Research-based innovation

1. Research-based innovation

2. Overview • Research-based innovation and Disruptive technologies • Commercialization of research-based innovation • Process • Organization • Initial funding • Patents • Sell your prototypes! • Sales integrated with development • R&D funding • National innovation capital • National R&D capital • European research framework programs • US-based research funding • Venture capital • Use-case 1: Birdstep Technology • Use-case 2: Nunatak AS and how we work to commercialize research-based innovation

3. Research-based innovation should look for Disruptive technologies • Research looks ahead – easier to identify a technology shift • Significant time/technology advantage is needed to establish new markets with new technology • Research-based innovation is not traditional academic research • New skills are required (sales, marketing, VC, ...) • Patenting before publication sometimes with IPR sharing • Prototyping • Product packaging • Companies as the nucleus for innovation and research • Examples of Distruptive technologies in the ICT sector: • HyperText Transfer Protocol (web) • Peer-to-peer technology (e.g. Napster ...) • IP as Telecom core technology • WLAN and other unlicenced radio technologies • Mobility • Security • Open Standards (e.g IETF, Java, ...) • Open Source (e.g. Linux)

4. Business idea development • Select area • Study the customers • How to create value for the customer • Constrain the market / get focus • Understand competition • Business plan Classical error 1 – Too high focus on own technology / ideas – forget customer requirements and needs

5. Business idea requirements Start with comparative intellectual and product advantage E.g. Business, market or technology knowledge Studies Work experience Prototypes => Ideas Spend time understanding the customers and their business • Meet potential customers • Demo • Targeted seminars • Undersand customer business process • Understanding of value for customer, your ”Value Proposition” Establishment and understanding of comparative advantages Better performance Lower cost Simpler Own IPR => Good understanding of your position

6. What is a good business idea? • A new technology is not a business idea • The word “business idea” contains nothing about technology or product. • An idea about a business, a market • Example: • To deliver a better method for securing data to customers that need security, and agrees that the new method gives a substantial improvement to same cost without replacing existing infrastructure is a business idea.

7. Process for realizing business idea • Business plan • Financing • Focused development • IPR protection • Sale of prototype • Improvements • Sell projects with product • Improve product • Sell standard product Classical error 2 - Spend all resourcesto raise funding Clasiscal error 3 - IPR not protected Classical error 4 – Wait for the breakthrough

8. The startup enterprise as foundation for research based innovation Resources: University education IPR ownership, supporting R&D, Knowledge ”production”, students The startup enterprise as tool for research-based innovation Financing Supporting Research Product packaging Partners First sales Competition analysis Prototype Markeds- føring Repeated sales Commercialization Patent Market studies Idea Products and Revenue Projects Customer installation Patent Improvements EU R&D funding National R&D funding National Startup Funding

9. Startup funding environment National Startup capital SND IFU/OFU, Etablererstipend, oppfinnerstipend, SkatteFUNN, etc. Startup company Venture Capital Customer e.g. 4G operator R&D University National Research funding Partners EU Comp- etitors Dissemination Journals, Conferences R&D units End users Partners Comp- etitors R&D units

10. Startup funding environment + Capital + International network - Anti-dillution clauses - Options - Controlling position National Startup capital SND IFU/OFU, Etablererstipend, SkatteFUNN, etc. Startup company Cost Squeeze Venture Capital + R&D support - Low income potential - IPR sharing • + Supporting research • No income • IPR sharing Customer e.g. 4G operator R&D University • + Supporting research • + International network • Admin overhead • IPR sharing National Research funding Partners EU Comp- etitors Dissemination Journals, Conferences R&D units End users Partners Comp- etitors R&D units

11. Motivation Startup euphoria Customer see sufficient demand for the solution, places volume order Solution approved, customer delays purchase Venture Capital Round 2 Sales cycle is longer than expected First contract Expensive sales Venture Capital Round 1 Challenge ”Industry Angels” or national startup capital ”Friends&Family” The long run to steady state Time Year 2 Year 3 Year 1

12. The entrepreneur should be in focus • Many actors would like control and influence national startup capital • Research parks (Real Estate, FORNY, SIVA) • Universities (base funding, NFR, EU) • Venture Capitalists (EFFEKT, Argentum, ...) • Research institutions (NFR, EU, consultant business) • Existing industries (Existing cashflow, SkatteFUNN, ..) • Political goals (e.g. SkatteFUNN to reach OECD targets) • Critical check: Is the entrepreneur commercially oriented? • Protect and support the entrepreneur • Knowledge (Entrepreneurship as an academic study) • Grants (e.g. Commercial post-doc grant) • IPR (patents, designs, source code, prototypes, documentation) • Startup services (office, administration, legal, etc) • Supporting research from University and R&D institutions • National startup funding projects • National and EU research funding • Use people in the network as advisors, but never attach people that also control the national startup funding, to avoid double loyalties • Commercial focus from day one: • Sell your own services and products • Sell your prototypes • Commercialization competency within the company, cannot be outsourced!