment

• Innovation for public good:o for economic growtho to address major public

and social challenges

• Work in partnership across private, public and creative sectors


the European Union

SVI FUND BIG SOCIETY FINANCE FUND

RESEARCH & POLICY RECOMMENDATIONS

VENTURE INVESTINGIMPACT INVESTMENT

FUND

CATALYSING START UP SUPPORT

SUPPORTING A DEVELOPING

MARKET

AGEING WELL

LEARNING & EMPLOYABILITY

NEEDS OF YOUNG PEOPLE

RESOURCE EFFICIENCY FOR INDIVIDUALS & COMMUNITIES

Investments

http://www.mtifirms.com/default.aspx

http://bethnalgreenventures.com/


the European Union

Investment Philosophy

• Typically co-lead or involved syndicate partner

• First investments at 2 stages of company evolution

• Look to build/be involved in good quality, well funded syndicates

• In businesses that require <£10m investment capital

• Balanced participation

• Ability to follow the strong assets

Bring:

• Insight through research

• Links to policy making and thinking

• Experienced entrepreneurs

• Committee and Trustee access

Time

£ amount required

Pre-Series A (£250k out of

£500k)

Series A (£500k - £1m out of £2m-£4m)


the European Union

Current Partnership

•UMIP Premier Fund•The UMIP Premier Fund is Europe's largest institutional fund to have a single university focus. It invests in businesses emerging from The University of Manchester's academic departments.

•Pentech Ventures•The Pentech Ventures Fund II invests in early-stage software companies in the UK and Ireland. It backs businesses with global potential in the enterprise software, telecommunications software, internet, mobile, and tech media sectors.

•GP Bullhound Sidecar Fund•Invests in technology, media and telecoms businesses alongside investors introduced by GP Bullhound. The Fund is managed by GP Bullhound, one of Europe's leading technology-focused investment banking advisory firms, providing service to entrepreneurs across Europe.

•IP Venture Fund•The IP Venture Fund is managed by Top Technology Ventures Limited, the venture capital fund management subsidiary of IP Group. It commits in the region of 25% of the amount of post-seed financings of IP Group portfolio companies alongside capital committed by external investors.

•Seedcamp•A Europe-wide initiative to support the next generation of Web 2.0 technology entrepreneurs.

http://www.ipgroupplc.com/ipo/


the European Union

NESTA Investment Research

•We aim to promote policy research in the area of early-stage finance. We work closely with various stakeholders, including the British Venture Capital Association, the British Business Angels Association, universities, and government departments, such as BIS (The Department for Business Innovation and Skills), to carry out primary and secondary research around the early-stage investment agenda in the UK and Europe.

•Current Research

•From funding gaps to thin markets NESTA in conjunction with the BVCA have analysed the impact of investment from UK government-backed venture capital schemes on funded firms.

•Reshaping the UK economy: the role of public investment in financing growth This document proposes the establishment of a public-private fund of funds, making use of the best of private sector experience and avoiding many of the pitfalls of excessive direct intervention.

•Siding with the Angels This research is the largest of its type attempted in the UK and greatly improves our understanding of angels’ investment approach and experience, what returns are being made and what factors affect successful investment.

•Shifting sands: The changing nature of the early-stage venture capital market in the UK This report highlights the growing dependence by entrepreneurs in the UK on public sources of finance.

•Micro Funds This research seeks to characterise the micro fund investment experience for both fund and portfolio firms.

•The connected university This report suggests that the innovative businesses created and supported by our universities will be essential to allowing the UK to emerge strongly from the recession.

•Impact of growing innovative firms This project aims to improve understanding of the contribution of high-growth firms to the wider economy, with a particular focus on those benefits that firms fail to appropriate for themselves. It analyses the different channels by which growing firms have an impact on the economy.


the European Union Investing to address target outcomes

AgeingYoung people and learning

Self sustaining communities

Target outcomes

• Reductions in avoidable injury and premature deaths of older people

• Increases in number of older people enjoying high quality of life

• Increases in number of older people participating in social, cultural and economic life

• Increased achievement and attainment of young people

• Improved employment readiness and access to employment of young people

• Greater capacity and motivation of young people to contribute to society

• Improved physical and mental well-being of young people

• Increased efficiency in the use of energy

• Reduced material intensity of goods and services

• Increased self-reliance of individuals and communities in materials, energy and social capital

• Increased access to products and services for individuals and communities experiencing exclusion

• Increased ownership and/or management of assets by communities experiencing exclusion

