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TECHNOLOGY COMMERCIALIZATION IN UKRAINE

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  1. TECHNOLOGY COMMERCIALIZATION IN UKRAINE October 2006

  2. PRESENTATION OVERVIEW • Technology Commercialization Challenges • Global IPP/USIC Model • Initiatives for Proliferation Prevention Projects in Ukraine

  3. COMMERCIALIZATION Of Science and TechnologyCHALLENGES AT A GLANCE • The process is high-risk, long-term, multi-stage, and complex. • You have to deal with a funding gap at the early engineering and commercialization stage • In the U.S., the amount of venture capital available for investments has declined since 2000 “bubble” • Commercialization investment portfolio • Only a few “Hits” will generate high revenues • A number of others will generate smaller revenues • Most endeavors do not attract outside investment

  4. The Process of Commercialization • Research and Development • Engineering to a prototype • Raising capital • Manufacturing • Marketing

  5. Research and Development • There is a large number of scientists and engineers in Ukraine doing research that they believe is marketable • The Science and Technology Center in Ukraine (STCU) supports a number of research projects, focusing on those with practical applications • Partner projects such as IPP focus on efforts likely to lead to commercialization

  6. Engineering to aPrototype • It is necessary to take the results of R&D and engineer it into a product that can be mass produced. This takes investment. • It is important to attract a company and/or an investor at this stage so that someone familiar with the market is involved • For example, the focus of the IPP program is on this phase

  7. Raising Capital • This is not an easy task • Large amounts of investment are required before a product hits the market • The amount of investment money invested in science has decreased over the past 5 or so years (at least in the U.S.)

  8. “VALLEY OF DEATH” “Valley of Death” – funding gap at survival stage Technology Creation Biz. and Product Development Commercialization Distribution Sales $ Cash flow or sales Idea, R&D Product Dev. Production Sales “Valley of Death” Time Cash flow Stock owners R&D grants, Public sector Entrepreneur, angel investors Venture capitalists Ideation Survival Growth

  9. VENTURE CAPITAL INVESTMENTS (US) Source: Pricewaterhouse Coopers & National Venture Capital Association

  10. GLOBAL PRIVATE EQUITY 2004Source: Pricewaterhouse Coopers & National Venture Capital Association

  11. North America 1. USA ($19.54) 2. Canada ($0.81) Western Europe 2. UK ($4.76) 4. France ($1.75) 5. Italy ($1.53) 8. Sweden ($0.82) 11. Germany ($0.76) 12. Ireland ($0.29) 13. Finland ($0.21) 14. Norway ($0.21) 15. Netherlands ($0.19) 16. Denmark ($0.16) 17. Switzerland ($0.16) 19. Spain ($0.15) Asia Pacific 3. Japan ($2.51) 6. Korea ($1.11) 7. China ($1.06) 18. Singapore ($0.16) Middle East & Africa 10. Israel ($0.77) 20. South Africa ($0.13) Top 20 Countries Based on High-Tech Investment (2003)

  12. How does the United States help with the Start-up of new Technology Businesses? • Small Business Innovative Research Program (SBIR) • Advanced Technology Program (ATP) of the National Institute of Standards and Technology (NIST) • University technology transfer offices • Technology licensing to businesses • Business incubators • Angel investors, venture capitalists, stock owners

  13. CHALLENGES IN UKRAINE • Lack of public resources • R&D stage • Commercialization/survival stage (“valley of death” is deeper) • Lack of venture/private investment resources • Ukraine is below the radar of global private equity investment in high-tech • Domestic high-tech market limited • Most customers were military in the past • Lack of tech commercialization expertise and infrastructure in research institutes (unlike in Western universities)

  14. US NONPROLIFERATION PROGRAMS:SUPPORTING UKRAINIAN SCIENTISTS • STCU • R&D grants/civilian engagement since early 1990s • Compensating for lack of public R&D funds in Ukraine • STCU Commercialization program • CRDF • R&D grants/civilian engagement • Next Steps to Market

  15. DOE’s Global IPP PROGRAM: INDUSTRY PARTNERSHIPS • Commercialization & industry partnerships focus • Critical element: US company participates as industry partner in each project • Industry partner matches 100% of federal funds • Industry partner provides business expertise/ direction and brings technology to the market • US Company provides access to Western investment resources (80% of global private equity)

  16. Projects Model • Three-way partnerships: • Ukrainian institute, U.S. company, and DOE national laboratory • IPP funds FSU scientists’ work • U.S. companies cost-share government funds by cash and/or in-kind resources • National laboratories funded by IPP to validate the Ukrainian science and technology technology validation and to help manage the project

