“Bridging the Gap Between Russian/CIS Innovation and Markets” ISTC Programs and Services

1. “Bridging the Gap Between Russian/CIS Innovation and Markets”ISTC Programs and Services Timothy P. Murray ISTC Group Manager ComSP Russian Venture Fair 2006 St. Petersburg, 11 October 2006

2. About ISTC • Founded in 1992 by the governments of the EU, Japan, the USA and Russia; operations began in 1994 in Moscow • Following years Norway, S. Korea and Canada joined as Funding Parties • Headquarters in Moscow with Branch Offices in Armenia, Belarus, Georgia, Kazakhstan, Kirgyzstan and Tajikistan • Inter-governmental organization with the status of diplomatic mission • Unique intersection of international, industry, and hi-tech cooperation • Unprecedented Agreement establishing institute access, tax immunity, customs privileges

3. ISTC Core Objectives • Redirect former Weapons of Mass Destruction (WMD) scientists of Russia/CIS • Promote long-term sustainability • Reinforce the transition to the market economy • Help integrate former WMD scientists into the global scientific community • Contribute to solving national/international science & technology problems

4. An Impressive Record • ISTC is one of the largest sponsors of R&D in Russia/CIS supporting former WMD scientific community • By May 2006, ISTC has: • Funded more than 2200 research projects worth more than $700 million • At over 700 CIS institutes • Engaging over 65,000 specialists • Attracting more than 300 Partners (both governmental and private sector) to fund ISTC projects • Providing business training and commercialization support to more than 1000 former WMD experts

5. ISTC Technology Areas

6. Asia, EU, USA: Large markets Entrepreneurial culture National systems to support business creation Access to capital Large pool of Management talent Russia and CIS: Under utilized technologies Small markets; domestic industry not using own hi-tech Limited national support systems for business creation Lacking entrepreneurial culture Lack of economic and operational independence Weak IPR protection awareness Limited access to early stage capital Regulatory barriers The Environment

7. ISTC Programs “Are you talking to me?”

8. ISTC Partner Program • Provides access to cost-effective, world class R&D talent in Russia/CIS • Tax-free grant payments to recipients via ISTC • Customs and duty free imports of project equipment via ISTC • Project planning, management, on site monitoring and audits • Complete control of funds

9. cash flow mature & profitable growth Research seed-phase time start-up savings, biz-partners ISTC Projects Commercialization national support (innovation system) banks, loans, outside capital INVESTORS stock exchange ISTC Commercialization Support Program

10. New ISTC Commercialization Services • Focused on supporting long-term sustainability for former Soviet defense scientists. • Competency Building (business training) • IPR Asset Inventory and Analysis • Advanced Matchmaking • Pre-Commercialization Support • Commercialization Initiatives

11. Business Training for Scientists • Competency Building Program • Free multimedia training courses in Russian, supported by interaction with a professional trainer, available to ISTC beneficiaries: • Intellectual Property Rights (IPR) • Business Planning • Basics of Business Administration • Business Presentation Skills • Negotiating for Success in a Business Environment • Others • Workshops, coaching, commercialization seminars, etc.

12. IPR Asset Inventory and Analysis (IPRA) • By Russian law, all state-owned research institutes must perform an IPR asset inventory. • Many institutes unclear how to do this. • ISTC can help. • IPRA is a key input to development of commercialization priorities and an institute sustainability plan.

13. IPRA • Assist ISTC beneficiaries to address the following: • Which IPR is most valuable, should it be protected and how? • Does institute have all IPR needed for success (incl. background & foreground, an IPR “portfolio”)? • What legal/contractual limitations may hinder success? • How to develop a sustainability strategy that helps the institute prioritize its human and asset capital to exploit most valuable IPR for maximum return? • How to develop expertise and procedures to empower institutes to perform their own IPR asset inventories? • Provide coaching and training so institutes can develop their own IPR asset inventory processes and expertise

14. Advanced Matchmaking (AMM): What Is It? • Traditional matchmaking often focuses on identifying a good “match” between CIS institute and international Partner, then facilitating the introduction—taking the first step. Several ISTC programs support this. • AMM is designed to: • 1.Bring together participants in a possible commercial deal (ISTC beneficiary and commercial partner, customer, investor, etc.), and • 2. Provide “hands-on” business development support to the ISTC beneficiary until the deal is reached.

15. AMM Support • Support can include: • Travel to meet potential partners, attend conferences and trade fairs • Business and legal consulting support • Support in preparing targeted business-attractive presentations • Help developing mini-business plans, limited market surveys, business models, etc. • No grants or equipment provided to scientists, no site access, no host government concurrence required.

16. Pre-Commercialization Support • Modest support that strengthens the business case and business capabilities of ISTC beneficiary institutes. • Ex. Market research, biz planning, biz/legal consulting, travel support for customer search, training, etc. • Services range from very small ($1-2K for travel) to rare cases of up to $100K (w/legal consulting and multi-stage biz planning and development work.) • No scientist grants or equipment provided, no site access required. • Therefore, no host govt. concurrence is required.

17. Commercialization Support Program • ISTC has funding available for early stage technologies developed by former WMD scientists; • ISTC funding goes to Russian/CIS scientists, but in alignment with investors or customers goals and supported by investor/customer/institute investment; • ISTC doesn’t take any equity, profit, royalties or intellectual property position in your business • ISTC services, financing and procurement must adhere to ISTC regulations—auditable and transparent • ISTC’s mission is to create sustainable jobs for former WMD experts;

18. Commercialization Initiatives (CIs) • Commercialization Support Program goals: • Bring marketable, revenue-producing hi-tech goods/services in advanced stages of development from former defense institutes to the market • Support technology transfer that brings revenue to former defense institutes • Create sustainable jobs for former defense experts • Funded by Parties and government Partners. Co-funding can be provided by outside investors, including Russian government agencies and private companies.

19. CI Outcomes • Sale of technology licenses or portfolios of technology licenses from former defense experts, bringing revenue to the institute. • Strategic partnerships/alliances between former defense experts and larger companies. • Support creation of start-ups & spin-offs involving former defense experts • Support creation of joint ventures involving former defense experts and Western partners

20. Terms of Support • The program positions itself in early phase of hi-tech commercialization process as a risk-sharing mechanism to support mature civilian technologies from former defense experts to the point where investors, commercial partners, etc. become involved. • ISTC exits when a technology becomes profitable or the CI becomes financially self-sustainable. • ISTC takes no profits, royalties, equities. • ISTC takes no part in beneficiary’s business decision-making process, but can advise if requested, under appropriate legal protections.

21. Types of Support • Available only for ISTC beneficiaries within our mandate (former military scientists & experts). • Support can include: • Capital equipment and materials • Infrastructure upgrades • 3rd party services (consulting, marketing, advertising) • Training, travel for networking purposes. • No-interest payback provisions for capital equipment when agreed conditions are reached.

22. ISTC Programs “What’s in it for me?”

23. ISTC Facilitation • Assistance assessing and accessing technologies, products and business opportunities that augment your current portfolio • Assistance for your companies to develop and implement “outsourced” research and development • Facilitation of business development and business creation with Russian/CIS institutes and entities • Bridging the gap between early “seed” stage funding and later stage/venture funding, sharing the risks with investors

24. ISTC Programs

25. ISTC Programs

26. Contact Information for Sustainability Programs at ISTC Laura Schmidt Williams Deputy Executive Director for Partnering & Sustainability Telephone +7-495-982-3111 Email Williams@istc.ru Timothy Murray Group Manager Commercialization Support Program Telephone +7-495-982-3163 Email Murray@istc.ru