Fostering high-tech start-ups for regional transformation: tangible to intangible factors

1. KNOWLEDGE ECONOMY FORUM VII Technology Absorption by Innovative Small and Medium Enterprises Fostering high-tech start-ups for regional transformation: tangible to intangible factors Donato Iacobucci Università Politecnica delle Marche Ancona, Italy - June 17-19, 2008

2. Presentation outline • Policy in context: the Marche region • The role and place of tangible factors • From tangible to intangible factors • Lessons and recommendations

3. High-tech startups • What are they? • new companies that have evolved from universities and research centers, as a result of a technology transfer process from research to the commercialization of products or services • Why promote them? • they create jobs for highly educated people • they facilitate entry into high growth sectors • they transform the regional economy

4. Policy in context • The role of technology start-ups (and regional policy to sustain them) varies according to context • In this presentation I refer to the experience of the Marche region

5. From agriculture to industry Percentage of employees by sector in the Marche region Source: Industry census Over 40 years the Marche has gone from an agricultural area, to one of the most highly industrialized regions in Italy and Europe

6. Manufacturing LLS by firm size “The Third Italy” • Features of the model: • fast growth during the ’60s and ’70s • prevalence of small and medium sized firms (high rates of entrepreneurship) • high degree of internationalization (export) • spread of activity across the territory, reducing population migration and urban congestion Small firms Medium-sized firms Large firms Non-manufacturing areas Source: ISTAT

7. The industry model LLS in 2001 Industrialization based mainly on the agglomeration of small firms in industrial districts Textiles and clothing Leather and footwear Furniture Musical instruments and goldsmithing Food Mechanical equipment and machinery Primary metal industry Coke, oil refining industry Transportation equipment Paper, printing and publishing Non-manufacturing areas Small-sized firms Medium-sized firms Large firms Non-manufacturing areas Source: Industry census

8. Industry specialization The manufacturing industry is dominated by traditional industries and small firms The average size of manufacturing firms in 2001 was 9.2 employees Employees by industry in 2001 Source: Industry census

9. The new challenges • Diversifying the industrial structure from traditional industries to high-tech activities • Changing the innovation model from “innovation without research” to “R&D based activities” High-tech start-ups are critical to both objectives

10. The first attempt:building a tangible infrastructure The 1990s • EU, national and regional funds used to build a network of business innovation centers (3 EuroBICs) and a technology park (TecnoMarche) • They had almost no effects on the development of high-tech firms or high-tech clusters in the region

11. Why was this? • No close relationships with research centers (universities) • Location: they were located in less developed areas of the region • Sequence: it was too early to build the ‘tangible infrastructure’ for high-tech start-ups

12. The second attempt:reconsidering the role of the university At the beginning of this decade our university redefined its Mission Talent: attract and educate the best people Technology: excellence in research and technology transfer Territory: serve the needs of firms in the region and its Name from “Università di Ancona” to Università Politecnica delle Marche

13. Technology transfer • To foster TT activity UPM created an industrial liaison office and launched a series of projects and activities in this area • Main aims: • Foster relations with industrial firms in the region • Promote spin-offs in high-tech sectors

14. Some of the ILO projects • Talent for competitiveness • PhD programs co-financed (50% UPM – 50% firms) • Database of competences • People, projects, research structures • Supporting spin-offs from research • Support for development of a business plan • Minority shares in initial capital • Use of university facilities (in the incubation phase)

15. Spin-off promoted, 2001-2207

16. Time for a new phase...Supporting take-off UPM is aware of the need to provide support for spin-offs to sustain their development • Projects with local governments to create incubators and technology parks for the location of spin-offs and high-tech firms • Agreements with financial institutions to facilitate the raising of capital • Specific bank loans • Regional government support measures

17. Lessons from experience • Providing tangible factors (technology parks, incubators, financial aids) is not a sufficient condition for technology startups • The development of tangible factors must follow rather than precede the early development of the phenomenon • Other factors are required in the early phases

18. Intangible factors to foster high-tech start-ups • Induce universities to play a proactive role in technology transfer activities • Promote an entrepreneurial culture within research institutions (universities) • Identify regional strengths in terms of research capabilities and possible relationships with business activity

19. Promoting an entrepreneurial culture • Stimulate highly educated people to embrace an entrepreneurial career • Legitimation (it is an interesting and respected career path) and feasibility proof (someone like me has succeeded) • Actions • courses on entrepreneurship and business plan • nurturing activity of young entrepreneurs by academics

20. From tangible to intangible factors • Policy based on intangible factors is more complex than policy based on tangible factors • Problems: • Requires ‘visionary’ leaders in local institutions • Requires coordination between institutions • Requires changes in organizations and in people’s behavior • Requires focus and selection • Outcomes not easily observable in the short period