  17. Benefits for Ukrainian scientists • Access to U.S. business expertise and investment resources • Invaluable lessons to learn • Partnerships created with U.S. companies • Combining Ukrainian technological resources with U.S. entrepreneurial expertise • Development of technologies, products and services for U.S. and global markets • Ukrainian high-tech market is limited • U.S. companies provide access to their markets and customers • Working with top U.S. national laboratories in joint tech development • JOBS, REVENUES, INVESTMENT, NEW JOINT AND OWN BUSINESSES CREATION

  18. United States Industry Coalition (USIC) • Association of 150+ U.S. companies • Multinational corporations – General Electric, Boeing, DuPont, Halliburton, IBM, Westinghouse, GNF, Nukem, Brush Wellman • Small innovative businesses • Advisor to NNSA/DOE’s Initiatives for Proliferation Prevention Program (IPP) • IPP project review/monitoring • Facilitation of technology commercialization • Public/Congress outreach • Provides an industry outreach for IPP • Member companies are industry partners of IPP projects • Over ten year experience in technology commercialization and partnerships in the FSU region

  19. COMMERCIALIZATION SUCCESS • Sustainable civilian occupations steadily grow • 2,800 civilian FSU jobs created/sustained • 16,000 scientists engaged by IPP since 1994 • US+FSU Revenues surpassed IPP budget since 2003 • $30M vs. $22.5M IPP budget in FY03 • $53M vs. $23.8M IPP budget in FY05

  20. COMMERCIALIZATION SUCCESS • Outside investments demonstrate high competitiveness of technologies • $137M invested by the end of 2005 • FSU institutes catching on commercial culture: • 30 FSU and FSU-US businesses created/sustained • Negotiations with customers & investors; FDA and FSU certifications; establishing manufacturing; int. patents; etc. • 30 % of projects generate revenues to date • Many more resulted in other successful developments

  21. Ukrainian Projects Supported by IPP • 19 Ongoing & Completed Projects in Ukraine • Examples of Successful Ukrainian Projects Supported by IPP: • Welding & Brazing Technologies for Repair of Turbine Engine Airfoils • Advanced Grinding Technology for Bio-source Materials • Advanced Welding & Fabrication Techniques for Al-li Alloys • Next Generation EB-PVD Apparatus • Flash-butt Fusion

  22. Welding & Brazing Technologies for Repair of Turbine Engine Airfoils • Repair of worn or defective turbine components made of nickel-base superalloys is difficult and expensive • Innovative technology reduces repair costs, allows re-manufacturing of initially defective, and refurbishment of used, components • Manufacturing started. Restoration repairs of aero engine parts Pratt & Whitney / UTC (CT) E.O. Paton Electric Welding Institute (Kyiv) Oak Ridge National Laboratory

  23. Advanced Grinding Technology for Bio-Source Materials Pinnacle Technology (KS) TexMet (Dniepropetrovsk) NNSA Kansas City Plant • Agricultural/forestry waste can be converted into consumer and industrial products • Fillers for plastics; chemicals; fuel; electricity; animal feed; fertilizer • Global demand for bio-source products surging • $23 Billion market growing at 9% per year • Ukraine plant has expertise in particulate reduction, analysis and system design techniques • Unique grinding & separation technology for global industrial and agricultural markets

  24. Advanced Welding & Fabrication Techniques for Al-Li Alloys Boeing (CA) VNIITF (Snezhinsk, RU) E.O. Paton Institute (Kyiv) Lawrence Livermore Nat’l Lab • Russian, Ukrainian & U.S. partners will design, analyze, fabricate prototype aircraft & launch vehicle components • Lightweight extruded panels reduce cost, improve performance • Growth in commercial aerospace design & manufacturing • Significant annual sales, dozens of people employed (numbers proprietary)

  25. Next Generation EB-PVD Apparatus General Electric Company (NY) E.O. Paton Electric Welding Institute (Kyiv) • Innovative design improves commercially-available systems • Higher deposition rates • Reduced time & operating costs • Ukrainian partner will be able to compete in global market for multiple industries • Aeronautical & gas turbines • Fuel cells • X-rays systems

  26. FBF applied in 55,000 km of pipeline worldwide Technology in use for 30+ years FBF advantages: bonds any metal to any other metal uses electric contact rather than welding rod or flux faster welding rates strong, high-quality welds higher labor productivity Oil, gas, chemical pipelines & storage tanks are primary market for upgraded FBF Maverix (FL) E.O. Paton Electric Welding Institute (Kyiv) NNSA Kansas City Plant Flash-Butt Fusion (FBF)

