1 / 32

Financing High-Tech: Lessons from the Israeli Innovation System

Financing High-Tech: Lessons from the Israeli Innovation System. Vittorio Modena The University of Pavia and E.M. Venturepolicy Prepared for the World Bank seminar held in Riga on June 8-9, 2004. Presentation Outline. Part I – Evolution of the Israeli Innovation System

india
Download Presentation

Financing High-Tech: Lessons from the Israeli Innovation System

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financing High-Tech: Lessons from the Israeli Innovation System Vittorio Modena The University of Pavia and E.M. Venturepolicy Prepared for the World Bank seminar held in Riga on June 8-9, 2004

  2. Presentation Outline Part I – Evolution of the Israeli Innovation System Part II – The Yozma and Technological Incubators programmes Part III– Exportable lessons Part IV – The ESTER project V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  3. General Evolution Phase I (1920-1967) – Academia and scientific tradition Phase II (1968-1990) - Accumulation of intangibles by public policy (military oriented) Phase III– (1990-2000) - Private high-tech exponential growth (through start-ups) V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  4. Phase 1 - Academia and Scientific Traditions • Strong scientific (academic) culture since the end of the 19° century • The Technion and Hebrew University of Jerusalem are created in the 1920’s • The Weizmann institute is founded in 1949 V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  5. Phase 2 –(1969-1990) (1/2) • Following the 6 days war and embargo on weapons import, independent technological capability becomes a need • The Office of the Chief Scientist at the Ministry of industry and trade is created • Large budget allocation to R&D V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  6. Phase 2 –(1969-1990) (2/2) • The Aeronautics and Electronics industries take the lead as they are the most relevant for the military sector • Since 1984 R&D activity is enlarged and becomes more oriented to civilian R&D V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  7. Phase 3 – (1990-2000) Main Characteristics • ICT market growing very strongly worldwide • Progresses in the peace process • Agressive public/private partnership programmes V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  8. Phase 1,2,3-Comparison Source: Teubal and Avnimelech V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  9. Phase 3 – Public Programmes • 1990-The Technological Incubators programme • 1992-3- Yozma and Inbal (Venture Capital) • Magnet (Universities-Firms links) • Regular funding of R&D (R&D in Firms) V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  10. Part II – The Yozma and Technological Incubators Programmes V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  11. Phase 3 – The Yozma Programme (or How to create a Venture Capital Industry from Scratch) 1990 Market Failure Gov’t Intervention 1993 $100M Investment Establishement of Yozma 1997 Creation of 10 funds Gov’t exit V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  12. Phase 3 – The Yozma Programme (1/3) Yozma= a public Fund of Funds’ 40% 60% Private investors Start-up fund (private) Company Company Company V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  13. The Yozma Programme- 10 Drop-Down Funds Attracting Foreign Investors (2/3) Fund Foreign Partners Eurofund Daimler Benz, DEG (DE) Gemini Advent Inventech Van Leer Group (NL) JPV Oxton Medica MVP (USA) Nitzanim-Concord AVX, Kyocera (Korea) Polaris CMS (USA) Star TVM (DE) & Singapore tech Vertex Vertex int’l funds Walden Walden V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  14. The Yozma Baby Funds Growing…(3/3) Fund Original Size (M$) Present Size (M$) Eurofund 20 90 Gemini 25 350 Inventech 20 40 JPV 20 580 Medica 20 70 Nitzanim-Con 20 280 Polaris 20 645 Star 20 400 Vertex 20 250 Walden 25 175 TOTAL 210 2880 V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  15. The Technological Incubators Programme • Finances 85% of the budget up to $ 350,000 • A protective environment for the inexperienced entrepreneur including premises and consulting • Accept projects at the very early stage of their conception V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  16. An Early Stage Business-plan Source:Pridor V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  17. The Technological Incubators Programme • Started 1991 • 23 incubators • 8 start-ups each • 30 M$ budget every year • Geographically distributed • Non-profit entities now being privatised • Number of graduates: 735 (end 2001) • Success rate: around 52% V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  18. Evolution of the Public/Private Investment in Incubated Projects V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  19. Contribution to Sectorial Variety Source:IFISE final report V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  20. Part III – Exportable Lessons(mainly from the IFISE Project) V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  21. Seed (and Pre-seed) vs. Start-up Capital • Both need strong initial public support • Start-up sources just need triggering, seed sources need continuous support • However, support for seed funds may be reduced gradually after successful launch V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  22. Research-Intensive vs. “Generally Innovative” Firms • Different schemes are needed for different kinds of firms: Research-intensive firms are more risky and need more help and infrastructure • Venture Capital and private equity also deal with traditional sectors V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  23. Sectorial Neutrality Neutral seed funds (or incubators) appear to succeed as much as sectoral, so: If you don’t have a very good reason to impose sectorality or neutrality, don’t ! Biotech is different as it requires different infrastructures, size of funds, development time. V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  24. Passive Role of Government • No intervention in the management companies: Government shall only monitor (a delicate matter), not make business decisions • Gov’t role and exit should be planned from the start. V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  25. Expert Foreign Partner Involvement • For expertise, networking and reputation. • Encouraging/requiring such partnerships is a way to help the industry work. V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  26. Deal Flow: a “Critical Mass” Problem • Making a programme attractive is not only about incentives • Deal flow may be a problem for new technology based deals and/or for small regions (or countries) • Low deal flow=>more flexible schemes not limited to small regions or specific sectors V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  27. Example: Italian high-tech potential vs. Structural funds V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  28. Part IV – The ESTER Project V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  29. The ESTER Project (1/2) Objectives • Planning for effective sources of seed and venture capital in Estonia, Latvia and the Slovak Republic • Submission of formal proposals for the launch of new programmes to the relevant authorities in the three countries and the EC V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  30. The ESTER Project (2/2) Basic Methodology • Inspiration from the Yozma and Technological Incubators programmes in Israel • Thorough study of the Innovation system in Estonia, Latvia and Slovakia • Thorough study of EC regulations • Planning with world experts • Submission of proposals to the relevant authorities V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  31. Latvia Venture Capital Strategy V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

  32. Contacts/references Email: vmodena@libero.it IFISE Project http://ifise.unipv.it ESTER Project http://www.unipv.it/ester/index.html Company http://www.venturepolicy.com V. Modena (vmodena@libero.it) - World Bank Conference - Riga, June 8-9th, 2004

More Related