Areas for innovation and investment

• Social care

• Housing and housing services

• Personal finance

• Increasing participation

• Learning outside of school

• Support for young people in transition from school to employment

• Support for healthy physical and mental development

• Behaviour change in communities

• Collaborative consumption and community participation

• Aggregation and management of demand

• Platforms for supporting community scale intervention 16


the European Union

Policy and Research

20.2

32.1

3.5

22.1

14.9

Total 133.4

14.5

26.1

Investment in innovation, ₤bn, 2007

Training & skills development

“Go-to-market”

Design

R&D

Other (copyright, etc)

Software development

Organisational innovation

Plan I as key activity synthesising lessons from innovation policy


the European Union NPRU – what we do

• Research projects• Policy briefings• Provocation pamphlets• Policy responses• Innovation policy newsletter• Working with policymakers


the European Union

•Pillar 1: Innovation and Economic Growth – NESTA’s approach

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Rationale

• Innovation is the most important driver of economic growth

• Minority of high-growth, innovative businesses vital to the economy

• Demand from government to help foster economic growth

Capital• NESTA Investments• Research into VC and portfolio

companies

Enterprise • NESTA incubation projects (Seedcamp,

EMA, etc)• Research into what really works

Knowledge CreationResearch into business-university interface

Markets Research into how to harness £200bn government procurement budget


the European Union

Three-year research programme looking atall businesses in UK and 11 other countries in the last decade (2002-05, 2005-08, 2007-10)

NESTA’s research on high-growth businesses

The Vital Six Per Cent (2009)

Business Growth and Innovation (2009)

Measuring Business Growth (2009)

Growth Dynamics (2010)

Vital Growth (2011)


the European Union

A gap has opened up between the practice, the theory, the measurement (and subsequently policies) of innovation. This innovation gap can produce a misleading view of national innovation performance.

Nesta has developed expertise in measuring innovation, including a methodology called the innovation index that we are working with countries around the world to apply….

It breaks down what really drives innovation and productivity growth beyond investment in R&D.

New innovation metrics


the European Union

21.6

27.1

3.8

23.3

16.0

Total 137.4

15.0

30.7

Investment in innovation, ₤bn, 2008

Training & skills development

“Go-to-market”

Design

R&D

Other (copyright, etc)

Software development

Organisational innovation

13.8% of private sector

output

The Index also provides historical innovation investment data going back to 1990

Source: Nesta Innovation Index

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

14%

15%

16%

Training

Org. Development

Design

Software

Go to Market

R&D

% of business output

Software

New innovation metrics


the European Union

Pillar 2: Innovation in the Creative Economy

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Rationale

• Creative industries is a truly distinctive sector for the UK

• Central to NESTA’s remit, and of interest to a large and well-disposed audience

• Appears to stimulate innovation in wider economy

Supporting high growth in the creative industries• Working with creative SMEs to trial

new business models• Mentoring to build potential to grow• Researching barriers to finance –

potential investment opportunities?

Creative industry crossovers• Research and experiments on how

creative industries benefit the wider economy

• How to promote more crossovers between “S, T & A” (e.g., video games)


the European Union

Pillar 3: Public and Social Innovation

12

Rationale

• UK’s public finances constrained – cuts inevitable

• But long-term, expensive social challenges remain

• And existing systems stifle innovation

How to enable people-powered public services• Partnerships with local authorities and

other public service organisations to run practical experiments to test user and community-centred innovations

• Research and practical work on how to make it work from the government perspective?

Developing the “infrastructure” for social innovation• Experiments on how to encourage social

innovation (e.g., Big Society)• Large existing stakes in a range of social

finance projects


the European Union

Programmes

DIGITAL R&D FUND FOR

ARTS & CULTURE

Funders & commissioners

Social innovators

Researchers

The problem A solution? What we’re doing next

Barriers

How can we support and scale up innovation if we don’t know what works? •Campaigning

•Sharing knowledge

•Coordinating a network of 250+ organisations committed to better evidence

• Discussion events and research to explore issues and possible responses

• Leading to the development of Evidence Centres to advance the useful evidence agenda in important policy areas

Evidence for innovation policy


the European Union

Networks and communications


the European Union

Innovation skills

• Core innovation curriculum• Blended learning materials• Foundational layer of ‘free to air’

modules• Face to face training• An eLearning platform/LMS


the European Union

• Systematising learning from practice into useful methods and products

• Innovation 101: adaptable curriculum covering theory and practice

• Suite of interventions from stimulus, advice and design through to accelerator models, camps and managing innovation processes

• Work with governments worldwide on innovation policy and practice


the European Union

NESTA’s previous experience provides lessons for the future

• Undertaken a sustained programme of work with a clear focus

6

When NESTA is most effective, it has…

2008-09: Attacking the Recession IIF

2009-10: People-Powered Public Services Big Society

When it has been less effective, it has…

• Combined practical work and research

• Drawn on innovative partners

• Been unfocused or disparate in its efforts

• Done practical work or research for its own sake

• Promoted its own work in isolation


the European Union

We set out to understand the ‘state of the art’…

Understanding which models work?