  27. List of IPP Projects in Ukraine • ANL-T2-0224-UA Photonuclear production of radioisotopes • ANL-T2-0229-UA Process Development: Low Cost, Continuous Nano-Scale Purification Technology of Powdered Carbonaceous Materials for Applications in Electrochemical Energy Storage Systems and Electroconsolidationョ Process Technology • ANL-T2-0151-UA The Use of the MAG*SEP Technology for the Decontamination of Milk, Juice, Baby Food, and Water from the Chernobyl-Affected Zone in the Ukraine • DOEH-T2-0001-UA Next Generation EB-PVD Apparatus • KCP-T2-0219-UA Advanced Grinding Technology for Bio-Source Materials • KCP-T2-0224-UA Flash-Butt Welding • KCP-T2-0222A-UA Custom Automotive Component Manufacturing • LBNL-T2-0178-UA Screening of Botanical and Fungal Species Collected within the Territory of NIS for Pharmaceutical and Agrochemical Activities • LLNL-T2-0090-UA Joining Technologies for Gamma Titanium Aluminide Castings • LLNL-T2-0091-UA High Specific Stiffness Shafts and Advanced Bearing Coatings for Gas Turbine Engines. • LLNL-T2-0113-UA Radiation Hardened Telerobotic Dismantling System Development • ORS-T2-204-UA Welding and Brazing for Repair of Aircraft and Gas Turbine Engine Components • ORS-T2-211-UA Development of Protective Coating Technologies for Gas Turbine Engine Airfoils • PNNL-T2-0241-UA Cost Effective Production of Powder Metallurgy Titanium Components for High Volume Commercial Applications • PNNL-T2-0245-UA Development of a New Lithium Metal Secondary Battery with Polymer Electrolyte and Cathode Based on Metal Oxides • PNNL-T2-0272-UA Development and Commercialization of Straw Fired Boilers of 100-1000 kW in Ukraine • PNNL-T2-0194-UA Empirical Discovery and Development of Crop Protection and Human Health Agents • PNNL-T2-0201-UA Commercial Application of Europium for Gamma Irradiation in Ukraine & Russia • SNL-T2-0179-UA Brazing Process Improvement for Stainless Steel Tubes

  28. Marketing Ukrainian Technologies • Ukrainian technologies are marketed to U.S. industry through IPP. • Marketing vehicle - BISNIS, U.S. Department of Commerce • TekhInvest, Ukraine identifies promising technologies from Ukrainian institutes • USIC facilitates interactions between institute and U.S. companies • U.S. company due diligence

  29. USIC Working through BISNIS • Amorphous and nanocrystalline tape-wound magnetic cores with high temperature stability of magnetic characteristics, Melta Ltd. • Plasma surface hardening of flanges of wheels of locomotives, as well as passenger and freight cars, RPE Topaz Ltd. • Holographic Coding Method to Produce Surface-Relief Holograms Incorporating Image that Is Recorded as a True Hologram, Spekl • Vortex Bubble Contactor for Intensification of Heat and Mass Transfer in Various Industries, Institute of Engineering Thermophysics • Ukraine Production of Nanodiamonds and Development of their Application Technologies, Sinta Ltd. • Chitin Adsorbent for Heavy Metals and Radionuclides; Technology for Liquid Industrial Waste Decontamination, Mycoton-Aglycon, Ltd. • Vehicle-Borne H2-Producing Rechargeable Feeder for Hydrogen-Propulsion Automobile, Scientific Research Power Engineering Institute of Dnipropetrovs'k National University • Gas-Thermal Jet for Surface Treatment and Coating, Kyiv National Taras Shevchenko University • High Efficiency Photo-Electrochemical Hydrogen Production and Storage Cell, Institute for Problems of Materials Sciences • Liquid Crystal Alignment Method, Institute of Physics of National Academy of Sciences of Ukraine • Magnetocardiograph - Early Detection Of Ischemic Heart Disease, Kharkiv National University • Superheated Vapor Impregnation of Capillary-Porous Materials, Pridneprovie Cleaner Production Center • Vibrato-Diagnostic Imaging for Security Monitoring / Power Generation from Agricultural Industry Waste / Flame - Jet Drilling System, Yuzhnoye State Design Office • Copper Scrap Recycling Technology, East Ukrainian National University • Brazing and Diffusion Bonding of Metals to Non-Metals, Frantsevich Institute for Problems in Materials Science • Advanced Acousto-Optical Modulator for Powerful Laser Radiation, Institute of Physical Optics • Pneumatic Washing & Cleaning Technology for Machinery Parts, National Science Center / High Critical Current Density Niobium-Titanium (NB-TI) Superconductors, Kharkiv Institute of Physics and Technology

  30. Conclusions and Questions • International institutions such as the STCU and programs like IPP are creating new, sustainable jobs for WMD personnel in Ukraine. • They are adding new jobs to U.S. and Ukrainian economies • IPP & STCU help reduce risk for U.S. high-tech business • Similar institutions and programs could accomplish the same • There is a need to attract significant private investment to new technologies • What role is the government of Ukraine willing to play to add to the current successes, to attract outside investment, and to lay the foundation for a high tech economy in Ukraine? • To what extent are outside governments and companies willing to continue, is not increase, the level of support for the commercialization of Ukrainian science?