How to judge additionality?

Which performance metrics to care about?


the European Union

Academic literature wasn’t the only place to look…


the European Union

Could these offer lessons for supporting startups?...

2005

2006

2007

2008

0

2000

4000

6000

8000

10000

12000

EBN BIC 2009 Observatory

Cost per job created with support of a BICPublic financial contribution per job created

€

But the cost of starting up has decreased dramatically in the last decade?


the European Union Our definition of accelerator programme:

- An application process that is open to all, yet highly competitive.- Pre-seed investment, usually in exchange for equity.- A focus on small teams not individual founders.- Time-limited support comprising programmed events and intensive mentoring.- Cohorts or ‘classes’ of startups.


the European Union

A lot of questions remain…

Will accelerators work in other sectors?

Could accelerators be ‘used’ as an economic development tool outside tech hotspots?

Bubble?

What are the transferrable lessons for startup support across the board?

How can we maximise the impact of efforts to incubate and accelerate ventures with high growth potential


the European Union

• Micro seed fund

• Micro seed fund • Micro seed fund

SEEDCAMP SPRINGBOARD INNOVATION RCA

EUROPEAN MICRO-

ELECTRONICS ACADEMY

SOCIAL INNOVATION CAMP

/ BGV

SEEDCAMP I & II 2011 & 2012 2008 – 2012 2010 – 2012 2012 –

£450k £75k £450k £150k £150k

• Established by insiders

• Very focused• Accelerate

through network• Micro seed fund

• Replicating a US model

• Very driven• Quality improving• Early in terms of

measuring success

• Nexus of technology and design

• Classic annual incubator

• Pipeline & promotion

• Targeting• Supply chain

participants• Advisory board• Impact

• Accelerator principles applied to social innovation

We’re working out how to answer them….


the European Union Crowdfunding

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the European Union $1.5b was raised last year

38


the European Union Crowdfunding and equity gap

39


the European Union Rewards and risks

40


the European Union Stages of equity crowdfunding

41


the European Union

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the European Union Crowdfunding - Lending

• Lent money to 61 companies (30 median)• Lent £6,177 (£1,500 median)• Average amount per company £120 (£50 median)• 9% of total assets (saving and investments) is invested

through FC• Total capital (savings and investments) £340k (£80k

median)• 75% expects this figure to raise • Between 84% to 280% • Spend 15 mins before made an investment

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the European Union Plan i

• Financial architecture: A £200m fund for early-stage ventures; freedom to raise money for the Green Investment Bank, and a new business banks to lend to growth sectors including advanced manufacture and life sciences.

• Rebalance government spending towards innovation: Invest the proceeds of the forthcoming 4G spectrum auction - estimated at £4bn - in science, technology and innovation.

• Government innovation procurement: Establish innovation spending to channel £1bn of government procurement through innovative businesses.

• Infrastructure investment: Relax planning restrictions around innovation clusters.

• Collective intelligence: Higher education funds for radical inventions around knowledge creation - putting design thinking at the heart of the new Catapult centres.

• Incentives for innovation: A £25m 'challenge prize' fund to inspire the nation to tackle big technological challenges

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the European Union Plan i

• Measurement, data and standards: Reshape the tax credit system to recognise hidden innovation and R&D.

• Boosting innovation across the UK: Supporting innovation clusters where they are already thriving.

• Innovation in the labour market: Link procurement to local jobs, training and apprenticeships and encourage innovation around micro-jobs and micro-franchises. Support innovative projects such as Studio Schools/establish norm of one apprenticeship per £1m turnover.

• Public and social innovation: Demonstrate the most effective models and approaches to tackle the severest social challenges, with cross-government funding commitment for public service incubators to share the most effective models.

• Education: Create the next generation of digital makers, giving all teenagers the chance to make, code, design and program.

• Remove barriers to entrepreneurship: Change the immigration cap to welcome skilled foreign graduates and entrepreneurs, and recast regulation to encourage new market entry.

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the European Union

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